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Exhibit 99.1 PRESS RELEASE FOR IMMEDIATE RELEASE CLEAR CHANNEL OUTDOOR HOLDINGS, INC. ANNOUNCES PRICING OF SENIOR NOTES San Antonio, Texas, November 6, 2012. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) (the “Company”) announced today the pricing of $735,750,000 aggregate principal amount of 6.5% Series A Senior Notes due 2022, which will be issued at an issue price of 99.0% of par,and $1,989,250,000 aggregate principal amount of 6.5% Series B Senior Notes due 2022, which will be issued at par(together, the “Notes”), offered by its indirect, wholly-owned subsidiary, Clear Channel Worldwide Holdings, Inc. (“Clear Channel Worldwide”).The Company anticipates that the closing of the private offering will take place on November 19, 2012, subject to customary closing conditions. The Company, its wholly-owned subsidiary Clear Channel Outdoor, Inc., and certain of the Company’s other domestic subsidiaries (collectively, the “Guarantors”) will guarantee the Notes.The Notes will be senior obligations that rank pari passu in right of payment to all unsubordinated indebtedness of Clear Channel Worldwide, and the guarantees of the Notes will be senior obligations that rank pari passu in right of payment to all unsubordinated indebtedness of the Guarantors. Clear Channel Worldwide intends to use the net proceeds from this offering, together with cash on hand, to pay the consideration in a concurrent tender offer Clear Channel Worldwide has undertaken in respect of its existing 9.25% Series A Senior Notes due 2017 and its existing 9.25% Series B Senior Notes due 2017 (together, the “Existing Notes”), and to pay all related fees and expenses.Clear Channel Worldwide currently intends to call for redemption on the closing date of this offering any Existing Notes that have not been tendered pursuant to the tender offer and to use the remaining net proceeds of this offering, together with cash on hand, to satisfy its obligations thereunder. The Notes and related guarantees are being offered only to “qualified institutional buyers” in reliance on the exemption from registration pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside of the United States in compliance with Regulation S under the Securities Act.The Notes and the related guarantees have not been registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable exemption from the Securities Act and applicable state securities laws. This press release is for informational purposes only and does not constitute a notice of redemption under the indentures governing the Existing Notes or an offer to sell nor the solicitation of an offer to buy the Notes or any other securities.The offering of the Notes is not being made to any person in any jurisdiction in which the offer, solicitation or sale of the Notes is unlawful. About Clear Channel Outdoor Holdings, Inc. Clear Channel Outdoor Holdings, Inc. is one of the world’s largest outdoor advertising companies, with more than 750,000 displays in over 40 countries across five continents, including 48 of the 50 largest markets in the United States. Clear Channel Outdoor Holdings, Inc. offers many types of displays across its global platform to meet the advertising needs of its customers. This includes a growing digital platform that now offers over 1,000 digital displays across 37 U.S. markets. Clear Channel Outdoor Holdings, Inc.’s International segment operates in nearly 30 countries across Asia, Australia, Europe and Latin America in a wide variety of formats. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements based on Clear Channel Outdoor Holdings, Inc.’s current management expectations.These forward-looking statements include all statements other than those made solely with respect to historical facts and include, but are not limited to, statements regarding the closing of the offering of the Notes and the anticipated use of the proceeds of the offering.Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements.These risks, uncertainties and other factors include, but are not limited to, the satisfaction or waiver of the conditions to closing of the offering and the timing and use of proceeds of the offering.Many of the factors that will determine the outcome of the subject matter of this press release are beyond Clear Channel Outdoor Holdings, Inc.’s ability to control or predict.Clear Channel Outdoor Holdings, Inc. undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. Contact For further information, please contact: Media Wendy Goldberg Senior Vice President – Communications (212) 549-0965 Investors Brian Coleman Senior Vice President and Treasurer (210) 822-2828 2

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):October 15, 2012 FS Investment Corporation II (Exact name of Registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation) 814-00926 (Commission File Number) 80-0741103 (I.R.S. Employer Identification No.) Cira Centre 2929 Arch Street, Suite 675 Philadelphia, Pennsylvania (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (215) 495-1150 None (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 (17CFR240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c)) Item2.02. Results of Operations and Financial Condition. On October 15, 2012, FS Investment Corporation II (the “Company”) determined to increase the Company’s public offering price from $10.05 per share to $10.10 per share and to increase the amount of the semi-monthly cash distributions payable to stockholders of record from $0.030359 per share to $0.030510 per share in order to maintain its annual distribution yield at 7.25% (based on the $10.10 public offering price). The increase in the public offering price was effective as of the Company’s October 16, 2012 semi-monthly closing and first applied to subscriptions received from October 1, 2012 through October 15, 2012. The increase in the semi-monthly cash distributions to $0.030510 per share will be first effective with respect to the semi-monthly cash distribution to be paid on October 31, 2012 to stockholders of record as of October 30, 2012. The previously declared semi-monthly cash distribution in the amount of $0.030359 per share to be paid on October 31, 2012 to stockholders of record as of October 15, 2012 will remain unchanged. The purpose of the increase in the public offering price was to ensure that the Company’s net asset value per share did not exceed the Company’s offering price per share, after deducting selling commissions and dealer manager fees, as required by the Investment Company Act of 1940, as amended. A copy of the press release announcing the foregoing is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Forward-Looking Statements This Current Report on Form 8-K may contain certain forward-looking statements, including statements with regard to the future performance and operation of the Company. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the filings the Company makes with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Item 9.01. Financial Statements and Exhibits. (d)Exhibits. EXHIBIT NUMBER DESCRIPTION Press release dated October 17, 2012. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FS Investment Corporation II Date: October 17, 2012 By: /s/ Michael C. Forman Michael C. Forman President and Chief Executive Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION Press release dated October 17, 2012.

Exhibit 10.8     Effective January 1, 2005, the following are the base salaries of the named Peoples Bankshares, Inc. for 2005:   Kenneth D. Hart    $ 181,500        Frank Sexton, Jr.    $ 110,250       

Title: (Florida) Can my friend date while she's here on a B-2 visa and would I get into any trouble? Question:My childhood friend is coming to visit my husband and I for six months. She's planning on dating while she's here is that legal? Would my husband and I get in any trouble? Answer #1: That would be super creepy if the government told visitors they couldn't date while they were here. We care that she not steal our jobs, not our men.

Exhibit 10.4 AMENDMENT TO CHANGE OF CONTROL AGREEMENT THIS AMENDMENT TO CHANGE OF CONTROL AGREEMENT is made effective February 9, 2015, by and between SurModics, Inc. (the “Company”) and Joseph J. Stich (“Executive”). WHEREAS, Company and Executive previously entered into that certain Change of Control Agreement dated as of February 9, 2012 (the “Agreement”); WHEREAS, Company and Executive desire to amend the Agreement to extend the term of the Agreement. NOW, THEREFORE, Company and Executive, intending to be legally bound, agree as follows: 1.Section 1 of the Agreement is hereby amended and restated as follows: 1.Term of Agreement.Except as otherwise provided herein, this Agreement shall commence on the date executed by the parties and shall continue in effect until the twelve-month anniversary of the date on which a Change of Control occurs.Notwithstanding the foregoing, if at any time during the term of this Agreement and prior to a Change of Control, Executive’s employment with the Company terminates for any reason or no reason, or if Executive no longer serves as an executive officer of the Company, this Agreement shall immediately terminate, and Executive shall not be entitled to any of the compensation and benefits described in this Agreement.Any rights and obligations accruing before the termination or expiration of this Agreement shall survive to the extent necessary to enforce such rights and obligations. 2.Except as expressly amended and restated herein, the Agreement, as previously and hereby amended, remains in full force and effect.All capitalized terms used and not otherwise defined herein shall have the meanings given them in the Agreement. IN WITNESS WHEREOF, Company and Executive have executed this Amendment to Change of Control Agreement effective as of the date set forth in the first paragraph. SurModics, Inc. By /s/ Bryan K. Phillips Its: SVP, Legal and Human Resources /s/ Joseph J. Stich

EXHIBIT 99.1 Internet Gold-Golden Lines Ltd. Reports Extension of the Company’s Directors’ and Officers' Liability Insurance Policy Internet Gold-Golden Lines Ltd. (NASDAQ Global Market and TASE: IGLD) (the “Company") announced today that the Compensation Committee and Board of Directors of the Company approved the extension of the Company’s directors' and officers' liability insurance policy (the "Policy") for the period from December 1, 2014 through April 30, 2016. The Policy was approved within the framework approved by the Company’s shareholders at the general meeting of the shareholders and according to the Company’s Compensation Policy. The Policy shall apply and include all members of the Board of Directors, including those who are deemed to be "controlling shareholders" in the meaning set forth in the Israeli Companies Law. The terms of the Policy remained the same, except for changes that are either not material or beneficial to the Company. The Policy will continue to cover a total liability of $10 million (for each claim and in the aggregate) and the Company will pay an aggregate premium of $78,494 for the Policy, which reflects approximately 5% lower monthly rate compared to 2013-2014. The Compensation Committee and Board of Directors of the Company, approved that the transaction is in a the company’s ordinary course of business, in market conditions and will not Influence the profitability of a company, its property or liabilities. According to the Israeli Companies Law Regulations (Reliefs Regarding Transaction with Interested Parties), 5760-2000, in the event that one or more shareholders, holding at least 1% of the issued share capital or the total voting rights in the Company, oppose this relief by written notice no later than 14 days following this report, the approval of the Company’s shareholders will be required for the extension of the Policy. The above information constitutes a translation of Immediate Report published by the Company. The Hebrew version was submitted by the Company to the relevant authorities pursuant to Israeli law, and represents the binding version and the only one having legal effect. This translation was prepared for convenience purposes only.

Title: I think my wife has kidnapped my son. Help? Question:She's seven weeks removed from giving birth and hasn't been herself. She fought with me for five days until things exploded and I got myself and my teenager from another marriage out of the house. We were gone for a day, and when I came by on Monday, she, our infant son, all of his things, and some of her things were gone. She keeps saying they are visiting her dad on the other side of the country, but I just got change of address notifications in the mail. She still says they are visiting, but won't say when they return. Thoughts anyone? Answer #1: She just had a baby and hasn't been herself? She needs to be evaluated for post partum depression. Call her dad and talk to him. Answer #2: In the absence of a court order, either parent can take the children anywhere. She hasn't "kidnapped your son", as you wrote. She has left you and taken her child with her, which is perfectly legal. Either reconcile or get a divorce.Answer #3: The police cannot help you. You know she is alive and have no reason to believe she is in danger. Contact an attorney. She has no obligation to tell you where she is out let you see your son, until you have a court order. Answer #4: Go to your local court and obtain an ex parte order immediately. Include the change of address notification as an exhibit. The courts take child abduction very seriously. Any order you get here can be enforced virtually anywhere in the US under the UCCJEA. You also need to do this before she starts a custody case in the State she fled to. If you wait, a court may deem that the kid's home state is the one your wife moved to. If this happens you will have to fight to get your kid back in the place she fled to instead of the state you live in.

EXECUTION COPY Exhibit 10.37 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 2nd day of December 2019 (the “Effective Date”), by and between Richard Rallo (the “Executive”), a New York resident, and Alico, Inc., a Florida corporation (the Recitals WHEREAS, the Company desires to employ the Executive to serve as the Chief Financial Officer of the Company, effective as of the Effective Date, and the Executive desires to accept such positions with the Company. Agreement 1. Employment. The Company hereby employs the Executive as its Chief Financial Officer, and the Executive hereby accepts such employment, effective as of the Effective Date, upon the terms and conditions set forth herein. Except as otherwise expressly provided herein and in the Indemnification Agreement to be executed by the Company and the Executive, this Agreement (including the exhibits, which are an integral part of it) sets forth the terms and conditions of the Executive’s employment by the Company, represents the entire agreement of the parties with respect to that subject, and supersedes all prior understandings and agreements with respect to that subject. Every reference in this Agreement to an Exhibit is to an exhibit to this Agreement. As used in this Agreement, the capitalized terms that are defined on Exhibit A have the respective definitions attributed to them on Exhibit A, and those definitions (a)    Duties. The Executive shall be employed by the Company as Chief Financial Officer. The Executive shall have the normal duties, responsibilities, and authority of a Chief Financial Officer, and shall perform all duties incidental to such position that may be required by law and all such other duties as may be reasonably assigned by the Chief Executive Officer of the Company and are consistent with the duties normally associated with a chief financial officer of a public corporation. The Executive shall report to the Chief Executive Officer of the Company. (b)    Engaging in Other Employment. While employed by the Company, except as the Company and its affiliates and shall not be employed by any other person or entity. Notwithstanding the foregoing or the provisions of Section 10(b) of this Agreement, the Executive is permitted to do any of the following while he is      employed by the Company or any of its subsidiaries: (i) if approved in advance by resolution of the Board, serve as an owner, officer, director, or manager of any other for-profit business entity, so long as it is not engaged in a business that competes with the Company; (ii) make a passive investment in less than 1% of the outstanding equity of any business entity that is traded on any national, regional, or international stock exchange or in the over-the-counter market, whether or not the business entity is engaged in a business that competes with the Company; and (iii) participate in a reasonable number of civic, industry, charitable, community, educational, professional, and similar organizations, including serving as an officer or member of a board of directors of any nonprofit organization; provided, in each case, that the activity or service does not materially interfere with the regular performance of the Executive’s (c)    Loyal and Conscientious Performance. The Executive shall act at all times in compliance with the written policies, rules, and decisions adopted from time to time by the Company and the Board and perform all of the duties and obligations required of him by this Agreement in a loyal and conscientious manner. (d)    Location. The Executive’s principal place of business shall be his home office located in Melville, New York. 3.     Term of Employment. The term of the Executive’s employment pursuant to this Agreement shall commence on the Effective Date and end on the second anniversary of the Effective Date, subject to extension and termination pursuant to the provisions of this Agreement (the “Term”). The Term will be automatically extended for a one-year period on the second and each ensuing anniversary of the Effective Date unless either the Company or the Executive provides written notice to the other party no later than 60 days in advance of the expiration of then-current Term that the period of the Executive’s employment pursuant to this Agreement shall not be extended. As used in this Agreement, the word “Term” means the initial two-year period of employment specified in this Agreement and includes any and every one-year extension of the period of employment under this Agreement. Notwithstanding the foregoing, the Term shall automatically terminate on the Date of Termination (as defined below). 4.     Annual Cash Compensation. (a)    Annual Base Salary. During the Term, the Company shall pay to the Executive in installments an annual base salary, not less often than monthly, at an annual rate of not less than $275,000 (“Annual Base Salary”). The Annual Base (the “Committee”) at least annually for increase, and the Annual Base Salary as so adjusted shall be the “Annual Base Salary” for all purposes of this Agreement. (b)    Short-Term Incentive Plan. For each fiscal year of the Company during the Term, the Executive shall be eligible for an annual incentive compensation award with an annual target opportunity in an amount equal to 40% of the Annual Base Salary (the “Target Bonus Opportunity”) and with the amount of the award for each fiscal year to be determined by the Board or the Committee from time to time and prorated for any partial year of service. The short-term incentive compensation 2 earned by the Executive with respect to any fiscal year (the “Annual Bonus”) shall be paid to the Executive within two and a half months following the fiscal year for which it was earned, subject to the Executive’s continued employment No equity awards will be made at the Effective Date. 6.     Employee Benefits. During the Term, the Executive shall be eligible to participate in the employee benefit plans, policies, programs, practices and arrangements that the Company provides to its executives generally from time to time (each, an “Employee Benefit Plan” and, collectively, the “Employee Benefit Plans”) on terms that are no less favorable to the Executive than those provided by the Company to other executives of the Company generally. The Executive will be entitled to 20 paid vacation days every fiscal year of the Company, which will be credited on the first day of each fiscal year during the Term. In addition to the foregoing paid vacation time, the Executive will be allowed additional days of paid holidays or other personal absent time as determined in accordance with Company policy or as approved by the Board. Any unused vacation time during a fiscal year will accumulate in accordance with the Company’s vacation policy. 7.     Perquisites. During the Term, the Executive shall be eligible to receive perquisites on a basis no less favorable than as are provided by the Company from time to time to other senior executives of the Company generally. 8.      Expense Reimbursement. The Executive shall be reimbursed for ordinary and reasonable travel, business, promotional, entertainment, and other expenses that are paid or incurred by him during the Term in connection with the performance of his services for and on behalf of the Company under this Agreement, subject to the Company’s expense reimbursement policies and procedures. 9.     Withholding. The Company may withhold from the payments due to the Executive for the payment of taxes and other lawful withholdings or required Executive contributions, in accordance with applicable law. If circumstances arise in which such withholding or contributions are required on account of any compensation or benefits (including, without limitation, upon the payment or provision of any compensation or benefits pursuant to Sections 6 or 7), at a time when there are not cash payments being made to the Executive from which such withholding obligations can be satisfied, the Executive will deliver to the Company amounts sufficient to fund such withholding or contribution obligations. 10.     Executive’s Covenants. (i)     The Executive shall not, at any time use, divulge, or otherwise disclose, directly or indirectly, any confidential and proprietary information (including, without limitation, any customer or prospect list, supplier list, acquisition or merger target, business plan or strategy, data, records, financial information, or other trade secrets) concerning the business, policies, or 3 operations of the Company or its affiliates (or any predecessors thereof) that the Executive may have learned or become aware of at any time on or prior to the date hereof or during the Term of the Executive’s employment by the Company. The confidential and proprietary information shall not include any information that: (A) was independently developed by the Executive before the commencement of his employment with the Company; (B) is or has been publicly disclosed by the Company or any subsidiary of the Company; and (C) is or becomes publicly available, other than as a result of a disclosure in contravention of this confidentiality restriction by the Executive or any person to whom the Executive disclosed the information. Notwithstanding the foregoing, the Executive is permitted to disclose confidential and proprietary information of the Company and/or its affiliates (x) to third parties and other officers, directors and employees of the Company or its affiliates in the performance of his duties as Chief Financial Officer of the Company, (y) to legal counsel for the Executive, the Company, or an affiliate of the Company to the extent necessary to obtain legal advice, so long as the Executive advises such legal counsel of the confidential and/or proprietary nature of such information, and (z) to the extent required by law or a request by a court or governmental authority (pursuant to a subpoena or otherwise). (ii)     The Executive further acknowledges and agrees that all Company Materials (as defined below) are the exclusive property of the Company and that, at request of the Company upon the termination of his employment with the Company pursuant to this Agreement, he shall return to the Company all Company Materials (including all copies thereof) that are in printed form and then in his control or possession and permanently delete from all accessible files, folders, and document libraries all Company Materials in digital form that are then stored on computers or other electronic devices in his control or possession. For purposes of this Section 10, “Company Materials” means all models, samples, products, prototypes, computers, computer software, computer and all other documents concerning the Company, any affiliate of the Company, or any predecessor of the Company or any affiliate of the Company, whether printed, drives, or any other tangible medium. (iii)     The Executive acknowledges that Company Materials may contain information that is confidential and subject to the attorney-client privilege of the Company or its affiliates or otherwise protected by attorney work product immunity. Except as required by law, the Executive agrees not to disclose to any person (other than in-house or outside counsel for the Company and its affiliates) the content or substance of (A) any such Company Materials that the Executive knows or has notice is protected by an attorney-client privilege or attorney work product immunity of the Company or any affiliate of the Company or (B) any communication that the Executive may have or may have had at any time with in-house or outside counsel for the Company and its affiliates, whether during his employment hereunder or otherwise, regarding such Company Materials. Notwithstanding the foregoing, the Executive is permitted to waive any attorney-client privilege or attorney work product privilege of the Company or any affiliate of the Company with respect to any particular information or communication, whether affirmatively or through the disclosure of information or communication to a person that results in waiver of the privilege, if the waiver or disclosure is (x) made in reliance on, and consistent with, the advice of legal counsel, 4 (y) directed or authorized by the Board or legal counsel for the Company in connection with a governmental investigation or otherwise, or (z) required by law or to comply in good faith with an order of a court or governmental authority, after providing the Company or its subsidiary a reasonable opportunity to obtain a protective order to prevent or protect the disclosure of the applicable information or communication. (i)     During the Restricted Period (as defined below), and except as otherwise authorized by Section 2(b) of this Agreement, the Executive agrees that he shall not, without the prior authorization by resolution of the Board, directly or director, officer, consultant, or otherwise (A) become engaged in, involved with, or employed in any business (other than as a less-than one percent (1%) equity owner of any corporation traded on any national, international, or regional stock exchange or in the over-the-counter market) that competes with the Company or any of its affiliates; or (B) induce or attempt to induce any customer, client, supplier, employee, agent, or independent contractor of the Company or any of its affiliates to reduce, terminate, restrict, or otherwise alter its business relationship with the Company or its affiliates; provided that the foregoing shall not prohibit the Executive, individually or in association with others, from (x) engaging in public advertisement and other forms of broad solicitation not intended to target Company employees to fulfill hiring needs or (y) hiring any individual who is a former employee of the Company or any subsidiary of the Company who has been separated from employment with the Company or the subsidiary of the Company for more than six months. The provisions of this Section 10(b)(i) shall be effective only within any state within the United States or any country outside the United States where the Company or any of its subsidiaries conducted its business during any part of the Executive’s employment with the Company. The parties intend the above the other areas. (ii)     For purposes of this Section 10(b), “Restricted Period” shall mean the period of the Executive’s employment by the Company during the Term and the 12-month period following the Date of Termination (as defined in Exhibit A). (c)    Forfeiture and Repayments. The Executive agrees that, in the event that he violates the provisions of Section 10(a) or 10(b), and except for the payment of Accrued Obligations, (i) he will forfeit and not be entitled to any further payments or benefits under this Agreement, (ii) any previously awarded stock options or stock appreciation rights (“Options”), Restricted Shares, or other equity awards then-outstanding shall expire immediately, and (iii) if such violation is after the termination of his employment, he will be obligated to repay to the Company the sum of (x) any amounts paid (determined as of the date of payment) after the termination of employment pursuant to Section 11 and (y) the amount of any gains realized by the Executive upon the exercise of Options (measured by the difference between the aggregate fair market value on the date of exercise of shares underlying the Options and the aggregate exercise price of the Options) within the one-year period prior to the first date of the violation. Such amount shall be paid to the Company in cash in 5 a single sum within ten business days after the first date of the violation, whether or not the Company has knowledge of the violation or has made a written interest at an annual rate equal to the prime lending rate of Citibank, N.A. (as periodically set) plus 1%. The forfeiture and clawback provisions of this Section 10(c) will terminate on the date that is 18 months following the expiration of the Restricted Period with respect to a violation of the provisions of Section 10(b) or 60 months following the Date of Termination with respect to a violation of the provisions of Section 10(a). (d)    Nondisparagement. The Executive shall not disparage the Company or any of its affiliates or their respective directors, officers, employees as a group, agents, stockholders, successors, and assigns (both individually and in their official capacities with the Company) (the “Company Parties”) or any Company Parties’ goods, services, employees as a group, customers, business relationships, reputation, or financial condition. (e)    Cooperation. During the Term and thereafter, the Executive shall cooperate with the Company and its affiliates as reasonably requested by the Company, without additional consideration, in any internal investigation or administrative, regulatory, or judicial proceeding involving the Company or any of its subsidiaries that pertains to any matter that occurred, or with which the Executive was involved or had knowledge, while he was employed by the Company, including, without limitation, the Executive being available to the Company or commitments if the Executive is then employed by the Company and otherwise taking into account the Executive’s reasonable business obligations. The Company promptly shall reimburse the Executive for all reasonable out-of-pocket costs and expenses that he incurs in providing any assistance requested by the Company under this Section 10(e). (f)    Scope of Restrictions. The Executive acknowledges that the restrictions Company’s business and goodwill, and that the obligations under this Section 10 shall survive any termination of his employment for the periods indicated. The Executive acknowledges that if any of these restrictions or obligations is found by a court having jurisdiction to be unreasonable or overly broad or otherwise unenforceable, he and the Company agree that the restrictions or obligations shall be modified by the court so as to be reasonable and enforceable and, if so modified, shall be fully enforced. (g)    Consideration; Survival. The Executive acknowledges and agrees that the Section 10. As further consideration for the covenants made by the Executive in this Section 10, the Company has provided and will provide the Executive certain projections, 6 income and earnings projections and statements, cost analyses and assessments, and/or business assessments of legal and regulatory issues. (a)    In General. Notwithstanding anything to the contrary contained herein, the Executive’s employment with the Company pursuant to this Agreement may be terminated at any time prior to the end of the Term (i) by the Executive by delivering to the Company a Notice of Termination (as defined on Exhibit A); (ii) by the Company by delivering to the Executive a Notice of Termination; or (iii) upon the death or due to the Disability (as defined on Exhibit A) of the Executive. (b)    Termination without Cause; Resignation for Good Reason Following a Change in Control. If, during the Term, the Executive’s employment is terminated (x) by the Company other than for Cause, death, or Disability or (y) on or following a Change in Control, by the Executive for Good Reason, the Executive shall be entitled to the compensation and benefits set forth in Section 11(b)(i) and 11(b)(ii) (the “Severance Payments”): (i)     Compensation Other Than Severance Payments. The Company shall pay to the Executive (A) the Accrued Obligations (as defined in Exhibit A) in a cash lump sum within 30 days after the Date of Termination, and (B) any rights or payments, except for any severance benefits, that are vested benefits or that the Executive is otherwise entitled to receive at or subsequent to the Date of Termination under any Employee Benefit Plan or any other contract or agreement with the Company or any of its subsidiaries, which shall be payable in accordance with the terms of such Employee Benefit Plan or contract or agreement, except as explicitly modified by this Agreement (collectively, the “Vested Benefits”), and (C) any Annual Bonus that has been earned but not paid as of the Date of Termination, which the Company shall pay at the time provided in Section 4(b) even though the Executive is no longer employed by the Company at that time. (ii)     Severance Benefits. Subject to the Executive’s execution of a release Release becoming effective and irrevocable in accordance with its terms by no later than the 55th day immediately following the date that the Executive incurs Revenue Code of 1986, as amended (the “Code”) (the “Release Deadline”), and the Executive’s continued compliance with the covenants set forth in Section 10, the Company shall pay to the Executive an amount equal to the Executive’s Annual Base Salary (the “Severance Amount”). The Severance Amount shall be paid to the Executive in equal installments for the one-year period following the Executive’s Date of Termination in accordance with the Company’s regular payroll practices, as in effect on the Date of Termination. In addition, during this one-year period, the Company will provide to the Executive the same health care benefit coverage being made available to similarly situated active Company employees (at no cost to the Executive in excess of the employee premium cost applicable to similarly situated active Company employees). (c)    Termination of Employment for Death or Disability. The Executive’s employment with the Company will terminate automatically on the date of his death. The Company may terminate 7 the employment of Executive upon his Disability by delivering to the Executive or his guardian a Notice of Termination. If the Executive dies or his employment is terminated by the Company for Disability, any and all outstanding Options that have been granted to the Executive by the Company and have vested as of the Date of Termination shall remain exercisable for the longer of their stated term or 90 days following the Date of Termination, and the Company shall pay to the Executive or the guardian or personal representative of his estate (as applicable) (i) the Accrued Obligations in a cash lump sum within 30 days after the Date of Termination, (ii) the Vested Benefits, which shall be payable in accordance with the terms of the Employee Benefit Plans, contracts, or agreements under which the Vested Benefits are provided, except as explicitly modified by this Agreement, and (iii) any Annual Bonus that has been earned but not paid as of the Date of Termination, which the Company shall pay at the time provided in Section 4(b) even though the Executive is no longer employed by the (d)    Resignation by the Executive without Good Reason. If the Executive’s employment is terminated by the Executive for any reason prior to a Change in Control or other than for Good Reason on or following a Change in Control, the Company shall pay to the Executive (i) within 30 days of the Date of Termination, to the extent not theretofore paid, (A) any earned but unpaid Annual Base Salary through the Date of Termination, (B) any of the Executive’s business expenses that are reimbursable, but have not been reimbursed as of the Date of Termination, and (C) any accrued vacation pay, and (ii) the Vested Benefits, which shall be payable in accordance with the terms of the Employee Benefit Plans, contracts, or agreements under which the Vested Benefits are provided, except as explicitly modified by this Agreement. (e)    Termination for Cause. If the Executive’s employment is terminated by the Company for Cause, any and all outstanding Options, Restricted Shares, or other equity awards that have been granted to the Executive by the Company and are not vested on the Date of Termination shall be automatically forfeited and cancelled without any consideration as of the Date of Termination, and the Company shall pay to the Executive (i) within 30 days of the Date of Termination, to the extent not theretofore paid, (A) any earned but unpaid Annual Base Salary through the Date of Termination, (B) any of the Executive’s business expenses that are reimbursable, but have not been reimbursed as of the Date of Termination, and (C) any accrued vacation pay, and (ii) the Vested Benefits, which shall be payable in accordance with the terms of the Employee Benefit Plans, contracts, or agreements under which the Vested Benefits are provided, positions as of the Date of Termination. The Executive agrees to execute a letter of resignation and take such other reasonable actions as the Company may request to effect such resignation. (g)    No Mitigation Duty. The amounts payable to the Executive pursuant to this Section 11 will not be reduced by the amount of any income that the Executive earns or could earn 8 from alternative employment following the Date of Termination. The Company waives any duty that the Executive might have under law to mitigate his damages by seeking alternative employment. 12.     Administration. Subject to Section 21, no right or benefit under this assign, pledge, encumber, or charge such rights or benefits shall be void. 13.     Notice. Any notice to be given hereunder by either party to the other must be in writing and be effectuated either by personal delivery in writing or requested. Mailed notices shall be addressed to the parties at the following addresses: Chairman, Compensation Committee c/o Alico, Inc. 10070 Daniels Interstate Court Suite 100 At the most recent contact information on file in the payroll records of the Company. A validly given notice will be effective on the earlier of its receipt, if it is personally delivered in writing, or on the fifth day after it is postmarked by the United States Postal Service, if it is delivered by certified or registered, postage-prepaid, United States mail. 14.     Waiver of Breach. The waiver by any party to a breach of any provision in this Agreement cannot operate or be construed as a waiver of any subsequent 15.     Severability. The invalidity or unenforceability of any particular 16.     Amendment. No modifications or amendments of the terms and conditions herein shall be effective unless in writing and signed by the parties or their respective duly authorized agents. 9 17.     Authorization. The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all requisite corporate action of the Company. This Agreement has been properly executed on behalf of the Company by a duly authorized representative. 18.     Counterparts. The parties may execute this Agreement in counterparts and by manual or facsimile signature. Each executed counterpart of this Agreement will constitute an original document, and all executed counterparts, together, will constitute the same agreement. This Agreement will become effective as of the Effective Date when it has been signed by both the Company and the Executive and will survive the termination of the Executive’s employment with the Company 19.     Recurring Words. As used in this Agreement: (a) the word “days” refers to calendar days, including Saturdays, Sundays, and holidays; (b) the term “fiscal year” means the fiscal year of the Company beginning on October 1 of each calendar year and ending on September 30 of the ensuing calendar year; (c) the word “law” includes a code, rule, statute, ordinance, or regulation and the common law arising from final, nonappealable decisions of state and federal courts in the United States of America; (d) the word “person” includes, in addition to a natural person, a trust, group, syndicate, corporation, cooperative, association, partnership, business trust, joint venture, limited liability company, unincorporated organization, and a governmental authority; (e) the term “governmental authority” includes a government, a central bank, a public body or authority, and any governmental body, agency, authority, department, or subdivision, whether domestic or foreign or local, state, regional, or national; and (f) the word “affiliate,” when used in reference to any specified person, means any other person that directly or indirectly controls, is controlled by, or is under common control with the specified person pursuant to direct or indirect possession of the power to direct or cause the direction of the management and policies of the specified person, whether by contract, through the ownership of voting securities, or otherwise, but, for all purposes of this Agreement, none of the following persons will be treated as an affiliate of the Company, unless the person becomes controlled by the Company: 734 Agriculture, LLC; 734 Investors, LLC; any member of 734 Agriculture, LLC or 734 Investors, LLC; and any person (other than the Company and its consolidated subsidiaries) that is controlled by 734 Agriculture, LLC, 734 Investors, LLC, or any of their respective members or subsidiaries. 20.     Governing Law and Forum Selection. This Agreement shall be interpreted, construed, and governed according to the laws of the State of Florida, without reference to conflicts of law principles thereof. The parties agree that any dispute, claim, or controversy based on common law, equity, or any federal, state, or local statute, ordinance, or regulation (other than workers’ compensation claims) arising out of or relating in any way to the Executive’s this Agreement or its termination and any resulting termination of employment, Notwithstanding the foregoing, any party to this Agreement may commence a proceeding in any court of competent jurisdiction to enter a judgment of any award rendered in the arbitration or to enforce any arbitration award or a settlement resulting from mediation or negotiation of the parties. This agreement to arbitrate includes, but is not limited to, all claims for any form of illegal discrimination, improper or unfair treatment or dismissal, and all tort claims. 10 that a demand for arbitration under the rules is made, and such proceeding shall be conducted in the English language by a sole arbitrator in Polk County, Florida, and governed by the Florida Arbitration Act and the substantive laws of the State of Florida, without regard to any applicable state’s choice of law provisions. The decision of the arbitrator(s), including determination of the amount of any damages suffered, shall be exclusive, final, and binding on all parties, their heirs, executors, administrators, successors, and assigns, and shall not be subject to appeal, review, or re-examination by a court or the arbitrator, except for fraud, perjury, manifest clerical error, or evident partiality or misconduct by the arbitrator that (in each case) prejudices the rights of a party to the arbitration. Each party shall bear its own expenses in including administrative fees and fees for records or transcripts, shall be borne equally by the parties. to the benefit of the parties hereto and their permitted successors, assigns, legal representatives, and heirs, but neither this Agreement nor any rights by the Company without the advance written consent of the Executive, which he may withhold in his sole discretion, except that the Company may assign this Agreement without the consent of the Executive to any direct or indirect successor in interest to all or substantially all its assets or business (whether pursuant to a sale, merger, exchange, consolidation, or reorganization transaction) that, at the closing of the transaction, expressly assumes in writing this Agreement and agrees to perform all the obligations of the Company under it. The Company will require any successor in interest to all or substantially all its assets or business to assume expressly and agree in 22.     Code Section 409A. It is the intention of the Company and the Executive that this Agreement will not result in unfavorable tax consequences to the Executive under Section 409A of the Code. To the extent applicable, it is Code. This Agreement shall be administered and interpreted in a manner permitted by Section 409A of the Code). The Company and the Executive agree to Code, including, if necessary, amending this Agreement based on further guidance Company shall not be required to assume any increased economic burden. payments shall be due to him under this Agreement that are payable upon his termination of employment until he would be considered to have incurred a 11 of the Code. To the extent required to avoid accelerated taxation and/or tax month following his termination of employment (or upon his death, if earlier). to be provided to the Executive pursuant to this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code. With respect to expenses eligible for reimbursement or in-kind benefits provided under the terms of this Agreement, (a) the amount of such expenses eligible for reimbursement or in-kind benefits provided in any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits provided in another taxable year, (b) any reimbursements of such expenses and the provision of any in-kind benefits shall be made no later than the end of the fiscal year following the fiscal year in which the related expenses were incurred, except, provided that with respect to any reimbursements for any taxes to which the Executive becomes entitled under the terms of this Agreement, the payment of fiscal year following the fiscal year in which the Executive remits the related taxes, and (c) the right to reimbursement or in-kind benefit shall not be 23.     Limitations on Payments under Certain Circumstances. (a)    Notwithstanding any other provisions of this Agreement, if any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a change in control or the termination of any other plan, arrangement, or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Section 280G of the Code that would be subject (in whole or part), to any excise Section 280G of the Code in such other plan, arrangement, or agreement, the amount of federal, state, and local income taxes on such reduced Total Payments and after taking into account the phaseout of itemized deductions and personal subtracting the net amount of federal, state, and local income taxes on such account the phaseout of itemized deductions and personal exemptions attributable to such unreduced Total Payments). If a reduction in the Severance Payments is necessary pursuant to this Section 23(a), then the reduction shall occur by first reducing the Severance Amount payable pursuant to Section 11(b)(ii) and then by reducing accelerated vesting of performance-based equity awards 12 (based on the reverse order of the date of grant), and finally by reducing the Payments shall be subject to the Excise Tax, (i) no portion of the Total the Total Payments shall be taken into account which, based on the determination of a nationally recognized certified public accounting firm that is selected by the Company, and reasonably acceptable to the Executive, for purposes of making the applicable determinations under this Section 23 (the “Accounting Firm”), shall be taken into account that, based on the determination of the Accounting within the meaning of Section 280G(b)(3) of the Code allocable to such (d)    For purposes of clarity, the Executive shall not be entitled to any form of tax gross-up in connection with Section 280G of the Code or Section 4999 of the Code under any circumstances. 13 ALICO, INC. By: _______________________________ Name: Gregory Eisner EXECUTIVE      Richard Rallo EXHIBIT A meanings: “Accrued Obligations” shall mean the sum of (a) any earned but unpaid Annual Base Salary through the Date of Termination, (b) any of the Executive’s business Termination, (c) the Executive’s Annual Bonus earned for the fiscal year if such Annual Bonus has not been paid as of the Date of Termination, and (d) any accrued vacation pay, in each case, to the extent not theretofore paid. “Cause” shall mean (a) a material failure by the Executive to carry out, or malfeasance or gross insubordination in carrying out, any of his material duties under this Agreement, (b) the final conviction of the Executive of a felony or crime involving moral turpitude, (c) an egregious act of dishonesty by the Executive (including, without limitation, theft or embezzlement) in connection with his employment by the Company, or a malicious action by the Executive toward the customers or employees of the Company or any affiliate of the Company, (d) a material breach by the Executive of the Company’s Code of Business Ethics or Section 10 of the Agreement, or (e) the failure of the Executive to cooperate fully with governmental investigations involving the Company or any affiliate of the Company, unless the Executive is a subject of the investigation or is acting in reliance on the advice of counsel or in accordance with directions from the Board or legal counsel for the Company; provided, however, that each act or omission described in the preceding clauses (a), (c), (d), and (e) will not constitute a basis for the Company to the Executive receives written notice from the Company identifying each act or omission that the Board views to constitute Cause and any identified act or omission recurs or, if curable, the identified act or omission is not reasonably cured within 30 days after the date when the Executive received the written (a)The acquisition by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Group”) of beneficial of more than 50% of either (i) the then outstanding common stock of the Company or any entity controlled by the Company, (iv) any acquisition by any Investor, or (v) any acquisition by any entity pursuant to a transaction that complies the Effective Date whose election, or nomination A-1 for election by the Company’s shareholders, was approved by (i) a vote of at least a majority of the directors then comprising the Incumbent Board or (ii) the holders of at least a majority of the Outstanding Company Voting Securities, including any Investor, shall be considered as though such (c)    Consummation of a reorganization, merger, statutory share exchange, consolidation, or similar transaction involving the Company or any of its subsidiaries with a third party other than any Investor, or a sale or other party other than any Investor, or a sale or other disposition to a third party other than any Investor of all or substantially all of the assets of one or more subsidiaries of the Company that constitute all or substantially all the assets of the Company and its subsidiaries on a consolidated basis (a “Business beneficial owners, respectively, of the Outstanding Company Stock and respectively, of the then outstanding shares of common stock (or, for a the case may be, (ii) no person or Group (excluding any entity resulting from such Business Combination or any parent of such entity, any employee benefit plan (or related trust) of the Company, such entity resulting from such Business Combination or such parent, and any Investor) beneficially owns, directly or indirectly, more than 50%, respectively, of the then outstanding shares of Combination were either (A) members of the Incumbent Board at the time of the such Business Combination, or (B) have been appointed or elected to the Board by an Investor; or dissolution of the Company, unless the transaction is subsequently abandoned or otherwise fails to occur; or (e)    The Investors cease to have, in the aggregate, beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 5% or more of the Outstanding Company Stock and 5% or more of the Outstanding Company Voting Securities. A-2 termination by the Executive, shall not be less than 15 days nor (without the consent of the Company) more than 60 days, respectively, from the date such Notice of Termination is given); provided, however, that if the Executive’s employment is terminated for Disability, the Date of Termination shall be 30 30-day period). The Company and the Executive shall take all steps necessary ensure that any termination under this Agreement constitutes a “separation from “Disability” shall mean a termination of employment as a result of the the Company under this Agreement for a period of six consecutive months, the and, within 30 days after such Notice of Termination is given, the Executive under this Agreement. “Good Reason” shall mean the occurrence (without the Executive’s written consent) of any one of the following material adverse changes to the Executive’s employment relationship with the Company on or following a Change in Control: (a) a reduction in the amount of the Executive’s Annual Base Salary, (b) a reduction in the amount of the Executive’s Target Bonus Opportunity, (c) a material diminution in the Executive’s duties or responsibilities, (d) the Executive is required by the Company to relocate to a principal place of work that is more than 50 miles from the current office location from which he worked prior to the Change of Control, (e) the Executive’s title is diminished from that as Chief Financial Officer, (f) the Company fails to pay or provide to the Executive when due any material amount owed to him under this Agreement or any material employee benefits that are required to be provided to him pursuant to this Agreement, or (g) any successor in interest to all or substantially all the assets or business of the Company (whether pursuant to a sale, merger, exchange, consolidation, or reorganization transaction) fails or refuses, at the closing of the transaction, to assume in writing this Agreement and agree to perform all the obligations of the Company under it, unless such assumption occurs by operation of law. The Executive’s continued employment shall not constitute constituting Good Reason under this Agreement, provided, however, that the Executive shall not have reason to terminate his employment with the Company for Good Reason pursuant to this Agreement unless (i) the Executive shall have provided the Company with written notice of the occurrence of the event constituting Good Reason within 90 days after the occurrence of such event and, if the event is curable, the Company shall have failed to cure such event within 30 days following receipt of such written notice, and (ii) if the event is not cured by the Company within the prescribed cure period, A-3 the Executive provides Notice of Termination to the Company within 180 days after the date on which the event giving rise to such Good Reason occurred. “Investor” shall mean any of 734 Agriculture, LLC; 734 Investors, LLC; any member of 734 Agriculture, LLC or 734 Investors, LLC; and any person (other than the Company and its consolidated subsidiaries) that is controlled by 734 Agriculture, LLC, 734 Investors, LLC, or any of their respective members or subsidiaries (or by any Group controlled by one or more of the foregoing persons, whether acting individually or in concert). “Notice of Termination” shall mean written notice that (a) indicates the hereunder. A-4 EXHIBIT B RELEASE OF CLAIMS THIS RELEASE OF CLAIMS (this “Release”) is executed and delivered by Richard Rallo (the “Executive”) to Alico, Inc., a Florida corporation (together with its successors, the “Company”). In consideration of the agreement by the Company to provide the Executive with the rights, payments and benefits under the Employment Agreement between the Executive and the Company dated December 2, 2019 (the “Employment Agreement”), the Executive hereby agrees as follows: Section 1. Release and Covenant. The Executive, of his own free will, shareholders, successors, and assigns (both individually and in their official capacities with the Company) (the “Company Releasees”) from, any and all past or present causes of action, suits, agreements, or other claims that the Executive, and his dependents, relatives, heirs, executors, administrators, successors, and assigns who are claiming through him, has or may hereafter have from the beginning of time to the date hereof against the Company or the Company of his employment by the Company and the cessation of said employment or any claim for compensation, and including, but not limited to, any alleged violation Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act of 1990, and any contract, or tort law having any bearing whatsoever on the terms and conditions of employment or termination of employment. Notwithstanding the foregoing, this Release shall not, and is not intended to, waive or release any claim the Executive or any of his heirs, relatives, dependents, executors, administrators, successors, or assigns has (a) under any directors or officers insurance policy under which the Executive is covered; (b) for payment of vested benefits under any employee benefit or welfare plan of the Company or its affiliates in which the Executive was a participant on the effective date of the termination of his employment by the Company; (c) for indemnification under statutory corporate law, the Bylaws and Articles of Incorporation of the Company or any of its subsidiaries, and the Indemnification Agreement executed by the Executive and the Company; and (d) for payment of the benefits, compensation, and reimbursable expenses set forth under Section 11 of the Employment Agreement or under the Indemnification Agreement. Section 2. Due Care. The Executive acknowledges that he has received a copy of execution. The Executive further acknowledges that he has been advised hereby to consult with an attorney prior to executing this Release. The Executive enters Release shall be revocable by the Executive during the 7-day period following its execution, and shall not become effective or enforceable until the Executive shall not be entitled to the consideration for this Release set forth above. B-1 Section 3. Nonassignment of Claims; Proceedings. The Executive represents and any claim that the Executive may have against the Company or any of the Company Releasees. The Executive represents that he has not commenced or joined in any claim, charge, action, or proceeding whatsoever against the Company or any of the Company Releasees arising out of or relating to any of the matters set forth in this Release. The Executive further agrees that he will not seek or be entitled to any personal recovery in any claim, charge, action, or proceeding whatsoever against the Company or any of the Company Releasees for any of the matters set forth in this Release. Section 4. Reliance by Executive. The Executive acknowledges that, in his promises, or agreements of any kind, including oral statements by representatives of the Company or any of the Company Releasees, except as set forth in this Release and the Employment Agreement. of this Release, the Executive remains free to report or otherwise communicate or any other appropriate federal or state governmental agency, and the Executive not resolved and terminated pursuant to this Release. With respect to any claims and matters resolved and terminated pursuant to this Release, the Executive is legislative proceeding or investigation if subpoenaed. The Executive shall give the Company, through its legal counsel, notice, including a copy of the subpoena, within 24 hours of receipt thereof. governed according to the laws of the State of Florida, without reference to THIS RELEASE OF CLAIMS is executed by the Executive and delivered to the Company on ____________________________. EXECUTIVE B-2

Title: Questions about how to handle a deathbed confession Question:I'm a long time redditor, but I made a throw away account for obvious reasons. This is a very serious request for advice. My location is CA. My maternal aunt is in hospice care at her home. She is expected to be with us perhaps another few weeks at most. She has cancer, but her mind is still sharp. Her husband, my uncle, died some years ago. His death was considered an accident; he fell off of their house roof while he was doing repairs. I was young when he died and don't have many memories of him. My mother always said he was a cruel man, but my aunt never talked about him after his death. A couple of days ago, my aunt called my mother and asked her to come over immediately. My mother rushed to my aunt's home, thinking she was ready to take her final breath. My aunt asked the hospice worker to give them some privacy. She told my mother that she needed to get some things off of her chest before she passed. She said that my uncle's death wasn't an accident. She pushed him off the roof, and said that she would have killed him much earlier, but that was the first real opportunity she had where she wouldn't be accused of his death. She said she had to do it, and if my mother knew what she knew, my mother would have done the same. Mu aunt then asked my mother to go into her bedroom closet and pull out a locked metal box. She told my mother where to find the key. She started falling asleep at that point, and the hospice worker needed to come back into the room to check on my aunt, so my mother left with the box and key. When my mother got home, she called me, and I came over. She was extremely upset. She had opened the box by that point. She told me what my aunt said, then showed me the contents of the box. It was a collection of "momentos" that my uncle had collected, along with newspaper articles and a notebook with many entries written inside. The momentos were small items that belonged to women. The articles were fairly old and were all from a time before my aunt had met and married my uncle. They were about a particular series of terrible crimes that the police and public suspected were linked to one person. The notebook entries had dates, addresses, and cryptic remarks about when people were at those locations. Some of the locations match places and names where these crimes occurred. Some do not. I looked up those crimes and as of today, they are still considered unsolved and no one has been charged with them. My uncle's name doesn't show up as a suspect in any accounts I can find. My mother went back to my aunt's home and asked her about the items in the box. My aunt would only say, "Now you know why I had to do it." My mother doesn't want to push my aunt more, because she's near death anyway. I don't know what to do, and neither does my mother. My mother doesn't want to "snitch" on my aunt. It's her sister, and she's near death, so I get it. But, she might have more evidence or testimony that ties my uncle to these terrible crimes. It could be that he merely collected this stuff and is not guilty of those crimes. I have no idea. So, should I/we call the police now and give them what we know? Should we wait until she passes, then call the police? Should we just forget it, it's just the ramblings of an old sick lady and a weird collector uncle? TL;DR My aunt has admitted to murdering my uncle on her deathbed, and she gave my mother a box of what could be evidence that he was a serial violent criminal. What do we do? Answer #1: you should turn the evidence over to the police and make a statement to them (after consulting an attorney) regarding aunt's statements. you have a moral obligation to help the police with unsolved murders. if this is real, of course. which it isn't. Answer #2: Pretty sure this is a Stephen King short story although I think his protagonist pushed her husband down the stairs. Assuming this isn't a troll, you don't have to do anything. If you want to tell the police then wait until after your aunt dies, then contact the FBI with your story and your uncle's box o'evidence. (the FBI will be a lot more interested in the Uncle and a lot less interested in your mom's role in this situation)Tell them everything and see what they want to do.

Name: 2013/471/EU: Council Decision of 23Â September 2013 on the granting of daily allowances to and the reimbursement of travelling expenses of members of the European Economic and Social Committee and their alternates Type: Decision Date Published: 2013-09-25 25.9.2013 EN Official Journal of the European Union L 253/22 COUNCIL DECISION of 23 September 2013 on the granting of daily allowances to and the reimbursement of travelling expenses of members of the European Economic and Social Committee and their alternates (2013/471/EU) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular the third paragraph of Article 301 thereof, Whereas: (1) Council Decision 81/121/EEC (1) laid down rules on the granting of daily allowances to and the reimbursement of travelling expenses of members of the European Economic and Social Committee (the Committee), alternates and experts. (2) In its resolution of 10 May 2012 (2), the European Parliament noted that the Bureau of the Committee undertook to reform the system for reimbursing expenses to members of the Committee and their alternates. (3) On 12 October 2012, the Committee requested the Council to adopt a new Decision on the granting of daily allowances and the reimbursement of travelling expenses of members of the Committee and their alternates, repealing and replacing Decision 81/121/EEC. (4) The amounts of the daily allowances paid to members of the Committee and their alternates should be adapted. Provision should also be made for a system for the reimbursement of transport expenses on the basis of actual costs, as well as for allowances compensating for the time spent by those members and their alternates in performance of their duties and for related administrative costs. (5) Where appropriate, detailed rules relating to the granting of allowances, the reimbursement of travelling expenses and the setting of the reimbursement ceilings for travelling expenses should be established at the level of the Committee. (6) In order to guarantee an appropriate degree of continuity for the members of the Committee and their alternates, transitional rules should be provided for. (7) Decision 81/121/EEC should therefore be repealed, HAS ADOPTED THIS DECISION: Article 1 The members of the European Economic and Social Committee (the Committee) and their alternates (together referred to as the beneficiaries) shall be entitled to a daily allowance for meeting days, to the reimbursement of their travelling expenses and to distance and duration allowances in accordance with this Decision. Article 2 1. The daily allowance for beneficiaries attending meetings shall be set at EUR 290. The Committee may decide to increase the daily allowance by a maximum of 50 %: (a) where a beneficiary duly invited to one or more meetings is obliged to pay for overnight accommodation at the meeting venue both before the first meeting and after the last meeting; or (b) in the event of a mission outside Brussels, where the rates of the hotels selected as accommodation for the beneficiaries exceed EUR 150 per night. 2. The daily allowance may be paid to beneficiaries for a maximum of two days bridging the gap between two meetings, where that allowance is less than the reimbursement of the travelling expenses which would otherwise be incurred by the beneficiary in making a return journey between those meetings. Article 3 The travelling expenses of beneficiaries shall be reimbursed on the basis of the expenses actually incurred. The Committee shall set appropriate reimbursement ceilings, with a view to ensuring that its travel-related expenditure does not exceed the level contained within its voted annual budget. Article 4 Beneficiaries shall be entitled to distance and duration allowances. In the case of journeys between the beneficiarys place of residence and Brussels, the beneficiary shall be entitled to allowances in relation to one journey to Brussels and one journey back from Brussels in respect of each week of work at the Committee. Article 5 The Committee shall adopt detailed provisions implementing Articles 2, 3 and 4 by 16 January 2014. Article 6 The distance allowance referred to in Article 4 shall be calculated as follows: (a) for the part of the journey between 0 and 50 km: EUR 15; (b) for the part of the journey between 51 and 500 km: EUR 0,08/km; (c) for the part of the journey between 501 and 1 000 km: EUR 0,04/km; (d) for the part of the journey between 1 001 and 3 000 km: EUR 0,02/km; (e) for the part of the journey exceeding 3 000 km: no allowance. Article 7 The duration allowance referred to in Article 4 shall be calculated as follows: (a) for a journey of a total duration of between two and four hours: an amount equivalent to one eighth of the daily allowance provided for in Article 2; (b) for a journey of a total duration of between four and six hours: an amount equivalent to one quarter of the daily allowance provided for in Article 2; (c) for a journey of a total duration of more than six hours and not requiring an overnight stay: an amount equivalent to half the daily allowance provided for in Article 2; (d) for a journey of a total duration of more than six hours and requiring an overnight stay: an amount equivalent to the daily allowance provided for in Article 2, subject to the presentation of supporting documents. Article 8 1. As a transitional measure, and subject to paragraph 2 of this Article, beneficiaries may request that Decision 81/121/EEC continue to be applied with regard to them until the end of their term of office, which expires on 20 September 2015. 2. In applying paragraph 1 of this Article, the Committee may decide to apply a reduction to the amounts set out in Decision 81/121/EEC. Article 9 The Committee shall, by 30 April of each year, submit to the European Parliament and to the Council a detailed report on the reimbursement of travelling expenses and allowances paid to beneficiaries in the preceding year. That report shall detail the number of beneficiaries, the number of journeys, the destinations, the travel class and the travel costs incurred and reimbursed, as well as the allowances paid. Article 10 By 16 October 2015, the Committee shall submit to the Council an evaluation report on the application of this Decision, and particularly on its budgetary impact. That evaluation report shall include the elements that will enable the Council to determine, as necessary, the allowances of beneficiaries. Article 11 Without prejudice to Article 8(1), Decision 81/121/EEC is repealed with effect from 15 October 2013. Article 12 This Decision shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Done at Brussels, 23 September 2013. For the Council The President V. JUKNA (1) Council Decision 81/121/EEC of 3 March 1981 on the granting of daily allowances and the reimbursement of travelling expenses of members of the Economic and Social Committee, alternates and experts (OJ L 67, 12.3.1981, p. 29). (2) OJ L 286, 17.10.2012, p. 110.

Execution Version PROTECTIVE RIGHTS AGREEMENT THIS PROTECTIVE RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of March 11, 2019 by and between Infinity Pharmaceuticals, Inc., a Delaware corporation (“Grantor”), and HCR Collateral Management, LLC, a Delaware limited liability company (“Agent”), as agent for HealthCare Royalty Partners III, L.P., a Delaware limited partnership (“HC Royalty”). RECITALS: A.    Grantor and HC Royalty are parties to that certain Purchase Agreement (as defined below). B.    Pursuant to the Purchase Agreement, Grantor has agreed to sell, assign, transfer, convey and grant to HC Royalty, and HC Royalty agreed to purchase, acquire and accept from Grantor, all of Grantor’s rights, title and interest in and to the Purchased Assets (as defined in the Purchase Agreement). C.    Pursuant to the terms of the Purchase Agreement, Grantor has agreed to enter into this Agreement, under which Grantor grants to Agent, for the benefit of HC Royalty, a security interest in and to the Collateral (as defined below) as security for the due performance and payment of all of Grantor’s obligations to HC Royalty under the Purchase Agreement. AGREEMENT: of which are hereby acknowledged, Grantor and Agent, with intent to be legally defined shall have the meaning given such terms in the UCC or the Purchase “Applicable Covenant” means the covenants set forth in Sections 5.3(a), (b), (d) and (e), Section 5.4(a), (b) and (e), and Section 5.5(a) and (b) of the Purchase Agreement. “Bankruptcy Event” means an Involuntary Seller Bankruptcy or a Voluntary Seller Bankruptcy that has caused or would reasonably be expected to cause: (i) the invalidity of the security interest pursuant to this Agreement or the Purchase Agreement, (ii) impairment of a material portion of the Collateral, (iii) termination of the License Agreement or (iv) a material change in the timing, amount or duration of HC Royalty’s payments under the Purchase Agreement. “Breach Event” means the occurrence of one or more of the following during the term of the Purchase Agreement: (a)    any breach by Grantor of any Applicable Covenant under the Purchase Agreement that has caused or would reasonably be expected to cause: (i) the Agreement, (ii) impairment of a material portion of the Collateral or (iii) (b)    any breach by Grantor of any Applicable Covenant under the Purchase Agreement that has caused or would reasonably be expected to cause a material change in the timing, amount or duration of HC Royalty’s payments under the Purchase Agreement; (c)    a Bankruptcy Event; or (d)    any breach by Grantor of Section 5.6 of the Purchase Agreement. “Counterparty” means Verastem, Inc., a Delaware corporation. “Default” means (i) a Recharacterization or (ii) a Breach Event. “Grantor” has the meaning set forth in the preamble to this Agreement. “License Agreement” means that certain Amended and Restated License Agreement, effective as of October 29, 2016, by and between Grantor and Counterparty, as “Party” means any of Grantor or Agent as the context indicates and “Parties” shall mean all of Grantor and Agent. “Patent Rights” means the Patents solely owned by Grantor set forth on Exhibit D “Permitted Liens” means (a) the security interest created by this Agreement, (b) the assignment effected pursuant to the Purchase Agreement, (c) those Liens created in favor of HC Royalty pursuant to any other Transaction Document to which HC Royalty is a party and (d) the interest of Counterparty as licensee of the Intellectual Property Rights under the License Agreement. “Purchase Agreement” means the Purchase and Sale Agreement entered into as of March 5, 2019 by and between Grantor and HC Royalty, as the same may be amended, “Recharacterization” means a judgment or order by a court of competent jurisdiction that the Seller’s right, title and interest in the Purchased Assets were not fully transferred to the Purchaser pursuant     to, as contemplated by, and subject to the provisions of the Purchase Agreement and the Bill of Sale, but instead that such transaction(s) constituted a loan and security device. “Secured Obligations” means (a) subject to the last sentence of Section 2 relating to a Recharacterization, the payment obligations of Grantor now or hereafter existing under or arising out of or in connection with this Agreement, the Purchase Agreement and each other Transaction Document to which it is a party, and (b) whether or not there is a Recharacterization, any damages, reimbursement of fees, expenses, indemnities or otherwise pursuant to any of the Purchase Agreement and other Transaction Documents arising out of a claim by Agent in connection with a Breach Event. hypothecation or transfer. Agreement in the State of New York; provided, that, if, with respect to any financing statement or by reason of any provisions of Applicable Law, the interest or any portion thereof granted herein is governed by the Uniform time in such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection Subject to the final paragraph of this Section 2, Grantor hereby grants Agent, for the benefit of HC Royalty, a security interest in all of its right, title, and interest in, to and under the following property, whether now or hereinafter existing or acquired, whether tangible or intangible and wherever the same may be located (collectively, the “Collateral”): (b)    the Patent Rights related to the patents listed on Schedule 2(b); (c)    all books, records and database extracts of Grantor specifically relating to any of the foregoing Collateral, subject in all respects to the limitations in the Counterparty Consent; and (d)    all proceeds of or from any and all of the foregoing Collateral, including all payments under any indemnity, warranty or guaranty, and all money now or at any time in the possession or under the control of, or in transit to, Agent, relating to any of the foregoing Collateral; provided, however, that the Closing Payment, the First Sales Milestone Payment (if any), the Second Sales Milestone Payment (if any), the Third Sales Milestone Payment (if any) and the Fourth Sales Milestone Payment (if any) shall not constitute Collateral or any proceeds thereof. Notwithstanding the foregoing definition of the term “Collateral,” the foregoing security interest is granted subject to all of the obligations of the Grantor set forth in the License Agreement (after giving effect to the Counterparty Consent) and the INFI Third Party Agreements, and Agent (on behalf of itself, HC Royalty, its and their Affiliates, and it and their successors and assigns) agrees not to take any action, in foreclosure proceedings, in bankruptcy proceedings or otherwise, to disturb or challenge the enforceability of the applicable counterparty’s rights under the License Agreement (after giving effect to the Counterparty Consent) or any INFI Third Party Agreement. Grantor that the description of the Collateral set forth above be construed to Grantor’s rights, title and interest in and to the Purchased Assets have been sold, assigned, transferred, conveyed and granted to HC Royalty pursuant to the Purchase Agreement and it is the intention of the Parties that such transaction be treated as a true and absolute sale, without recourse. The security interest granted in this Section 2 is granted as a precaution against the possibility, contrary to the Parties’ intentions, that the transaction is subject to a Recharacterization, and Agent’s recourse to the Collateral for the Secured Obligations described in clause (a) of the definition of the term “Secured Obligations” arises only if there is a Recharacterization. and punctual payment or performance in full of all Secured Obligations. SECTION 4.    Grantor to Remain Liable. the exercise by Agent of any of its rights hereunder shall not release Grantor from any of its duties or obligations under any contracts and agreements included in the Collateral, and (c) Agent shall not have any obligation or liability under any contracts, licenses, and agreements included in the Collateral by reason of this Agreement, nor shall Agent be obligated (i) to perform any of the obligations or duties of Grantor thereunder, (ii) to take any action to collect or enforce any claim for payment assigned hereunder, or (iii) to make any inquiry as to the nature or sufficiency of any payment Grantor may SECTION 5.    Representations and Warranties. Grantor represents and warrants as follows: (a)    Validity. This Agreement creates a valid security interest in the Collateral securing the payment and performance in full of the Secured Obligations. Upon the filing of appropriate UCC financing statements, substantially in the form set forth on Schedule 5(a), in the filing offices listed on Schedule 5(b), all filings, registrations, recordings and other actions necessary or appropriate to create, preserve, protect and perfect a first priority security interest in the Collateral will have been accomplished and such security interest will be prior to the rights of all other Persons therein and free and clear of any and all Liens, except any Permitted Liens, to the extent that a security interest in such Collateral can be perfected by filing of a UCC financing statement. (b)    Authorization, Approval. No authorization, approval, or other action by, and no notice to or filing with, any government or agency of any government or other Person is required either (i) for the grant by Grantor of the security Agreement by Grantor; or (ii) for the perfection of, and the first priority of, the grant of the security interest created hereby or the exercise by Agent of its rights and remedies hereunder, other than in the case of clause (ii), the filing of financing statements or intellectual property security agreements in the respective offices listed on Schedule 5(b). (c)    Enforceability. This Agreement is the legally valid and binding or general equitable principles. (d)    Office Locations; Type and Jurisdiction of Organization. The sole place of business, the chief executive office and each office where Grantor keeps its records regarding the Collateral are, as of the date hereof, located at the locations set forth on Schedule 5(d); Grantor’s type of organization (e.g., corporation) and jurisdiction of organization are listed on Schedule 5(d). (e)    Names. The name listed for Grantor on the signature pages hereof is the correct legal name of Grantor. Except as set forth on Schedule 5(e), Grantor (or any predecessor by merger or otherwise) has not, within the five-year period preceding the date hereof, had a different name from the name listed for Grantor Grantor agrees that from time to time, at its expense, Grantor will promptly execute and deliver and will cause to be executed and delivered all further instruments and documents, and will take all further action, that may be necessary, or that Agent may reasonably request, in order to perfect and protect any Collateral. Without limiting the generality of the foregoing, Grantor will deliver such other instruments or notices, in each case, as may be necessary, or interests granted or purported to be granted hereby or to enable Agent to Collateral. Grantor agrees to furnish Agent promptly upon reasonable request by Agent, with any information that is reasonably requested by Agent in order to complete such financing statements, continuation statements, or amendments thereto. SECTION 7.    Certain Covenants of Grantor. Grantor shall give Agent 30 days’ written notice before any change in Grantor’s name, identity, the address of its sole place of business, chief executive office, or where Grantor keeps its records regarding the Collateral, or corporate structure or reincorporation, reorganization, or taking of any other action that results in a change of the jurisdiction of organization of Grantor. Any such notice shall be accompanied by a revised Schedule 5(d) which shall replace Schedule 5(d) hereto and shall, upon effectiveness of the change set forth therein, become a part of this Agreement. SECTION 8.    Special Covenants With Respect to the Collateral. (a)    Except as otherwise permitted by the Purchase Agreement, Grantor shall not Transfer, or agree to Transfer, any Collateral; provided that Grantor may Transfer or agree to Transfer any Collateral in connection with the merger or consolidation of the Grantor or the assignment of such Grantor’s obligations and rights by operation of law so long as (A) the Person into which the Grantor has been merged or consolidated or which has acquired such Collateral of the Grantor has delivered evidence to Agent, in form and substance reasonably satisfactory to Agent, that such Person has assumed all of Grantor’s obligations under the Transaction Documents and (B) all steps have been taken satisfactory to Agent to assure to Agent of the continued perfection and priority of its security (b)    Grantor shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Agent one original of a Special Power of Attorney in the form of Exhibit I annexed hereto for execution of an assignment of the Collateral to Agent, or the implementation of the sale or other disposition of the Collateral pursuant to Agent’s good faith exercise of the rights and remedies granted hereunder; provided, however, Agent agrees that it will not exercise its rights under such Special Power of Attorney unless a (c)    Grantor further agrees that a breach of any of the covenants contained in this Section 8 (other than the covenant contained in Section 8(a)(i)) will cause irreparable injury to Agent, that Agent has no adequate remedy at law in respect this Section 8 shall be specifically enforceable against Grantor, and Grantor assertion that Grantor had performed and is performing its obligations pursuant to such covenant(s)). SECTION 9.    Standard of Care. The powers conferred on Agent hereunder are solely to protect its interest in accounting for monies actually received by Agent hereunder, Agent shall have no Agent shall have exercised reasonable care in the custody and preservation of SECTION 10.    Remedies Upon Default. (a)    If, and only if, any Default shall have occurred and be continuing, Agent may, in good faith, exercise in respect of the Collateral all rights and remedies provided for herein, including, without duplication, any rights or remedies provided for under the Purchase Agreement, the UCC or under other applicable law, in all relevant jurisdictions. (b)    If, and only if, any Default shall have occurred and be continuing, Agent Grantor, Agent or otherwise, to exercise the Agent’s rights as a secured party with respect to any Collateral (it being understood that this Section 10(b) shall not supersede Section 5.3 of the Purchase Agreement), in which event any and all documents required by Agent in aid of such enforcement. Grantor shall promptly, upon demand, reimburse and indemnify Agent as provided in Section 10. SECTION 11.    Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds net of enforcement expenses received by Agent, for the benefit of HC Royalty, in part of the Collateral shall be applied in good faith to satisfy such item or part of the Secured Obligations as Agent may designate. SECTION 12.    Expenses. Grantor agrees to pay to Agent upon demand the amount of any and all documented, expenses of counsel and of any experts and agents, that Agent may reasonably and actually incur in connection with (i) the custody, preservation, use or the Collateral during the continuance of a Default, (ii) the preservation of or exercise or enforcement of any of the rights of Agent hereunder during the continuance of a Default, or (iii) the failure by Grantor to perform or observe any of the provisions hereof, which failure, if reasonably capable of being cured within 30 days, continues without cure after such period. shall (i) remain in full force and effect until termination of the Purchase Agreement in accordance with Section 7.1 thereof, (ii) be binding upon Grantor and its respective successors and assigns, and (iii) inure, together with the rights and remedies of Agent hereunder, to the benefit of Agent and its successors, transferees and assigns. Upon termination of the Purchase Agreement in accordance with Section 7.1 thereof, the security interest granted hereunder Agent shall, at the expense of Grantor, execute such instruments of release and otherwise take such actions, or permit Grantor to take such actions, as Grantor may reasonably request to release the Collateral from the security interest granted hereby. SECTION 14.    Amendments. changed or modified except with the written consent of the Parties and the approval of such amendment, change or modification by each Party’s counsel. No writing by the Party against whom such waiver is sought to be enforced. (c)    No waiver or approval hereunder shall, except as may otherwise be stated or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. The rights and remedies herein provided applicable law. writing and shall be delivered in accordance with Section 9.3 of the Purchase Agreement. or unenforceability shall not affect any other provision of this Agreement, which shall remain in full force and effect, and the Parties shall replace such invalid, illegal or unenforceable provision with a new provision permitted by Applicable Law and having an economic effect as close as possible to the invalid, illegal or unenforceable provision. Any provision of this Agreement held invalid, illegal or unenforceable only in part or degree by a court of competent jurisdiction shall remain in full force and effect to the extent not SECTION 17.    Headings and Captions. The headings and captions in this Agreement have been inserted for convenience SECTION 18.    Governing Law; Jurisdiction. enforced in accordance with, the internal substantive laws of the State of New York, USA without giving effect to the rules thereof relating to conflicts of law thereof (other than Section 5-1401 of the General Obligations Law of the State of New York) and the obligations, rights and remedies of the Parties hereunder shall be determined in accordance with such laws. Each Party courts of the State of New York, USA located in the County of New York and the Federal district court for the Southern District of New York located in the County of New York with respect to any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Each Party hereby irrevocably and unconditionally waives, to the fullest extent it relating to this Agreement in any court referred to in this Section 18(a). Each proceeding in any such court. Each Party agrees that a final judgment in any Applicable Law. (b)    Each Party hereby irrevocably consents to service of process in the the right of any party hereto to serve process on the other Party in any other manner permitted by Applicable Law. Each of the Parties waives personal service permitted by New York law. SECTION 19.    Waiver of Jury Trial. CERTIFICATIONS IN THIS SECTION 19. SECTION 20.    Counterparts; Effectiveness. Party shall have received a counterpart hereof signed by the other Party. Any written. By: /s/Seth A. Tasker______________________________ Name: Seth A. Tasker HCR COLLATERAL MANAGEMENT, LLC By: /s/John Urquhart_______________________________ Name: John Urquhart Title: Partner SCHEDULES AND EXHIBITS OMITTED PURSUANT TO ITEM 601(a)(5) of REGULATION S-K Schedule 2(b) Patents Schedule 5(a) Form of Financing Statement Schedule 5(b) Filing Offices Schedule 5(d) Office Locations, Type and Jurisdiction of Organization Schedule 5(e) Name Changes Exhibit I Special Power of Attorney ActiveUS 171605493v.9

Exhibit 10.29                                                       AMENDMENT OF                                       1     1       2. AMENDMENT/MODIFICATION NO: Four (4)       April 4, 2008   N/A       N/A               6. ISSUED BY   CODE     7. ADMINISTERED BY (If other than Item 6)   CODE     Assistant Secretary for Preparedness and Response (ASPR) 330 Independence Avenue, SW Room G640 Washington, DC 20201                       8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)   þ   9A. AMENDMENT OF SOLICITATION NO.                                                     BioCryst Pharmaceuticals, Inc 2190 Parkway Lake Drive Birmingham, AL 35244                                                                           þ   10A. MODIFICATION OF CONTRACT/ ORDER     HHSO100200700032C                             10B. DATED (SEE ITEM 13)         CODE           FACILITY CODE           01-03-07           11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS required) SOCC:                      DOC#                      TIN#                      LOC#                       CAN#                        13. CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.       A.   THIS CHANGE ORDER IS MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.                                                               B.   THE ABOVE NUMBERED PURSUANT TO THE AUTHORITY OF FAR 43.103(b).                                                     þ   C.   THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Far 1.602-1, FAR 52-242-15 Stop-Work Order                                                               D.   OTHER (Specify type of modification and authority)                                                           E. IMPORTANT: Contractor o is not, þ is required to sign this document and return 2 copies to the issuing headings, including solicitation/contract subject matter where feasible)                                                   PURPOSE: The purpose of this modification is to:       1. Extend the period of the Stop-Work Order issued January 4, 2008 an additional 90 days from April 4, 2008 through July 3, 2008.                                                   The total contract amount remains unchanged. ($102,661,429)   The contract completion date remains unchanged. (December 31, 2010)   Except as provided herein, all terms and conditions referenced in item 9A or 10A, as heretofore changed, remains full AND TITLE OF CONTRACTING OFFICER (Type or print)                                                   Michael Darwin           Schuyler T. Eldridge                   15B. CONTRACTOR/OFFEROR       15C. DATE SIGNED   16B. UNITED STATES OF AMERICA     16C. DATE SIGNED                                                     /s/ Michael Darwin   4/3/08    BY  /s/ Schuyler T. Eldridge                              4/3/08 (Signature of person authorized to sign)       (Signature of Contracting Officer)                       NSN 7540-01-152-8070       OMB No. 0990–0115   STANDARD FORM 30 (REV. 10-83)  

Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Annual Report of Natural Gas Services Group, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Earl R. Wait, Vice President - Accounting (Principal Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date:August 10, 2009 Natural Gas Services Group, Inc. By: /s/ Earl R. Wait Earl R. Wait Vice President of Accounting (Principal Accounting Officer) and Treasurer The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Name: 2012/135/EU: Commission Implementing Decision of 28 February 2012 establishing the best available techniques (BAT) conclusions under Directive 2010/75/EU of the European Parliament and of the Council on industrial emissions for iron and steel production (notified under document C(2012) 903) Text with EEA relevance Type: Decision_IMPL Subject Matter: deterioration of the environment; technology and technical regulations; information and information processing; environmental policy; iron, steel and other metal industries Date Published: 2012-03-08 8.3.2012 EN Official Journal of the European Union L 70/63 COMMISSION IMPLEMENTING DECISION of 28 February 2012 establishing the best available techniques (BAT) conclusions under Directive 2010/75/EU of the European Parliament and of the Council on industrial emissions for iron and steel production (notified under document C(2012) 903) (Text with EEA relevance) (2012/135/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (1), and in particular Article 13(5) thereof, Whereas: (1) Article 13(1) of Directive 2010/75/EU requires the Commission to organise an exchange of information on industrial emissions between it and Member States, the industries concerned and non-governmental organisations promoting environmental protection in order to facilitate the drawing up of best available techniques (BAT) reference documents as defined in Article 3(11) of that Directive. (2) In accordance with Article 13(2) of Directive 2010/75/EU, the exchange of information is to address the performance of installations and techniques in terms of emissions, expressed as short- and long-term averages, where appropriate, and the associated reference conditions, consumption and nature of raw materials, water consumption, use of energy and generation of waste and the techniques used, associated monitoring, cross-media effects, economic and technical viability and developments therein and also the best available techniques and emerging techniques identified after considering the issues mentioned in points (a) and (b) of Article 13(2) of that Directive. (3) BAT conclusions as defined in Article 3(12) of Directive 2010/75/EU are the key element of BAT reference documents and lay down the conclusions on best available techniques, their description, information to assess their applicability, the emission levels associated with the best available techniques, associated monitoring, associated consumption levels and, where appropriate, relevant site remediation measures. (4) In accordance with Article 14(3) of Directive 2010/75/EU, BAT conclusions are to be the reference for setting the permit conditions for installations covered by Chapter 2 of that Directive. (5) Article 15(3) of Directive 2010/75/EU requires the competent authority to set emission limit values that ensure that, under normal operating conditions, emissions do not exceed the emission levels associated with the best available techniques as laid down in the decisions on BAT conclusions referred to in Article 13(5) of that Directive. (6) Article 15(4) of Directive 2010/75 provides for derogations from the requirement laid down in Article 15(3) only where the costs associated with the achievement of emissions levels disproportionately outweigh the environmental benefits due to the geographical location, the local environmental conditions or the technical characteristics of the installation concerned. (7) Article 16(1) of Directive 2010/75/EU provides that the monitoring requirements in the permit referred to in point (c) of Article 14(1) are to be based on the conclusions on monitoring as described in the BAT conclusions. (8) In accordance with Article 21(3) of Directive 2010/75/EU, within four years of publication of decisions on BAT conclusions, the competent authority is to reconsider and, if necessary, update all the permit conditions and ensure that the installation complies with those permit conditions. (9) Commission Decision of 16 May 2011 establishing a forum for the exchange of information pursuant to Article 13 of the Directive 2010/75/EU on industrial emissions (2) established a forum composed of representatives of Member States, the industries concerned and non-governmental organisations promoting environmental protection. (10) In accordance with Article 13(4) of Directive 2010/75/EU, the Commission obtained the opinion (3) of that forum on the proposed content of the BAT reference document for iron and steel production on 13 September 2011 and made it publicly available. (11) The measures provided for in this Decision are in accordance with the opinion of the Committee established by Article 75(1) of Directive 2010/75/EU, HAS ADOPTED THIS DECISION: Article 1 The BAT conclusions for iron and steel production are set out in the Annex to this Decision. Article 2 This Decision is addressed to the Member States. Done at Brussels, 28 February 2012. For the Commission Janez POTOÄ ŒNIK Member of the Commission (1) OJ L 334, 17.12.2010, p. 17. (2) OJ C 146, 17.5.2011, p. 3. (3) http://circa.europa.eu/Public/irc/env/ied/library?l=/ied_art_13_forum/opinions_article ANNEX BAT CONCLUSIONS FOR IRON AND STEEL PRODUCTION SCOPE GENERAL CONSIDERATIONS DEFINITIONS 1.1. General BAT Conclusions 1.1.1. Environmental management systems 1.1.2. Energy management 1.1.3. Material management 1.1.4. Management of process residues such as by-products and waste 1.1.5. Diffuse dust emissions from materials storage, handling and transport of raw materials and (intermediate) products 1.1.6. Water and waste water management 1.1.7. Monitoring 1.1.8. Decommissioning 1.1.9. Noise 1.2. BAT Conclusions For Sinter Plants 1.3. BAT Conclusions For Pelletisation Plants 1.4. BAT Conclusions For Coke Oven Plants 1.5. BAT Conclusions For Blast Furnaces 1.6. BAT Conclusions For Basic Oxygen Steelmaking And Casting 1.7. BAT Conclusions For Electric Arc Furnace Steelmaking And Casting SCOPE These BAT conclusions concern the following activities specified in Annex I to Directive 2010/75/EU, namely: ” activity 1.3: coke production ” activity 2.1: metal ore (including sulphide ore) roasting and sintering ” activity 2.2: production of pig iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2,5 tonnes per hour. In particular, the BAT conclusions cover the following processes: ” the loading, unloading and handling of bulk raw materials ” the blending and mixing of raw materials ” the sintering and pelletisation of iron ore ” the production of coke from coking coal ” the production of hot metal by the blast furnace route, including slag processing ” the production and refining of steel using the basic oxygen process, including upstream ladle desulphurisation, downstream ladle metallurgy and slag processing ” the production of steel by electric arc furnaces, including downstream ladle metallurgy and slag processing ” continuous casting (thin slab/thin strip and direct sheet casting (near-shape)) These BAT conclusions do not address the following activities: ” production of lime in kilns, covered by the Cement, Lime and Magnesium Oxide Manufacturing Industries BREF (CLM) ” the treatment of dusts to recover non-ferrous metals (e.g. electric arc furnace dust) and the production of ferroalloys, covered by the Non-Ferrous Metals Industries BREF (NFM) ” sulphuric acid plants in coke ovens, covered by the Large Volume Inorganic Chemicals-Ammonia, Acids and Fertilisers Industries (LVIC-AAF BREF). Other reference documents which are of relevance for the activities covered by these BAT conclusions are the following: Reference documents Activity Large Combustion Plants BREF (LCP) Combustion plants with a rated thermal input of 50 MW or more Ferrous Metals Processing Industry BREF (FMP) Downstream processes like rolling, pickling, coating, etc. Continuous casting to the thin slab/thin strip and direct sheet casting (near-shape) Emissions from Storage BREF (EFS) Storage and handling Industrial Cooling Systems BREF (ICS) Cooling systems General Principles of Monitoring (MON) Emissions and consumptions monitoring Energy Efficiency BREF (ENE) General energy efficiency Economic and Cross-Media Effects (ECM) Economic and cross-media effects of techniques The techniques listed and described in these BAT conclusions are neither prescriptive nor exhaustive. Other techniques may be used that ensure at least an equivalent level of environmental protection. GENERAL CONSIDERATIONS The environmental performance levels associated with BAT are expressed as ranges, rather than as single values. A range may reflect the differences within a given type of installation (e.g. differences in the grade/purity and quality of the final product, differences in design, construction, size and capacity of the installation) that result in variations in the environmental performances achieved when applying BAT EXPRESSION OF EMISSION LEVELS ASSOCIATED WITH THE BEST AVAILABLE TECHNIQUES (BAT-AELs) In these BAT conclusions, BAT-AELs for air emissions are expressed as either: ” mass of emitted substances per volume of waste gas under standard conditions (273,15 K, 101,3 kPa), after deduction of water vapour content, expressed in the units g/Nm3, mg/Nm3, Î ¼g/Nm3 or ng/Nm3; or ” mass of emitted substances per unit of mass of products generated or processed (consumption or emission factors), expressed in the units kg/t, g/t, mg/t or Î ¼g/t. and BAT-AELs for emissions to water are expressed as: ” mass of emitted substances per volume of waste water, expressed in the units g/l, mg/l or Î ¼g/l. DEFINITIONS For the purposes of these BAT conclusions: ” new plant means: a plant introduced on the site of the installation following the publication of these BAT conclusions or a complete replacement of a plant on the existing foundations of the installation following the publication of these BAT conclusions ” existing plant means: a plant which is not a new plant ” NOX means: the sum of nitrogen oxide (NO) and nitrogen dioxide (NO2) expressed as NO2 ” SOX means: the sum of sulphur dioxide (SO2) and sulphur trioxide (SO3) expressed as SO2 ” HCl means: all gaseous chlorides expressed as HCl ” HF means: all gaseous fluorides expressed as HF 1.1. General BAT Conclusions Unless otherwise stated, the BAT conclusions presented in this section are generally applicable. The process specific BAT included in the Sections 1.2 “ 1.7 apply in addition to the general BAT mentioned in this Section. 1.1.1. Environmental management systems 1. BAT is to implement and adhere to an environmental management system (EMS) that incorporates all of the following features: I. commitment of management, including senior management; II. definition of an environmental policy that includes continuous improvement for the installation by the management; III. planning and establishing the necessary procedures, objectives and targets, in conjunction with financial planning and investment; IV. implementation of the procedures paying particular attention to: (i) structure and responsibility (ii) training, awareness and competence (iii) communication (iv) employee involvement (v) documentation (vi) efficient process control (vii) maintenance programmes (viii) emergency preparedness and response (ix) safeguarding compliance with environmental legislation; V. checking performance and taking corrective action, paying particular attention to: (i) monitoring and measurement (see also the Reference Document on the General Principles of Monitoring) (ii) corrective and preventive action (iii) maintenance of records (iv) independent (where practicable) internal and external auditing in order to determine whether or not the EMS conforms to planned arrangements and has been properly implemented and maintained; VI. review of the EMS and its continuing suitability, adequacy and effectiveness by senior management; VII. following the development of cleaner technologies; VIII. consideration for the environmental impacts from the eventual decommissioning of the installation at the stage of designing a new plant, and throughout its operating life; IX. application of sectoral benchmarking on a regular basis. Applicability The scope (e.g. level of details) and nature of the EMS (e.g. standardised or non-standardised) will generally be related to the nature, scale and complexity of the installation, and the range of environmental impacts it may have. 1.1.2. Energy management 2. BAT is to reduce thermal energy consumption by using a combination of the following techniques: I. improved and optimised systems to achieve smooth and stable processing, operating close to the process parameter set points by using (i) process control optimisation including computer-based automatic control systems (ii) modern, gravimetric solid fuel feed systems (iii) preheating, to the greatest extent possible, considering the existing process configuration. II. recovering excess heat from processes, especially from their cooling zones III. an optimised steam and heat management IV. applying process integrated reuse of sensible heat as much as possible. In the context of energy management, see the Energy Efficiency BREF (ENE). Description of BAT I.i The following items are important for integrated steelworks in order to improve the overall energy efficiency: ” optimising energy consumption ” online monitoring for the most important energy flows and combustion processes at the site including the monitoring of all gas flares in order to prevent energy losses, enabling instant maintenance and achieving an undisrupted production process ” reporting and analysing tools to check the average energy consumption of each process ” defining specific energy consumption levels for relevant processes and comparing them on a long-term basis ” carrying out energy audits as defined in the Energy Efficiency BREF, e.g. to identify cost-effective energy savings opportunities. Description of BAT II “ IV Process integrated techniques used to improve energy efficiency in steel manufacturing by improved heat recovery include: ” combined heat and power production with recovery of waste heat by heat exchangers and distribution either to other parts of the steelworks or to a district heating network ” the installation of steam boilers or adequate systems in large reheating furnaces (furnaces can cover a part of the steam demand) ” preheating of the combustion air in furnaces and other burning systems to save fuel, taking into consideration adverse effects, i.e. an increase of nitrogen oxides in the off-gas ” the insulation of steam pipes and hot water pipes ” recovery of heat from products, e.g. sinter ” where steel needs to be cooled, the use of both heat pumps and solar panels ” the use of flue-gas boilers in furnaces with high temperatures ” the oxygen evaporation and compressor cooling to exchange energy across standard heat exchangers ” the use of top recovery turbines to convert the kinetic energy of the gas produced in the blast furnace into electric power. Applicability of BAT II “ IV Combined heat and power generation is applicable for all iron and steel plants close to urban areas with a suitable heat demand. The specific energy consumption depends on the scope of the process, the product quality and the type of installation (e.g. the amount of vacuum treatment at the basic oxygen furnace (BOF), annealing temperature, thickness of products, etc.). 3. BAT is to reduce primary energy consumption by optimisation of energy flows and optimised utilisation of the extracted process gases such as coke oven gas, blast furnace gas and basic oxygen gas. Description Process integrated techniques to improve energy efficiency in an integrated steelworks by optimising process gas utilisation include: ” the use of gas holders for all by-product gases or other adequate systems for short-term storage and pressure holding facilities ” increasing pressure in the gas grid if there are energy losses in the flares “ in order to utilise more process gases with the resulting increase in the utilisation rate ” gas enrichment with process gases and different calorific values for different consumers ” heating fire furnaces with process gas ” use of a computer-controlled calorific value control system ” recording and using coke and flue-gas temperatures ” adequate dimensioning of the capacity of the energy recovery installations for the process gases, in particular with regard to the variability of process gases. Applicability The specific energy consumption depends on the scope of the process, the product quality and the type of installation (e.g. the amount of vacuum treatment at the BOF, annealing temperature, thickness of products, etc.). 4. BAT is to use desulphurised and dedusted surplus coke oven gas and dedusted blast furnace gas and basic oxygen gas (mixed or separate) in boilers or in combined heat and power plants to generate steam, electricity and/or heat using surplus waste heat for internal or external heating networks, if there is a demand from a third party. Applicability The cooperation and agreement of a third party may not be within the control of the operator, and therefore may not be within the scope of the permit. 5. BAT is to minimise electrical energy consumption by using one or a combination of the following techniques: I. power management systems II. grinding, pumping, ventilation and conveying equipment and other electricity-based equipment with high energy efficiency. Applicability Frequency controlled pumps cannot be used where the reliability of the pumps is of essential importance for the safety of the process. 1.1.3. Material management 6. BAT is to optimise the management and control of internal material flows in order to prevent pollution, prevent deterioration, provide adequate input quality, allow reuse and recycling and to improve the process efficiency and optimisation of the metal yield. Description Appropriate storage and handling of input materials and production residues can help to minimise the airborne dust emissions from stockyards and conveyor belts, including transfer points, and to avoid soil, groundwater and runoff water pollution (see also BAT 11). The application of an adequate management of integrated steelworks and residues, including wastes, from other installations and sectors allows for a maximised internal and/or external use as raw materials (see also BAT 8, 9 and 10). Material management includes the controlled disposal of small parts of the overall quantity of residues from an integrated steelworks which have no economic use. 7. In order to achieve low emission levels for relevant pollutants, BAT is to select appropriate scrap qualities and other raw materials. Regarding scrap, BAT is to undertake an appropriate inspection for visible contaminants which might contain heavy metals, in particular mercury, or might lead to the formation of polychlorinated dibenzodioxins/furans (PCDD/F) and polychlorinated biphenyls (PCB). To improve the use of scrap, the following techniques can be used individually or in combination: ” specification of acceptance criteria suited to the production profile in purchase orders of scrap ” having a good knowledge of scrap composition by closely monitoring the origin of the scrap; in exceptional cases, a melt test might help characterise the composition of the scrap ” having adequate reception facilities and check deliveries ” having procedures to exclude scrap that is not suitable for use in the installation ” storing the scrap according to different criteria (e.g. size, alloys, degree of cleanliness); storing of scrap with potential release of contaminants to the soil on impermeable surfaces with a drainage and collection system; using a roof which can reduce the need for such a system ” putting together the scrap load for the different melts taking into account the knowledge of composition in order to use the most suitable scrap for the steel grade to be produced (this is essential in some cases to avoid the presence of undesired elements and in other cases to take advantage of alloy elements which are present in the scrap and needed for the steel grade to be produced) ” prompt return of all internally-generated scrap to the scrapyard for recycling ” having an operation and management plan ” scrap sorting to minimise the risk of including hazardous or non-ferrous contaminants, particularly polychlorinated biphenyls (PCB) and oil or grease. This is normally done by the scrap supplier but the operator inspects all scrap loads in sealed containers for safety reasons. Therefore, at the same time, it is possible to check, as far as practicable, for contaminants. Evaluation of the small quantities of plastic (e.g. as plastic coated components) may be required ” radioactivity control according to the United Nations Economic Commission for Europe (UNECE) Expert Group framework of recommendations ” implementation of the mandatory removal of components which contain mercury from End-of-Life Vehicles and Waste Electrical and Electronic Equipment (WEEE) by the scrap processors can be improved by: ” fixing the absence of mercury in scrap purchase contracts ” refusal of scrap which contains visible electronic components and assemblies. Applicability The selection and sorting of scrap might not be entirely within the control of the operator. 1.1.4. Management of process residues such as by-products and waste 8. BAT for solid residues is to use integrated techniques and operational techniques for waste minimisation by internal use or by application of specialised recycling processes (internally or externally). Description Techniques for the recycling of iron-rich residues include specialised recycling techniques such as the OxyCup ® shaft furnace, the DK process, smelting reduction processes or cold bonded pelletting/briquetting as well as techniques for production residues mentioned in Sections 9.2 “ 9.7. Applicability As the mentioned processes may be carried out by a third party, the recycling itself may not be within the control of the operator of the iron and steel plant, and therefore may not be within the scope of the permit. 9. BAT is to maximise external use or recycling for solid residues which cannot be used or recycled according to BAT 8, wherever this is possible and in line with waste regulations. BAT is to manage in a controlled manner residues which can neither be avoided nor recycled. 10. BAT is to use the best operational and maintenance practices for the collection, handling, storage and transport of all solid residues and for the hooding of transfer points to avoid emissions to air and water. 1.1.5. Diffuse dust emissions from materials storage, handling and transport of raw materials and (intermediate) products 11. BAT is to prevent or reduce diffuse dust emissions from materials storage, handling and transport by using one or a combination of the techniques mentioned below. If abatement techniques are used, BAT is to optimise the capture efficiency and subsequent cleaning through appropriate techniques such as those mentioned below. Preference is given to the collection of the dust emissions nearest to the source. I. General techniques include: ” the setting up within the EMS of the steelworks of an associated diffuse dust action plan; ” consideration of temporary cessation of certain operations where they are identified as a source of PM10 causing a high ambient reading; in order to do this, it will be necessary to have sufficient PM10 monitors, with associated wind direction and strength monitoring, to be able to triangulate and identify key sources of fine dust. II. Techniques for the prevention of dust releases during the handling and transport of bulk raw materials include: ” orientation of long stockpiles in the direction of the prevailing wind ” installing wind barriers or using natural terrain to provide shelter ” controlling the moisture content of the material delivered ” careful attention to procedures to avoid the unnecessary handling of materials and long unenclosed drops ” adequate containment on conveyors and in hoppers, etc. ” the use of dust-suppressing water sprays, with additives such as latex, where appropriate ” rigorous maintenance standards for equipment ” high standards of housekeeping, in particular the cleaning and damping of roads ” the use of mobile and stationary vacuum cleaning equipment ” dust suppression or dust extraction and the use of a bag filter cleaning plant to abate sources of significant dust generation ” the application of emissions-reduced sweeping cars for carrying out the routine cleaning of hard surfaced roads. III. Techniques for materials delivery, storage and reclamation activities include: ” total enclosure of unloading hoppers in a building equipped with filtered air extraction for dusty materials, or hoppers should be fitted with dust baffles and the unloading grids coupled to a dust extraction and cleaning system ” limiting the drop heights if possible to a maximum of 0,5 m ” the use of water sprays (preferably using recycled water) for dust suppression ” where necessary, the fitting of storage bins with filter units to control dust ” the use of totally enclosed devices for reclamation from bins ” where necessary, the storage of scrap in covered, and hard surfaced areas to reduce the risk of ground contamination (using just in time delivery to minimise the size of the yard and hence emissions) ” minimisation of the disturbance of stockpiles ” restriction of the height and a controlling of the general shape of stockpiles ” the use of in-building or in-vessel storage, rather than external stockpiles, if the scale of storage is appropriate ” the creation of windbreaks by natural terrain, banks of earth or the planting of long grass and evergreen trees in open areas to capture and absorb dust without suffering long-term harm ” hydro-seeding of waste tips and slag heaps ” implementation of a greening of the site by covering unused areas with top soil and planting grass, shrubs and other ground covering vegetation ” the moistening of the surface using durable dust-binding substances ” the covering of the surface with tarpaulins or coating (e.g. latex) stockpiles ” the application of storage with retaining walls to reduce the exposed surface ” when necessary, a measure could be to include impermeable surfaces with concrete and drainage. IV. Where fuel and raw materials are delivered by sea and dust releases could be significant, some techniques include: ” use by operators of self-discharge vessels or enclosed continuous unloaders. Otherwise, dust generated by grab-type ship unloaders should be minimised through a combination of ensuring adequate moisture content of the material is delivered, by minimising drop heights and by using water sprays or fine water fogs at the mouth of the ship unloader hopper ” avoiding seawater in spraying ores or fluxes as this results in a fouling of sinter plant electrostatic precipitators with sodium chloride. Additional chlorine input in the raw materials may also lead to rising emissions (e.g. of polychlorinated dibenzodioxins/furans (PCDD/F)) and hamper filter dust recirculation ” storage of powdered carbon, lime and calcium carbide in sealed silos and conveying them pneumatically or storing and transferring them in sealed bags. V. Train or truck unloading techniques include: ” if necessary due to dust emission formation, use of dedicated unloading equipment with a generally enclosed design. VI. For highly drift-sensitive materials which may lead to significant dust release, some techniques include: ” use of transfer points, vibrating screens, crushers, hoppers and the like, which may be totally enclosed and extracted to a bag filter plant ” use of central or local vacuum cleaning systems rather than washing down for the removal of spillage, since the effects are restricted to one medium and the recycling of spilt material is simplified. VII. Techniques for the handling and processing of slag include: ” keeping stockpiles of slag granulate damp for slag handling and processing since dried blast furnace slag and steel slag can give rise to dust ” use of enclosed slag-crushing equipment fitted with efficient extraction and bag filters to reduce dust emissions. VIII. Techniques for handling scrap include: ” providing scrap storage under cover and/or on concrete floors to minimise dust lift-off caused by vehicle movements IX. Techniques to consider during material transport include: ” the minimisation of points of access from public highways ” the employment of wheel-cleaning equipment to prevent the carryover of mud and dust onto public roads ” the application of hard surfaces to the transport roads (concrete or asphalt) to minimise the generation of dust clouds during materials transport and the cleaning of roads ” the restriction of vehicles to designated routes by fences, ditches or banks of recycled slag ” the damping of dusty routes by water sprays, e.g. at slag-handling operations ” ensuring that transport vehicles are not overfull, so as to prevent any spillage ” ensuring that transport vehicles are sheeted to cover the material carried ” the minimisation of numbers of transfers ” use of closed or enclosed conveyors ” use of tubular conveyors, where possible, to minimise material losses by changes of direction across sites usually provided by the discharge of materials from one belt onto another ” good practice techniques for molten metal transfer and ladle handling ” dedusting of conveyor transfer points. 1.1.6. Water and waste water management 12. BAT for waste water management is to prevent, collect and separate waste water types, maximising internal recycling and using an adequate treatment for each final flow. This includes techniques utilising, e.g. oil interceptors, filtration or sedimentation. In this context, the following techniques can be used where the prerequisites mentioned are present: ” avoiding the use of potable water for production lines ” increasing the number and/or capacity of water circulating systems when building new plants or modernising/revamping existing plants ” centralising the distribution of incoming fresh water ” using the water in cascades until single parameters reach their legal or technical limits ” using the water in other plants if only single parameters of the water are affected and further usage is possible ” keeping treated and untreated waste water separated; by this measure it is possible to dispose of waste water in different ways at a reasonable cost ” using rainwater whenever possible. Applicability The water management in an integrated steelworks will primarily be constrained by the availability and quality of fresh water and local legal requirements. In existing plants the existing configuration of the water circuits may limit applicability. 1.1.7. Monitoring 13. BAT is to measure or assess all relevant parameters necessary to steer the processes from control rooms by means of modern computer-based systems in order to adjust continuously and to optimise the processes online, to ensure stable and smooth processing, thus increasing energy efficiency and maximising the yield and improving maintenance practices. 14. BAT is to measure the stack emissions of pollutants from the main emission sources from all processes included in the Sections 1.2 “ 1.7 whenever BAT-AELs are given and in process gas-fired power plants in iron and steel works. BAT is to use continuous measurements at least for: ” primary emissions of dust, nitrogen oxides (NOX) and sulphur dioxide (SO2) from sinter strands ” nitrogen oxides (NOX) and sulphur dioxide (SO2) emissions from induration strands of pelletisation plants ” dust emissions from blast furnace cast houses ” secondary emissions of dust from basic oxygen furnaces ” emissions of nitrogen oxides (NOX) from power plants ” dust emissions from large electric arc furnaces. For other emissions, BAT is to consider using continuous emission monitoring depending on the mass flow and emission characteristics. 15. For relevant emission sources not mentioned in BAT 14, BAT is to measure the emissions of pollutants from all processes included in the Sections 1.2 “ 1.7 and from process gas-fired power plants within iron and steel works as well as all relevant process gas components/pollutants periodically and discontinuously. This includes the discontinuous monitoring of process gases, stack emissions, polychlorinated dibenzodioxins/furans (PCDD/F) and monitoring the discharge of waste water, but excludes diffuse emissions (see BAT 16). Description (relevant for BAT 14 and 15) The monitoring of process gases provides information about the composition of process gases and about indirect emissions from the combustion of process gases, such as emissions of dust, heavy metals and SOx. Stack emissions can be measured by regular, periodic discontinuous measurements at relevant channelled emission sources over a sufficiently long period, to obtain representative emission values. For monitoring the discharge of waste water a great variety of standardised procedures exist for sampling and analyzing water and waste water, including: ” a random sample which refers to a single sample taken from a waste water flow ” a composite sample, which refers to a sample taken continuously over a given period, or a sample consisting of several samples taken either continuously or discontinuously over a given period and blended ” a qualified random sample shall refer to a composite sample of at least five random samples taken over a maximum period of two hours at intervals of no less than two minutes, and blended. Monitoring should be done according to the relevant EN or ISO standards. If EN or ISO standards are not available, national or other international standards should be used that ensure the provision of data of an equivalent scientific quality. 16. BAT is to determine the order of magnitude of diffuse emissions from relevant sources by the methods mentioned below. Whenever possible, direct measurement methods are preferred over indirect methods or evaluations based on calculations with emission factors. ” Direct measurement methods where the emissions are measured at the source itself. In this case, concentrations and mass streams can be measured or determined. ” Indirect measurement methods where the emission determination takes place at a certain distance from the source; a direct measurement of concentrations and mass stream is not possible. ” Calculation with emission factors. Description Direct or quasi-direct measurement Examples for direct measurements are measurements in wind tunnels, with hoods or other methods like quasi-emissions measurements on the roof of an industrial installation. For the latter case, the wind velocity and the area of the roofline vent are measured and a flow rate is calculated. The cross-section of the measurement plane of the roofline vent is subdivided into sectors of identical surface area (grid measurement). Indirect measurements Examples of indirect measurements include the use of tracer gases, reverse dispersion modelling (RDM) methods and the mass balance method applying light detection and ranging (LIDAR). Calculation of emissions with emission factors Guidelines using emission factors for the estimation of diffuse dust emissions from storage and handling of bulk materials and for the suspension of dust from roadways due to traffic movements are: ” VDI 3790 Part 3 ” US EPA AP 42 1.1.8. Decommissioning 17. BAT is to prevent pollution upon decommissioning by using necessary techniques as listed below. Design considerations for end-of-life plant decommissioning: I. giving consideration to the environmental impact from the eventual decommissioning of the installation at the stage of designing a new plant, as forethought makes decommissioning easier, cleaner and cheaper II. decommissioning poses environmental risks for the contamination of land (and groundwater) and generates large quantities of solid waste; preventive techniques are process-specific but general considerations may include: (i) avoiding underground structures (ii) incorporating features that facilitate dismantling (iii) choosing surface finishes that are easily decontaminated (iv) using an equipment configuration that minimises trapped chemicals and facilitates drain-down or cleaning (v) designing flexible, self-contained units that enable phased closure (vi) using biodegradable and recyclable materials where possible. 1.1.9. Noise 18. BAT is to reduce noise emissions from relevant sources in the iron and steel manufacturing processes by using one or more of the following techniques depending on and according to local conditions: ” implementation of a noise-reduction strategy ” enclosure of the noisy operations/units ” vibration insulation of operations/units ” internal and external lining made of impact-absorbent material ” soundproofing buildings to shelter any noisy operations involving material transformation equipment ” building noise protection walls, e.g. the construction of buildings or natural barriers, such as growing trees and bushes between the protected area and the noisy activity ” outlet silencers on exhaust stacks ” lagging ducts and final blowers which are situated in soundproof buildings ” closing doors and windows of covered areas. 1.2. BAT Conclusions For Sinter Plants Unless otherwise stated, the BAT conclusions presented in this section can be applied to all sinter plants. Air emissions 19. BAT for blending/mixing is to prevent or reduce diffuse dust emissions by agglomerating fine materials by adjusting the moisture content (see also BAT 11). 20. BAT for primary emissions from sinter plants is to reduce dust emissions from the sinter strand waste gas by means of a bag filter. BAT for primary emissions for existing plants is to reduce dust emissions from the sinter strand waste gas by using advanced electrostatic precipitators when bag filters are not applicable. The BAT-associated emission level for dust is < 1 “ 15 mg/Nm3 for the bag filter and < 20 “ 40 mg/Nm3 for the advanced electrostatic precipitator (which should be designed and operated to achieve these values), both determined as a daily mean value. Bag Filter Description Bag filters used in sinter plants are usually applied downstream of an existing electrostatic precipitator or cyclone but can also be operated as a standalone device. Applicability For existing plants requirements such as space for a downstream installation to the electrostatic precipitator can be relevant. Special regard should be given to the age and the performance of the existing electrostatic precipitator. Advanced electrostatic precipitator Description Advanced electrostatic precipitators are characterised by one or a combination of the following features: ” good process control ” additional electrical fields ” adapted strength of the electric field ” adapted moisture content ” conditioning with additives ” higher or variably pulsed voltages ” rapid reaction voltage ” high energy pulse superimposition ” moving electrodes ” enlarging the electrode plate distance or other features which improves the abatement efficiency. 21. BAT for primary emissions from sinter strands is to prevent or reduce mercury emissions by selecting raw materials with a low mercury content (see BAT 7) or to treat waste gases in combination with activated carbon or activated lignite coke injection. The BAT-associated emissions level for mercury is < 0,03 “ 0,05 mg/Nm3, as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). 22. BAT for primary emissions from sinter strands is to reduce sulphur oxide (SOX) emissions by using one or a combination of the following techniques: I. lowering the sulphur input by using coke breeze with a low sulphur content II. lowering the sulphur input by minimisation of coke breeze consumption III. lowering the sulphur input by using iron ore with a low sulphur content IV. injection of adequate adsorption agents into the waste gas duct of the sinter strand before dedusting by bag filter (see BAT 20) V. wet desulphurisation or regenerative activated carbon (RAC) process (with particular consideration for the prerequisites for application). The BAT-associated emission level for sulphur oxides (SOX) using BAT I “ IV is < 350 “ 500 mg/Nm3, expressed as sulphur dioxide (SO2) and determined as a daily mean value, the lower value being associated with BAT IV. The BAT-associated emission level for sulphur oxides (SOX) using BAT V is < 100 mg/Nm3, expressed as sulphur dioxide (SO2) and determined as a daily mean value. Description of the RAC process mentioned under BAT V Dry desulphurisation techniques are based on an adsorption of SO2 by activated carbon. When the SO2-laden activated carbon is regenerated, the process is called regenerated activated carbon (RAC). In this case, a high quality, expensive activated carbon type may be used and sulphuric acid (H2SO4) is yielded as a by-product. The bed is regenerated either with water or thermally. In some cases, for fine-tuning downstream of an existing desulphurisation unit, lignite-based activated carbon is used. In this case, the SO2-laden activated carbon is usually incinerated under controlled conditions. The RAC system can be developed as a single-stage or a two-stage process. In the single-stage process, the waste gases are led through a bed of activated carbon and pollutants are adsorbed by the activated carbon. Additionally, NOX removal occurs when ammonia (NH3) is injected into the gas stream before the catalyst bed. In the two-stage process, the waste gases are led through two beds of activated carbon. Ammonia can be injected before the bed to reduce NOX emissions. Applicability of techniques mentioned under BAT V Wet desulphurisation: The requirements of space may be of significance and may restrict the applicability. High investment and operational costs and significant cross-media effects such as slurry generation and disposal and additional waste water treatment measures, have to be taken into account. This technique is not used in Europe at the time of writing, but might be an option where environmental quality standards are unlikely to be met through the application of other techniques. RAC: Dust abatement should be installed prior to the RAC process to reduce the inlet dust concentration. Generally the layout of the plant and space requirements are important factors when considering this technique, but especially for a site with more than one sinter strand. High investment and operational costs, in particular when high quality, expensive, activated carbon types may be used and a sulphuric acid plant is needed, have to be taken into account. This technique is not used in Europe at the time of writing, but might be an option in new plants targeting SOX, NOX, dust and PCDD/F simultaneously and in circumstances where environmental quality standards are unlikely to be met through the application of other techniques. 23. BAT for primary emissions from sinter strands is to reduce total nitrogen oxides (NOX) emissions by using one or a combination of the following techniques: I. process integrated measures which can include: (i) waste gas recirculation (ii) other primary measures, such as the use of anthracite or the use of low-NOX burners for ignition II. end-of-pipe techniques which can include (i) the regenerative activated carbon (RAC) process (ii) selective catalytic reduction (SCR). The BAT-associated emission level for nitrogen oxides (NOX) using process integrated measures is < 500 mg/Nm3, expressed as nitrogen dioxide (NO2) and determined as a daily mean value. The BAT-associated emission level for nitrogen oxides (NOX) using RAC is < 250 mg/Nm3 and using SCR it is < 120 mg/Nm3, expressed as nitrogen dioxide (NO2), related to an oxygen content of 15 % and determined as daily mean values. Description of waste gas recirculation under BAT I.i In the partial recycling of waste gas, some portions of the sinter waste gas are recirculated to the sintering process. Partial recycling of waste gas from the whole strand was primarily developed to reduce waste gas flow and thus the mass emissions of major pollutants. Additionally it can lead to a decrease in energy consumption. The application of waste gas recirculation requires special efforts to ensure that the sinter quality and productivity are not affected negatively. Special attention needs to be paid to carbon monoxide (CO) in the recirculated waste gas in order to prevent carbon monoxide poisoning of employees. Various processes have been developed such as: ” partial recycling of waste gas from the whole strand ” recycling of waste gas from the end sinter strand combined with heat exchange ” recycling of waste gas from part of the end sinter strand and use of waste gas from the sinter cooler ” recycling of parts of waste gas to other parts of the sinter strand. Applicability of BAT I.i The applicability of this technique is site specific. Accompanying measures to ensure that sinter quality (cold mechanical strength) and strand productivity are not negatively affected must be considered. Depending on local conditions, these can be relatively minor and easy to implement or, on the contrary, they can be of a more fundamental nature and may be costly and difficult to introduce. In any case, the operating conditions of the strand should be reviewed when this technique is introduced. In existing plants, it may not be possible to install a partial recycling of waste gas due to space restrictions. Important considerations in determining the applicability of this technique include: ” initial configuration of the strand (e.g. dual or single wind-box ducts, space available for new equipment and, when required, lengthening of the strand) ” initial design of the existing equipment (e.g. fans, gas cleaning and sinter screening and cooling devices) ” initial operating conditions (e.g. raw materials, layer height, suction pressure, percentage of quick lime in the mix, specific flow rate, percentage of in-plant reverts returned in the feed) ” existing performance in terms of productivity and solid fuel consumption ” basicity index of the sinter and composition of the burden at the blast furnace (e.g. percentage of sinter versus pellet in the burden, iron content of these components). Applicability of other primary measures under BAT I.ii The use of anthracite depends on the availability of anthracites with a lower nitrogen content compared to coke breeze. Description and applicability of the RAC process under BAT II.i see BAT 22. Applicability of the SCR process under BAT II.ii SCR can be applied within a high dust system, a low dust system and as a clean gas system. Until now, only clean gas systems (after dedusting and desulphurisation) have been applied at sinter plants. It is essential that the gas is low in dust (< 40 mg dust/Nm3) and heavy metals, because they can make the surface of the catalyst ineffective. Additionally, desulphurisation prior to the catalyst might be required. Another prerequisite is a minimum off-gas temperature of about 300 °C. This requires an energy input. The high investment and operational costs, the need for catalyst revitalisation, NH3 consumption and slip, the accumulation of explosive ammonium nitrate (NH4NO3), the formation of corrosive SO3 and the additional energy required for reheating which can reduce the possibilities for recovery of sensible heat from the sinter process, all may constrain the applicability. This technique might be an option where environmental quality standards are unlikely to be met through the application of other techniques. 24. BAT for primary emissions from sinter strands is to prevent and/or reduce emissions of polychlorinated dibenzodioxins/furans (PCDD/F) and polychlorinated biphenyls (PCB) by using one or a combination of the following techniques: I. avoidance of raw materials which contain polychlorinated dibenzodioxins/furans (PCDD/F) and polychlorinated biphenyls (PCB) or their precursors as much as possible (see BAT 7) II. suppression of polychlorinated dibenzodioxins/furans (PCDD/F) formation by addition of nitrogen compounds III. waste gas recirculation (see BAT 23 for description and applicability). 25. BAT for primary emissions from sinter strands is to reduce emissions of polychlorinated dibenzodioxins/furans (PCDD/F) and polychlorinated biphenyls (PCB) by the injection of adequate adsorption agents into the waste gas duct of the sinter strand before dedusting with a bag filter or advanced electrostatic precipitators when bag filters are not applicable (see BAT 20). The BAT- associated emission level for polychlorinated dibenzodioxins/furans (PCDD/F) is < 0,05 “ 0,2 ng I-TEQ/Nm3 for the bag filter and < 0,2 “ 0,4 ng-I-TEQ/Nm3 for the advanced electrostatic precipitator, both determined for a 6 “ 8 hour random sample under steady-state conditions. 26. BAT for secondary emissions from sinter strand discharge, sinter crushing, cooling, screening and conveyor transfer points is to prevent dust emissions and/or to achieve an efficient extraction and subsequently to reduce dust emissions by using a combination of the following techniques: I. hooding and/or enclosure II. an electrostatic precipitator or a bag filter. The BAT-associated emission level for dust is < 10 mg/Nm3 for the bag filter and < 30 mg/Nm3 for the electrostatic precipitator, both determined as a daily mean value. Water and waste water 27. BAT is to minimise water consumption in sinter plants by recycling cooling water as much as possible unless once-through cooling systems are used. 28. BAT is to treat the effluent water from sinter plants where rinsing water is used or where a wet waste gas treatment system is applied, with the exception of cooling water prior to discharge by using a combination of the following techniques: I. heavy metal precipitation II. neutralisation III. sand filtration. The BAT-associated emission levels, based on a qualified random sample or a 24-hour composite sample, are: ” suspended solids < 30 mg/l ” chemical oxygen demand (COD (1)) < 100 mg/l ” heavy metals < 0,1 mg/l (sum of arsenic (As), cadmium (Cd), chromium (Cr), copper (Cu), mercury (Hg), nickel (Ni), lead (Pb), and zinc (Zn)). Production residues 29. BAT is to prevent waste generation within sinter plants by using one or a combination of the following techniques (see BAT 8): I. selective on-site recycling of residues back to the sinter process by excluding heavy metals, alkali or chloride-enriched fine dust fractions (e.g. the dust from the last electrostatic precipitator field) II. external recycling whenever on-site recycling is hampered. BAT is to manage in a controlled manner sinter plant process residues which can neither be avoided nor recycled. 30. BAT is to recycle residues that may contain oil, such as dust, sludge and mill scale which contain iron and carbon from the sinter strand and other processes in the integrated steelworks, as much as possible back to the sinter strand, taking into account the respective oil content. 31. BAT is to lower the hydrocarbon content of the sinter feed by appropriate selection and pretreatment of the recycled process residues. In all cases, the oil content of the recycled process residues should be < 0,5 % and the content of the sinter feed < 0,1 %. Description The input of hydrocarbons can be minimised, especially by the reduction of the oil input. Oil enters the sinter feed mainly by addition of mill scale. The oil content of mill scales can vary significantly, depending on their origin. Techniques to minimise oil input via dusts and mill scale include the following: ” limiting input of oil by segregating and then selecting only those dusts and mill scale with a low oil content ” the use of good housekeeping techniques in the rolling mills can result in a substantial reduction in the contaminant oil content of mill scale ” de-oiling of mill scale by: ” heating the mill scale to approximately 800 °C, the oil hydrocarbons are volatilised and clean mill scale is yielded; the volatilised hydrocarbons can be combusted. ” extracting oil from the mill scale using a solvent. Energy 32. BAT is to reduce thermal energy consumption within sinter plants by using one or a combination of the following techniques: I. recovering sensible heat from the sinter cooler waste gas II. recovering sensible heat, if feasible, from the sintering grate waste gas III. maximising the recirculation of waste gases to use sensible heat (see BAT 23 for description and applicability). Description Two kinds of potentially reusable waste energies are discharged from the sinter plants: ” the sensible heat from the waste gases from the sintering machines ” the sensible heat of the cooling air from the sinter cooler. Partial waste gas recirculation is a special case of heat recovery from waste gases from sintering machines and is dealt with in BAT 23. The sensible heat is transferred directly back to the sinter bed by the hot recirculated gases. At the time of writing (2010), this is the only practical method of recovering heat from the waste gases. The sensible heat in the hot air from the sinter cooler can be recovered by one or more of the following ways: ” steam generation in a waste heat boiler for use in the iron and steel works ” hot water generation for district heating ” preheating combustion air in the ignition hood of the sinter plant ” preheating the sinter raw mix ” use of the sinter cooler gases in a waste gas recirculation system. Applicability At some plants, the existing configuration may make costs of heat recovery from the sinter waste gases or sinter cooler waste gas very high. The recovery of heat from the waste gases by means of a heat exchanger would lead to unacceptable condensation and corrosion problems. 1.3. BAT Conclusions For Pelletisation Plants Unless otherwise stated, the BAT conclusions presented in this section can be applied to all pelletisation plants. Air emissions 33. BAT is to reduce the dust emissions in the waste gases from ” the raw materials pre-treatment, drying, grinding, wetting, mixing and the balling; ” from the induration strand; and ” from the pellet handling and screening by using one or a combination of the following techniques: I. an electrostatic precipitator II. a bag filter III. a wet scrubber The BAT-associated emission level for dust is < 20 mg/Nm3 for the crushing, grinding and drying and < 10 “ 15 mg/Nm3 for all other process steps or in cases where all waste gases are treated together, all determined as daily mean values. 34. BAT is to reduce the sulphur oxides (SOX), hydrogen chloride (HCl) and hydrogen fluoride (HF) emissions from the induration strand waste gas by using one of the following techniques: I. a wet scrubber II. semi-dry absorption with a subsequent dedusting system The BAT-associated emission levels, determined as daily mean values, for these compounds are: ” sulphur oxides (SOX), expressed as sulphur dioxide (SO2) < 30 “ 50 mg/Nm3 ” hydrogen fluoride (HF) < 1 “ 3 mg/Nm3 ” hydrogen chloride (HCl) < 1 “ 3 mg/Nm3. 35. BAT is to reduce NOX emissions from the drying and grinding section and induration strand waste gases by applying process-integrated techniques. Description Plant design through tailor-made solutions should be optimised for low nitrogen oxides (NOX) emissions from all firing sections. The reduction of the formation of thermal NOX can be achieved by lowering the (peak) temperature in the burners and reducing the excess oxygen in the combustion air. Additionally, lower NOX emissions can be achieved by a combination of low energy use and low nitrogen content in the fuel (coal and oil). 36. BAT for existing plants is to reduce NOX emissions from the drying and grinding section and induration strand waste gases by applying one of the following techniques: I. selective catalytic reduction (SCR) as an end-of-pipe technique II. any other technique with a NOX reduction efficiency of at least 80 %. Applicability For existing plants, both straight grate and grate kiln systems, it is difficult to obtain the operating conditions necessary to suit an SCR reactor. Due to high costs, these end-of-pipe techniques should only be considered in circumstances where environmental quality standards are otherwise not likely to be met. 37. BAT for new plants is to reduce NOX emissions from the drying and grinding section and induration strand waste gases by applying selective catalytic reduction (SCR) as an end-of-pipe technique. Water and waste water 38. BAT for pelletisation plants is to minimise the water consumption and discharge of scrubbing, wet rinsing and cooling water and reuse it as much as possible. 39. BAT for pelletisation plants is to treat the effluent water prior to discharge by using a combination of the following techniques: I. neutralisation II. flocculation III. sedimentation IV. sand filtration V. heavy metal precipitation. The BAT-associated emission levels, based on a qualified random sample or a 24-hour composite sample, are: ” suspended solids < 50 mg/l ” chemical oxygen demand (COD (2)) < 160 mg/l ” Kjeldahl nitrogen < 45 mg/l ” heavy metals < 0,55 mg/l (sum of arsenic (As), cadmium (Cd), chromium (Cr), copper (Cu), mercury (Hg), nickel (Ni), lead (Pb), zinc (Zn)). Production residues 40. BAT is to prevent waste generation from pelletisation plants by effective on-site recycling or the reuse of residues (i.e. undersized green and heat-treated pellets) BAT is to manage in a controlled manner pellet plant process residues, i.e. sludge from waste water treatment, which can neither be avoided nor recycled. Energy 41. BAT is to reduce/minimise thermal energy consumption in pelletisation plants by using one or a combination of the following techniques: I. process integrated reuse of sensible heat as far as possible from the different sections of the induration strand II. using surplus waste heat for internal or external heating networks if there is demand from a third party. Description Hot air from the primary cooling section can be used as secondary combustion air in the firing section. In turn, the heat from the firing section can be used in the drying section of the induration strand. Heat from the secondary cooling section can also be used in the drying section. Excess heat from the cooling section can be used in the drying chambers of the drying and grinding unit. The hot air is transported through an insulated pipeline called a hot air recirculation duct. Applicability Recovery of sensible heat is a process integrated part of pelletisation plants. The hot air recirculation duct can be applied at existing plants with a comparable design and a sufficient supply of sensible heat. The cooperation and agreement of a third party may not be within the control of the operator, and therefore may not be within the scope of the permit. 1.4. BAT Conclusions For Coke Oven Plants Unless otherwise stated, the BAT conclusions presented in this section can be applied to all coke oven plants. Air emissions 42. BAT for coal grinding plants (coal preparation including crushing, grinding, pulverising and screening) is to prevent or reduce dust emissions by using one or a combination of the following techniques: I. building and/or device enclosure (crusher, pulveriser, sieves) and II. efficient extraction and use of a subsequent dry dedusting systems. The BAT-associated emission level for dust is < 10 “ 20 mg/Nm3, as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). 43. BAT for storage and handling of pulverised coal is to prevent or reduce diffuse dust emissions by using one or a combination of the following techniques: I. storing pulverised materials in bunkers and warehouses II. using closed or enclosed conveyors III. minimising the drop heights depending on the plant size and construction IV. reducing emissions from charging of the coal tower and the charging car V. using efficient extraction and subsequent dedusting. When using BAT V, the BAT-associated emission level for dust is < 10 “ 20 mg/Nm3, as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). 44. BAT is to charge coke oven chambers with emission-reduced charging systems. Description From an integrated point of view, smokeless charging or sequential charging with double ascension pipes or jumper pipes are the preferred types, because all gases and dust are treated as part of the coke oven gas treatment. If, however, the gases are extracted and treated outside the coke oven, charging with a land-based treatment of the extracted gases is the preferred method. Treatment should consist of an efficient extraction of the emissions with subsequent combustion to reduce organic compounds and the use of a bag filter to reduce particulates. The BAT-associated emission level for dust from coal charging systems with land-based treatment of extracted gases is < 5 g/t coke equivalent to < 50 mg/Nm3, as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). The duration associated with BAT of visible emissions from charging is < 30 seconds per charge as a monthly average using a monitoring method described in BAT 46. 45. BAT for coking is to extract the coke oven gas (COG) during coking as much as possible. 46. BAT for coke plants is to reduce the emissions through achieving continuous undisrupted coke production by using the following techniques: I. extensive maintenance of oven chambers, oven doors and frame seals, ascension pipes, charging holes and other equipment (a systematic programme should be carried out by specially-trained detection and maintenance personnel) II. avoiding strong temperature fluctuations III. comprehensive observation and monitoring of the coke oven IV. cleaning of doors, frame seals, charging holes, lids and ascension pipes after handling (applicable at new and, in some cases, existing plants) V. maintaining a free gas-flow in the coke ovens VI. adequate pressure regulation during coking and application of spring-loaded flexible sealing doors or knife-edged doors (in cases of ovens ‰ ¤ 5 m high and in good working order) VII. using water-sealed ascension pipes to reduce visible emissions from the whole apparatus which provides a passage from the coke oven battery to the collecting main, gooseneck and stationary jumper pipes VIII. luting charging hole lids with a clay suspension (or other suitable sealing material), to reduce visible emissions from all holes IX. ensuring complete coking (avoiding green coke pushes) by application of adequate techniques X. installing larger coke oven chambers (applicable to new plants or in some cases of a complete replacement of the plant on the old foundations) XI. where possible, using variable pressure regulation to oven chambers during coking (applicable to new plants and can be an option for existing plants; the possibility of installing this technique in existing plants should be assessed carefully and is subject to the individual situation of every plant). The percentage of visible emissions from all doors associated with BAT is < 5 “ 10 %. The percentage of visible emissions for all source types associated with BAT VII and BAT VIII is < 1 %. The percentages are related to the frequency of any leaks compared to the total number of doors, ascension pipes or charging hole lids as a monthly average using a monitoring method as described below. For the estimation of diffuse emissions from coke ovens the following methods are in use: ” the EPA 303 method ” the DMT (Deutsche Montan Technologie GmbH) methodology ” the methodology developed by BCRA (British Carbonisation Research Association). ” the methodology applied in the Netherlands, based on counting visible leaks of the ascension pipes and charging holes, while excluding visible emissions due to normal operations (coal charging, coke pushing). 47. BAT for the gas treatment plant is to minimise fugitive gaseous emissions by using the following techniques: I. minimising the number of flanges by welding piping connections wherever possible II. using appropriate sealings for flanges and valves III. using gas-tight pumps (e.g. magnetic pumps) IV. avoiding emissions from pressure valves in storage tanks by: ” connecting the valve outlet to the coke oven gas (COG) collecting main or ” collecting the gases and subsequent combustion. Applicability The techniques can be applied to both new and existing plants. In new plants, a gas tight design might be easier to achieve than in existing plants. 48. BAT is to reduce the sulphur content of the coke oven gas (COG) by using one of the following techniques: I. desulphurisation by absorption systems II. wet oxidative desulphurisation. The residual hydrogen sulphide (H2S) concentrations associated with BAT, determined as daily mean averages, are < 300 “ 1 000 mg/Nm3 in the case of using BAT I (the higher values being associated with higher ambient temperature and the lower values being associated with lower ambient temperature) and < 10 mg/Nm3 in the case of using BAT II. 49. BAT for the coke oven underfiring is to reduce the emissions by using the following techniques: I. preventing leakage between the oven chamber and the heating chamber by means of regular coke oven operation II. repairing leakage between the oven chamber and the heating chamber (only applicable to existing plants) III. incorporating low-nitrogen oxides (NOX) techniques in the construction of new batteries, such as staged combustion and the use of thinner bricks and refractory with a better thermal conductivity (only applicable to new plants) IV. using desulphurised coke oven gas (COG) process gases. The BAT-associated emission levels, determined as daily mean values and relating to an oxygen content of 5 % are: ” sulphur oxides (SOX), expressed as sulphur dioxide (SO2) < 200 “ 500 mg/Nm3 ” dust < 1 “ 20 mg/Nm3 (3) ” nitrogen oxides (NOX), expressed as nitrogen dioxide (NO2) < 350 “ 500 mg/Nm3 for new or substantially revamped plants (less than 10 years old) and 500 “ 650 mg/Nm3 for older plants with well maintained batteries and incorporated low- nitrogen oxides (NOX) techniques. 50. BAT for coke pushing is to reduce dust emissions by using the following techniques: I. extraction by means of an integrated coke transfer machine equipped with a hood II. using land-based extraction gas treatment with a bag filter or other abatement systems III. using a one point or a mobile quenching car. The BAT-associated emission level for dust from coke pushing is < 10 mg/Nm3 in the case of bag filters and of < 20 mg/Nm3 in other cases, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). Applicability At existing plants, lack of space may constrain the applicability. 51. BAT for coke quenching is to reduce dust emissions by using one of the following techniques: I. using coke dry quenching (CDQ) with the recovery of sensible heat and the removal of dust from charging, handling and screening operations by means of a bag filter II. using emission-minimised conventional wet quenching III. using coke stabilisation quenching (CSQ). The BAT-associated emission levels for dust, determined as the average over the sampling period, are: ” < 20 mg/Nm3 in case of coke dry quenching ” < 25 g/t coke in case of emission minimised conventional wet quenching (4) ” < 10 g/t coke in case of coke stabilisation quenching (5). Description of BAT I For the continuous operation of coke dry quenching plants, there are two options. In one case, the coke dry quenching unit comprises two to up to four chambers. One unit is always on stand by. Hence no wet quenching is necessary but the coke dry quenching unit needs an excess capacity against the coke oven plant with high costs. In the other case, an additional wet quenching system is necessary. In case of modifying a wet quenching plant to a dry quenching plant, the existing wet quenching system can be retained for this purpose. Such a coke dry quenching unit has no excess processing capacity against the coke oven plant. Applicability of BAT II Existing quenching towers can be equipped with emissions reduction baffles. A minimum tower height of at least 30 m is necessary in order to ensure sufficient draught conditions. Applicability of BAT III As the system is larger than that necessary for conventional quenching, lack of space at the plant may be a constraint. 52. BAT for coke grading and handling is to prevent or reduce dust emissions by using the following techniques in combination: I. use of building or device enclosures II. efficient extraction and subsequent dry dedusting. The BAT-associated emission level for dust is < 10 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). Water and waste water 53. BAT is to minimise and reuse quenching water as much as possible. 54. BAT is to avoid the reuse of process water with a significant organic load (like raw coke oven waste water, waste water with a high content of hydrocarbons, etc.) as quenching water. 55. BAT is to pretreat waste water from the coking process and coke oven gas (COG) cleaning prior to discharge to a waste water treatment plant by using one or a combination of the following techniques: I. using efficient tar and polycyclic aromatic hydrocarbons (PAH) removal by using flocculation and subsequent flotation, sedimentation and filtration individually or in combination II. using efficient ammonia stripping by using alkaline and steam. 56. BAT for pretreated waste water from the coking process and coke oven gas (COG) cleaning is to use biological waste water treatment with integrated denitrification/nitrification stages. The BAT-associated emission levels, based on a qualified random sample or a 24-hour composite sample and referring only to single coke oven water treatment plants, are: ” chemical oxygen demand (COD (6)) < 220 mg/l ” biological oxygen demand for 5 days (BOD5) < 20 mg/l ” sulphides, easily released (7) < 0,1 mg/l ” thiocyanate (SCN-) < 4 mg/l ” cyanide (CN-), easily released (8) < 0,1 mg/l ” polycyclic aromatic hydrocarbons (PAH) (sum of Fluoranthene, Benzo[b]fluoranthene, Benzo[k]fluoranthene, Benzo[a]pyrene, Indeno[1,2,3-cd]pyrene and Benzo[g,h,i]perylene) < 0,05 mg/l ” phenols < 0,5 mg/l ” sum of ammonia-nitrogen (NH4 +-N), nitrate-nitrogen (NO3 --N) and nitrite-nitrogen (NO2 --N) < 15 “ 50 mg/l. Regarding the sum of ammonia-nitrogen (NH4 +-N), nitrate-nitrogen (NO3 --N) and nitrite-nitrogen (NO2 --N), values of < 35 mg/l are usually associated with the application of advanced biological waste water treatment plants with predenitrification/nitrification and post-denitrification. Production residues 57. BAT is to recycle production residues such as tar from the coal water and still effluent, and surplus activated sludge from the waste water treatment plant back to the coal feed of the coke oven plant. Energy 58. BAT is to use the extracted coke oven gas (COG) as a fuel or reducing agent or for the production of chemicals. 1.5. BAT Conclusions For Blast Furnaces Unless otherwise stated, the BAT conclusions presented in this section can be applied to all blast furnaces. Air emissions 59. BAT for displaced air during loading from the storage bunkers of the coal injection unit is to capture dust emissions and perform subsequent dry dedusting. The BAT-associated emission level for dust is < 20 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). 60. BAT for burden preparation (mixing, blending) and conveying is to minimise dust emissions and, where relevant, extraction with subsequent dedusting by means of an electrostatic precipitator or bag filter. 61. BAT for casting house (tap holes, runners, torpedo ladles charging points, skimmers) is to prevent or reduce diffuse dust emissions by using the following techniques: I. covering the runners II. optimising the capture efficiency for diffuse dust emissions and fumes with subsequent off-gas cleaning by means of an electrostatic precipitator or bag filter III. fume suppression using nitrogen while tapping, where applicable and where no collecting and dedusting system for tapping emissions is installed. When using BAT II, the BAT-associated emission level for dust is < 1 “ 15 mg/Nm3, determined as a daily mean value. 62. BAT is to use tar-free runner linings. 63. BAT is to minimise the release of blast furnace gas during charging by using one or a combination of the following techniques: I. bell-less top with primary and secondary equalising II. gas or ventilation recovery system III. use of blast furnace gas to pressurise the top bunkers. Applicability of BAT II Applicable for new plants. Applicable for existing plants only where the furnace has a bell-less charging system. It is not applicable to plants where gases other than blast furnace gas (e.g. nitrogen) are used to pressurise the furnace top bunkers. 64. BAT is to reduce dust emissions from the blast furnace gas by using one or a combination of the following techniques: I. using dry prededusting devices such as: (i) deflectors (ii) dust catchers (iii) cyclones (iv) electrostatic precipitators. II. subsequent dust abatement such as: (i) hurdle-type scrubbers (ii) venturi scrubbers (iii) annular gap scrubbers (iv) wet electrostatic precipitators (v) disintegrators. For cleaned blast furnace (BF) gas, the residual dust concentration associated with BAT is < 10 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). 65. BAT for hot blast stoves is to reduce emissions by using desulphurised and dedusted surplus coke oven gas, dedusted blast furnace gas, dedusted basic oxygen furnace gas and natural gas, individually or in combination. The BAT-associated emission levels, determined as daily mean values related to an oxygen content of 3 %, are: ” sulphur oxides (SOx) expressed as sulphur dioxide (SO2) < 200 mg/Nm3 ” dust < 10 mg/Nm3 ” nitrogen oxides (NOx), expressed as nitrogen dioxide (NO2) < 100 mg/Nm3. Water and waste water 66. BAT for water consumption and discharge from blast furnace gas treatment is to minimise and to reuse scrubbing water as much as possible, e.g. for slag granulation, if necessary after treatment with a gravel-bed filter. 67. BAT for treating waste water from blast furnace gas treatment is to use flocculation (coagulation) and sedimentation and the reduction of easily released cyanide, if necessary. The BAT-associated emission levels, based on a qualified random sample or a 24-hour composite sample, are: ” suspended solids < 30 mg/l ” iron < 5 mg/l ” lead < 0,5 mg/l ” zinc < 2 mg/l ” cyanide (CN-), easily released (9) < 0,4 mg/l. Production residues 68. BAT is to prevent waste generation from blast furnaces by using one or a combination of the following techniques: I. appropriate collection and storage to facilitate a specific treatment II. on-site recycling of coarse dust from the blast furnace (BF) gas treatment and dust from the cast house dedusting, with due regard for the effect of emissions from the plant where it is recycled III. hydrocyclonage of sludge with subsequent on-site recycling of the coarse fraction (applicable whenever wet dedusting is applied and where the zinc content distribution in the different grain sizes allows a reasonable separation) IV. slag treatment, preferably by means of granulation (where market conditions allow for it), for the external use of slag (e.g. in the cement industry or for road construction). BAT is to manage in a controlled manner blast furnace process residues which can neither be avoided nor recycled. 69. BAT for minimising slag treatment emissions is to condense fume if odour reduction is required. Resource management 70. BAT for resource management of blast furnaces is to reduce coke consumption by directly injected reducing agents, such as pulverised coal, oil, heavy oil, tar, oil residues, coke oven gas (COG), natural gas and wastes such as metallic residues, used oils and emulsions, oily residues, fats and waste plastics individually or in combination. Applicability Coal injection: The method is applicable to all blast furnaces equipped with pulverised coal injection and oxygen enrichment. Gas injection: Tuyà ¨re injection of coke oven gas (COG) is highly dependent upon the availability of the gas that may be effectively used elsewhere in the integrated steelworks. Plastic injection: It should be noted that this technique is highly dependent on the local circumstances and market conditions. Plastics can contain Cl and heavy metals like Hg, Cd, Pb and Zn. Depending on the composition of the wastes used (e.g. shredder light fraction), the amount of Hg, Cr, Cu, Ni and Mo in the BF gas may increase. Direct injection of used oils, fats and emulsions as reducing agents and of solid iron residues: The continuous operation of this system is reliant on the logistical concept of delivery and the storage of residues. Also, the conveying technology applied is of particular importance for a successful operation. Energy 71. BAT is to maintain a smooth, continuous operation of the blast furnace at a steady state to minimise releases and to reduce the likelihood of burden slips. 72. BAT is to use the extracted blast furnace gas as a fuel. 73. BAT is to recover the energy of top blast furnace gas pressure where sufficient top gas pressure and low alkali concentrations are present. Applicability Top gas pressure recovery can be applied at new plants and in some circumstances at existing plants, albeit with more difficulties and additional costs. Fundamental to the application of this technique is an adequate top gas pressure in excess of 1.5 bar gauge. At new plants, the top gas turbine and the blast furnace (BF) gas cleaning facility can be adapted to each other in order to achieve a high efficiency of both scrubbing and energy recovery. 74. BAT is to preheat the hot blast stove fuel gases or combustion air using the waste gas of the hot blast stove and to optimise the hot blast stove combustion process. Description For optimisation of the energy efficiency of the hot stove, one or a combination of the following techniques can be applied: ” the use of a computer-aided hot stove operation ” preheating of the fuel or combustion air in conjunction with insulation of the cold blast line and waste gas flue ” use of more suitable burners to improve combustion ” rapid oxygen measurement and subsequent adaptation of combustion conditions. Applicability The applicability of fuel preheating depends on the efficiency of the stoves as this determines the waste gas temperature (e.g. at waste gas temperatures below 250 °C, heat recovery may not be a technically or economically viable option). The implementation of computer-aided control could require the construction of a fourth stove in the case of blast furnaces with three stoves (if possible) in order to maximise benefits. 1.6. BAT Conclusions For Basic Oxygen Steelmaking And Casting Unless otherwise stated, the BAT conclusions presented in this section can be applied to all basic oxygen steelmaking and casting. Air emissions 75. BAT for basic oxygen furnace (BOF) gas recovery by suppressed combustion is to extract the BOF gas during blowing as much as possible and to clean it by using the following techniques in combination: I. use of a suppressed combustion process II. prededusting to remove coarse dust by means of dry separation techniques (e.g. deflector, cyclone) or wet separators III. dust abatement by means of: (i) dry dedusting (e.g. electrostatic precipitator) for new and existing plants (ii) wet dedusting (e.g. wet electrostatic precipitator or scrubber) for existing plants. The residual dust concentrations associated with BAT, after buffering the BOF gas, are: ” 10 “ 30 mg/Nm3 for BAT III.i ” < 50 mg/Nm3 for BAT III.ii. 76. BAT for basic oxygen furnace (BOF) gas recovery during oxygen blowing in the case of full combustion is to reduce dust emissions by using one of the following techniques: I. dry dedusting (e.g. ESP or bag filter) for new and existing plants II. wet dedusting (e.g. wet ESP or scrubber) for existing plants. The BAT-associated emission levels for dust, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour), are: ” 10 “ 30 mg/Nm3 for BAT I ” < 50 mg/Nm3 for BAT II. 77. BAT is to minimise dust emissions from the oxygen lance hole by using one or a combination of the following techniques: I. covering the lance hole during oxygen blowing II. inert gas or steam injection into the lance hole to dissipate the dust III. use of other alternative sealing designs combined with lance cleaning devices. 78. BAT for secondary dedusting, including the emissions from the following processes: ” reladling of hot metal from the torpedo ladle (or hot metal mixer) to the charging ladle ” hot metal pretreatment (i.e. the preheating of vessels, desulphurisation, dephosphorisation, deslagging, hot metal transfer processes and weighing) ” BOF-related processes like the preheating of vessels, slopping during oxygen blowing, hot metal and scrap charging, tapping of liquid steel and slag from BOF and ” secondary metallurgy and continuous casting, is to minimise dust emissions by means of process integrated techniques, such as general techniques to prevent or control diffuse or fugitive emissions, and by using appropriate enclosures and hoods with efficient extraction and a subsequent off-gas cleaning by means of a bag filter or an ESP. The overall average dust collection efficiency associated with BAT is > 90 % The BAT-associated emission level for dust, as a daily mean value, for all dedusted off-gases is < 1 “ 15 mg/Nm3 in the case of bag filters and < 20 mg/Nm3 in the case of electrostatic precipitators. If the emissions from hot metal pretreatment and the secondary metallurgy are treated separately, the BAT-associated emission level for dust, as a daily mean value, is < 1 “ 10 mg/Nm3 for bag filters and < 20 mg/Nm3 for electrostatic precipitators. Description General techniques to prevent diffuse and fugitive emissions from the relevant BOF process secondary sources include: ” independent capture and use of dedusting devices for each subprocess in the BOF shop ” correct management of the desulphurisation installation to prevent air emissions ” total enclosure of the desulphurisation installation ” maintaining the lid on when the hot metal ladle is not in use and the cleaning of hot metal ladles and removal of skulls on a regular basis or alternatively apply a roof extraction system ” maintaining the hot metal ladle in front of the converter for approximately two minutes after putting the hot metal into the converter if a roof extraction system is not applied ” computer control and optimisation of the steelmaking process, e.g. so that slopping (i.e. when the slag foams to such an extent that it flows out of the vessel) is prevented or reduced ” reduction of slopping during tapping by limiting elements that cause slopping and the use of anti-slopping agents ” closure of doors from the room around the converter during oxygen blowing ” continuous camera observation of the roof for visible emission ” the use of a roof extraction system. Applicability In existing plants, the design of the plant may restrict the possibilities for proper evacuation. 79. BAT for on-site slag processing is to reduce dust emissions by using one or a combination of the following techniques: I. efficient extraction of the slag crusher and screening devices with subsequent off-gas cleaning, if relevant II. transport of untreated slag by shovel loaders III. extraction or wetting of conveyor transfer points for broken material IV. wetting of slag storage heaps V. use of water fogs when broken slag is loaded. The BAT-associated emission level for dust in the case of using BAT I is < 10 “ 20 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). Water and waste water 80. BAT is to prevent or reduce water use and waste water emissions from primary dedusting of basic oxygen furnace (BOF) gas by using one of the following techniques as set out in BAT 75 and BAT 76: ” dry dedusting of basic oxygen furnace (BOF) gas; ” minimising scrubbing water and reusing it as much as possible(e.g. for slag granulation) in case wet dedusting is applied. 81. BAT is to minimise the waste water discharge from continuous casting by using the following techniques in combination: I. the removal of solids by flocculation, sedimentation and/or filtration II. the removal of oil in skimming tanks or any other effective device III. the recirculation of cooling water and water from vacuum generation as much as possible. The BAT-associated emission levels, based on a qualified random sample or a 24-hour composite sample, for waste water from continuous casting machines are: ” suspended solids < 20 mg/l ” iron < 5 mg/l ” zinc < 2 mg/l ” nickel < 0,5 mg/l ” total chromium < 0,5 mg/l ” total hydrocarbons < 5 mg/l. Production residues 82. BAT is to prevent waste generation by using one or a combination of the following techniques (see BAT 8): I. appropriate collection and storage to facilitate a specific treatment II. on-site recycling of dust from basic oxygen furnace (BOF) gas treatment, dust from secondary dedusting and mill scale from continuous casting back to the steelmaking processes with due regard for the effect of emissions from the plant where they are recycled III. on-site recycling of BOF slag and BOF slag fines in various applications IV. slag treatment where market conditions allow for the external use of slag (e.g. as an aggregate in materials or for construction) V. use of filter dusts and sludge for external recovery of iron and non-ferrous metals such as zinc in the non-ferrous metals industry VI. use of a settling tank for sludge with the subsequent recycling of the coarse fraction in the sinter/blast furnace or cement industry when grain size distribution allows for a reasonable separation. Applicability of BAT V Dust hot briquetting and recycling with recovery of high zinc concentrated pellets for external reuse is applicable when a dry electrostatic precipitation is used to clean the BOF gas. Recovery of zinc by briquetting is not applicable in wet dedusting systems because of unstable sedimentation in the settling tanks caused by the formation of hydrogen (from a reaction of metallic zinc and water). Due to these safety reasons, the zinc content in the sludge should be limited to 8 “ 10 %. BAT is to manage in a controlled manner basic oxygen furnace process residues which can neither be avoided nor recycled. Energy 83. BAT is to collect, clean and buffer BOF gas for subsequent use as a fuel. Applicability In some cases, it may not be economically feasible or, with regard to appropriate energy management, not feasible to recover the BOF gas by suppressed combustion. In these cases, the BOF gas may be combusted with the generation of steam. The kind of combustion (full or suppressed combustion) depends on local energy management. 84. BAT is to reduce energy consumption by using ladle-lid systems. Applicability The lids can be very heavy as they are made out of refractory bricks and therefore the capacity of the cranes and the design of the whole building may constrain the applicability in existing plants. There are different technical designs for implementing the system into the particular conditions of a steel plant. 85. BAT is to optimise the process and reduce energy consumption by using a direct tapping process after blowing. Description Direct tapping normally requires expensive facilities like sub-lance or DROP IN sensor-systems to tap without waiting for a chemical analysis of the samples taken (direct tapping). Alternatively, a new technique has been developed to achieve direct tapping without such facilities. This technique requires a lot of experience and developmental work. In practice, the carbon is directly blown down to 0,04 % and simultaneously the bath temperature decreases to a reasonably low target. Before tapping, both the temperature and oxygen activity are measured for further actions. Applicability A suitable hot metal analyser and slag stopping facilities are required and the availability of a ladle furnace facilitates implementation of the technique. 86. BAT is to reduce energy consumption by using continuous near net shape strip casting, if the quality and the product mix of the produced steel grades justify it. Description Near net shape strip casting means the continuous casting of steel to strips with thicknesses of less than 15 mm. The casting process is combined with the direct hot rolling, cooling and coiling of the strips without an intermediate reheating furnace used for conventional casting techniques, e.g. continuous casting of slabs or thin slabs. Therefore, strip casting represents a technique for producing flat steel strips of different widths and thicknesses of less than 2 mm. Applicability The applicability depends on the produced steel grades (e.g. heavy plates cannot be produced with this process) and on the product portfolio (product mix) of the individual steel plant. In existing plants, the applicability may be constrained by the layout and the available space as e.g. retrofitting with a strip caster requires approximately 100 m in length. 1.7. BAT Conclusions For Electric Arc Furnace Steelmaking And Casting Unless otherwise stated, the BAT conclusions presented in this section can be applied to all electric arc furnace steelmaking and casting. Air emissions 87. BAT for the electric arc furnace (EAF) process is to prevent mercury emissions by avoiding, as much as possible, raw materials and auxiliaries which contain mercury (see BAT 6 and 7). 88. BAT for the electric arc furnace (EAF) primary and secondary dedusting (including scrap preheating, charging, melting, tapping, ladle furnace and secondary metallurgy) is to achieve an efficient extraction of all emission sources by using one of the techniques listed below and to use subsequent dedusting by means of a bag filter: I. a combination of direct off-gas extraction (4th or 2nd hole) and hood systems II. direct gas extraction and doghouse systems III. direct gas extraction and total building evacuation (low-capacity electric arc furnaces (EAF) may not require direct gas extraction to achieve the same extraction efficiency). The overall average collection efficiency associated with BAT is > 98 %. The BAT-associated emission level for dust is < 5 mg/Nm3, determined as a daily mean value. The BAT-associated emission level for mercury is < 0,05 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least four hours). 89. BAT for the electric arc furnace (EAF) primary and secondary dedusting (including scrap preheating, charging, melting, tapping, ladle furnace and secondary metallurgy) is to prevent and reduce polychlorinated dibenzodioxins/furans (PCDD/F) and polychlorinated biphenyls (PCB) emissions by avoiding, as much as possible, raw materials which contain PCDD/F and PCB or their precursors (see BAT 6 and 7) and using one or a combination of the following techniques, in conjunction with an appropriate dust removal system: I. appropriate post-combustion II. appropriate rapid quenching III. injection of adequate adsorption agents into the duct before dedusting. The BAT-associated emission level for polychlorinated dibenzodioxins/furans (PCDD/F) is < 0,1 ng I-TEQ/Nm3, based on a 6 “ 8 hour random sample during steady-state conditions. In some cases, the BAT-associated emission level can be achieved with primary measures only. Applicability of BAT I In existing plants, circumstances like available space, given off-gas duct system, etc. need to be taken into consideration for assessing the applicability. 90. BAT for on-site slag processing is to reduce dust emissions by using one or a combination of the following techniques: I. efficient extraction of the slag crusher and screening devices with subsequent off-gas cleaning, if relevant II. transport of untreated slag by shovel loaders III. extraction or wetting of conveyor transfer points for broken material IV. wetting of slag storage heaps V. use of water fogs when broken slag is loaded. In the case of using BAT I, the BAT-associated emission level for dust is < 10 “ 20 mg/Nm3, determined as the average over the sampling period (discontinuous measurement, spot samples for at least half an hour). Water and waste water 91. BAT is to minimise the water consumption from the electric arc furnace (EAF) process by the use of closed loop water cooling systems for the cooling of furnace devices as much as possible unless once-through cooling systems are used. 92. BAT is to minimise the waste water discharge from continuous casting by using the following techniques in combination: I. the removal of solids by flocculation, sedimentation and/or filtration II. the removal of oil in skimming tanks or in any other effective device III. the recirculation of cooling water and water from vacuum generation as much as possible. The BAT-associated emission levels, for waste water from continuous casting machines, based on a qualified random sample or a 24-hour composite sample, are: ” suspended solids < 20 mg/l ” iron < 5 mg/l ” zinc < 2 mg/l ” nickel < 0,5 mg/l ” total chromium < 0,5 mg/l ” total hydrocarbons < 5 mg/l Production residues 93. BAT is to prevent waste generation by using one or a combination of the following techniques: I. appropriate collection and storage to facilitate a specific treatment II. recovery and on-site recycling of refractory materials from the different processes and use internally, i.e. for the substitution of dolomite, magnesite and lime III. use of filter dusts for the external recovery of non-ferrous metals such as zinc in the non-ferrous metals industry, if necessary, after the enrichment of filter dusts by recirculation to the electric arc furnace (EAF) IV. separation of scale from continuous casting in the water treatment process and recovery with subsequent recycling, e.g. in the sinter/blast furnace or cement industry V. external use of refractory materials and slag from the electric arc furnace (EAF) process as a secondary raw material where market conditions allow for it. BAT is to manage in a controlled manner EAF process residues which can neither be avoided nor recycled. Applicability The external use or recycling of production residues as mentioned under BAT III “ V depend on the cooperation and agreement of a third party which may not be within the control of the operator, and therefore may not be within the scope of the permit. Energy 94. BAT is to reduce energy consumption by using continuous near net shape strip casting, if the quality and the product mix of the produced steel grades justify it. Description Near net shape strip casting means the continuous casting of steel to strips with thicknesses of less than 15 mm. The casting process is combined with the direct hot rolling, cooling and coiling of the strips without an intermediate reheating furnace used for conventional casting techniques, e.g. continuous casting of slabs or thin slabs. Therefore, strip casting represents a technique for producing flat steel strips of different widths and thicknesses of less than 2 mm. Applicability The applicability depends on the produced steel grades (e.g. heavy plates cannot be produced with this process) and on the product portfolio (product mix) of the individual steel plant. In existing plants, the applicability may be constrained by the layout and the available space as e.g. retrofitting with a strip caster requires approximately 100 m in length. Noise 95. BAT is to reduce noise emissions from electric arc furnace (EAF) installations and processes generating high sound energies by using a combination of the following constructional and operational techniques depending on and according to local conditions (in addition to using the techniques listed in BAT 18): I. construct the electric arc furnace (EAF) building in such a way as to absorb noise from mechanical shocks resulting from the operation of the furnace II. construct and install cranes destined to transport the charging baskets to prevent mechanical shocks III. special use of acoustical insulation of the inside walls and roofs to prevent the airborne noise of the electric arc furnace (EAF) building IV. separation of the furnace and the outside wall to reduce the structure-borne noise from the electric arc furnace (EAF) building V. housing of processes generating high sound energies (i.e. electric arc furnace (EAF) and decarburisation units) within the main building. (1) In some cases, TOC is measured instead of COD (in order to avoid HgCl2 used in the analysis for COD). The correlation between COD and TOC should be elaborated for each sinter plant case by case. The COD/TOC ratio may vary approximately between two and four. (2) In some cases, TOC is measured instead of COD (in order to avoid HgCl2 used in the analysis for COD). The correlation between COD and TOC should be elaborated for each pelletisation plant case by case. The COD/TOC ratio may vary approximately between two and four. (3) The lower end of the range has been defined based on the performance of one specific plant achieved under real operating conditions by the BAT obtaining the best environmental performance. (4) This level is based on the use of the non-isokinetic Mohrhauer method (former VDI 2303) (5) This level is based on the use of an isokinetic sampling method according to VDI 2066 (6) In some cases, TOC is measured instead of COD (in order to avoid HgCl2 used in the analysis for COD). The correlation between COD and TOC should be elaborated for each coke oven plant case by case. The COD/TOC ratio may vary approximately between two and four. (7) This level is based on the use of the DIN 38405 D 27 or any other national or international standard that ensures the provision of data of an equivalent scientific quality. (8) This level is based on the use of the DIN 38405 D 13-2 or any other national or international standard that ensures the provision of data of an equivalent scientific quality. (9) This level is based on the use of the DIN 38405 D 13-2 or any other national or international standard that ensures the provision of data of an equivalent scientific quality.

    Original Issue Date: April 17, 2015   $500,000.00   10.0% FIRST LIEN CONVERTIBLE NOTE   THIS NOTE is issued for 10.0% First Lien Secured Convertible Notes of Saleen place of business at 2735 Wardlow Road, Corona, CA 92882, designated as its 10.0% First Lien Convertible Notes (this Note, the “Note” and, collectively with   FOR VALUE RECEIVED, the Company promises to pay to GreenTech Automotive, Inc.., terms hereunder, the principal sum of $500,000.00 on August 17, 2015 (the   Transaction Documents are secured by the Collateral (as defined in the Intercreditor Agreement) pursuant to the terms of the Intercreditor Agreement and the obligations under this Note and are guaranteed by the Subsidiaries                             2               “Fundamental Transaction Cash Amount” means the sum of (a) two hundred percent (200%) of the then outstanding principal amount of this Note, plus one hundred percent (100%) of accrued and unpaid interest thereon, and (b) all other     (120%) of the then outstanding principal amount of this Note, (b) plus one hundred percent (100%) of accrued and unpaid interest hereon, and (c) all other         the indebtedness existing on the initial Closing Date and disclosed in the SEC Reports, (c) lease obligations and purchase money indebtedness incurred in respect to newly acquired or leased assets, (d) loans previously provided to Saleen Automotive, Inc., SMS Signature Cars and/or Steve Saleen by the Small Business Administration and (e) indebtedness that is expressly subordinate to the Notes pursuant to a written subordination agreement with the Purchasers that is acceptable to each Purchaser in its sole and absolute discretion; provided that such Permitted   3     Indebtedness shall not exceed seventy-five percent (75%) of the aggregate     incurred in connection with Permitted Indebtedness and disclosed in the SEC Reports.   25, 2015, among the Company and the original Holders, as amended, modified or    regulations promulgated thereunder.       business.     Agreement.   Trading   4           amount of this Note at a rate per annum equal to 10.0%, subject to Section 2(d) below.   Holder any accrued but unpaid and unconverted interest hereunder on the   c) Interest Calculations. Interest shall be calculated on the basis of a three   d) Default Interest. After the occurrence and during the continuance of any rate equal to the lesser of twelve percent (12%) per annum, compounded daily, or the maximum rate permitted under applicable law.   5     e) Prepayment. This Note may not be prepaid except with the consent of the holder hereof.     exchange.   regulations.     d) Transfer Restrictions. Any transfer of this Note shall also be subject to the applicable restrictions and requirements of Sections 3.2 and 4.1 of the Purchase Agreement and other provisions of the Transaction Documents.     of Conversion”), specifying therein the principal amount of this Note and any Section 8(a)) on which such conversion shall be effected (such date, the   6     b) Conversion Price. The conversion price shall equal the lesser of (A) $0.075 (subject to adjustment as provided in this Note) and (B) seventy percent (70%) of the average of the three (3) lowest VWAPs occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note (as applicable, the “Conversion Price”); provided, however, that in no event shall the Conversion Price be less than $0.02 (the “Conversion Price”).     thereunder. For purposes of this paragraph, in determining the number of   7     of a Holder, the Company shall within three (3) Trading Days confirm orally and “Beneficial Ownership Limitation” shall be four and nine-tenths percent (4.9%) this Note held by the Holder. By written notice to the Company, the Holder may at any time and from time to time increase or decrease the Beneficial Ownership Limitation to any other percentage specified in such notice (or specify that the any other holder of Notes. The provisions of this paragraph shall be construed   ii. Unless otherwise approved in writing by the Company, any individual conversion under Section 4(a) must be for at least 10,000 Conversion Shares (such number to be appropriately adjusted for any stock splits, stock dividends     the quotient obtained by dividing (a) the outstanding principal amount of this Note to be converted plus any accrued but unpaid interest thereon, by (b) the Conversion Price.   8     representing the Conversion Shares which, on or after the Legend Removal Date, the date which is six (6) months following the Original Issue Date on which this Note is issued, the Company shall use commercially reasonable efforts to deliver any certificate(s) or shares required to be delivered by the Company under this Section 4 electronically through the Depository Trust Company or another   such certificate(s) or shares are not delivered to or as directed by the applicable Holder by the second (2nd) Trading Day after the Conversion Date, the   one hundred percent (100%) of the outstanding principal amount of this Note,   9     to Section 4(d)(ii) by the third (3rd) Trading Day after the Share Delivery not as a penalty, for each $1,000 of principal amount being converted, $7.00 per Trading Day (increasing to $13.00 per Trading Day on the fifth (5th) Trading Day third (3rd) Trading Day after the Share Delivery Date until such certificates other Section hereof or under applicable law. Notwithstanding any portion of the foregoing to the contrary, if the Company fails to deliver to the Holder such certificate(s) or shares by the Share Delivery Date pursuant to Section 4(d)(ii) because (A) the conversion by the Holder is delivered in connection with a proposed sale by the Holder of the Conversion Shares under Rule 144 promulgated under the Securities Act, and (B) in connection with such sale, the Holder has failed to deliver customary representation letters, as prepared by the brokerage firm of Holder in the ordinary course of its business, appropriate to evidence compliance with such rule, then the liquidated damages provisions herein shall not begin to accrue until the Trading Day immediately following the date that the Holder has delivered such representation letters.   Stock that would have   10             11       interest on, the Notes); (ii) subdivides outstanding shares of Common Stock into     c) Subsequent Rights Offerings. The Company shall not, at any time while the Note is outstanding, issue rights, options or warrants to all holders of Common mentioned below.   d) Pro Rata Distributions. The Company shall not, at any time while this Note is outstanding, distribute to all holders of Common Stock (and not to Holders of than the Common Stock.   securities, cash or property (each, a “Fundamental Transaction”), then upon any Transaction the Holder may elect, by giving written notice of such election to the Company at least five (5) Trading Days before the closing of such Fundamental Transaction, to sell this Note to the Company or its designated assignee, concurrently with such closing, for a cash payment equal to the Fundamental Transaction Cash Amount at the time of the closing. Notice of any such proposed Fundamental Transaction and of such election shall be given to the Holder at least fifteen (15) calendar days before such closing. In connection with such purchase, the Holder shall assign this Note to the Company or its   12             13     outstanding, unless the holders of at least a majority in principal amount of     therefrom;   Stock Equivalents of departing employees of the Company, provided that such repurchases shall not exceed an aggregate of $150,000 for all employees during     transaction is expressly approved by a majority of the disinterested directors approval); or   14           governmental body), provided that an event specified in item i, ii, iii, or viii below will not become an Event of Default unless and until it is not cured, if possible to cure, within the earlier to occur of (i) five (5) Trading Days after notice of such failure sent by the Holder or by any other Holder and (ii) ten such failure:     addressed in clause (xi) below);       Event;   15     under any long term leasing or factoring arrangement that (A) involves an hereafter be created, and (B) results in such indebtedness becoming or being due and payable;     viii. if at any time after three (3) months following the Closing Date the thereunder during the then preceding twelve (12) months (or such shorter period that the Company was required to file such reports);   ix. if any of the Security Documents or Subsidiary Guaranties ceases to be in full force and effect (including failure to create, to the extent reasonably feasible, a valid and perfected first priority lien (subject to the Permitted Security Agreement) and Intellectual Property Rights of the Company and its   x. if Steve Saleen ceases to serve full time as the President and Chief due to Steve Saleen’s death, permanent disability, voluntary termination or a full-time replacement reasonably acceptable to the Holder within ninety (90) days following such death, permanent disability, voluntary termination or termination by the Company for cause, and (B) following any such acceptable replacement this clause shall apply to such replacement in lieu of Steve Saleen;   prior to the tenth (10th) Trading Day after a Conversion Date or the Company   16     (45) calendar days; provided, however, that any judgment which is covered by calendar days of the issuance of such judgment.   not make more than the later of thirty (30) calendar days after the date (a) such Event of Default is cured or otherwise resolved and (b) the Holder is aware of such cure or resolution), immediately due and payable in cash at the Mandatory Default Amount. After the occurrence and during the continuance of any Event of Default, the interest rate on this Note shall accrue as set forth in     accordance with this Section 8. Any and all notices or other communications or effective on the earliest of (i) the date of transmission or delivery, if such notice or communication is delivered via facsimile at the facsimile number, or delivered by such courier service to the address, specified in this Section 8 date of transmission or delivery, if such notice or communication is delivered via facsimile at the facsimile number, or delivered by such courier to the address, specified in this Section 8 between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, or (iii) upon actual receipt by the Purchase Agreement.   17         proceeding.   18           the provisions hereof.     the Purchase Agreement.   19         By:     Steve Saleen, Chief Executive Officer   Facsimile No. for delivery of Notices: (888) 729-4827   20     ANNEX A NOTICE OF CONVERSION   The undersigned hereby elects to convert principal under the 3.0% Senior Secured Convertible Note due June 25, 2017 of Saleen Automotive, Inc., a Nevada        Conversion calculations:                                                                        Principal                                                                                                                 shares):                                                                                                                                                              Signature:                                                                                                    Name:                                                                                                                                                                                                                                                                                                                                       Account No:                              

Exhibit 99.1 June 3, 2010 Daulton Capital Corp. Announces New Director LAS VEGAS, NEVADA(Marketwire - June 3, 2010) - DAULTON CAPITAL CORP. (OTCBB:DUCP) - Terry R. Fields, President of Daulton Capital Corporation, is pleased to announce the acceptance by Mr.Peter Stecher of a seat on its Board of Directors. Mr. Stecher, 54 years of age, is a graduate of Sir George Williams University where he obtained his degree in Commerce, while majoring in Marketing. He undertook postgraduate studies at the University of Colorado, where he obtained a certificate in metallurgy. Mr. Stecher has successfully spearheaded numerous start-up companies that continue to prosper and even flourish in these trying economic times. His business acumen and guidance will be a major asset to the company and his leadership abilities will ensure that the company will continue to be channelled in a positive direction. ABOUT DAULTON CAPITAL CORPORATION Daulton Capital Corporation is a natural resource finance company focused on precious & base metals as well as oil & gas opportunities. Management's corporate philosophy is to be a Project Generator, with the objective of option/joint venturing projects with major and junior natural resource companies from inception through to production. The Company has acquired property rights in the Yukon and continues focussing on acquiring and / or funding additional resource projects. Please visit www.daultoncapital.com for more information. This news release may contain forward-looking statements. Therefore all readers of this information are cautioned that the forward-looking statements are inherently uncertain, including statements related to possible opportunities for growth strategies and statements that are not statements of historical fact, which may or may not be based on Daulton Capital Corp management's estimates, assumptions, projections or beliefs. The forward-looking statements in this news release are subject to various risks, uncertainties and other factors that could cause Daulton Capital Corp actual results or achievements to differ materially from those expressed in or implied by forward looking statements. Forward-looking statements are based on the beliefs, opinions and expectations of Daulton Capital Corp at the time they are made, and Daulton Capital Corp does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change. Readers are cautioned not to place undue reliance on forward-looking statements. CONTACT INFORMATION: Daulton Capital Corp. Peter Graham Toll Free: 1-877-882-7858 Daulton.capital@yahoo.com www.daultoncapital.com

Name: Commission Regulation (EEC) No 1786/88 of 24 June 1988 fixing the estimated production of olive oil and the amount of the unit production aid that may be paid in advance for the 1987/88 marketing year Type: Regulation Subject Matter: processed agricultural produce; economic policy Date Published: nan No L 158/ 12 Official Journal of the European Communities 25. 6. 88 COMMISSION REGULATION (EEC) No 1786/88 of 24 June 1988 fixing the estimated production of olive oil and the amount of the unit production aid that may be paid in advance for the 1987/88 marketing year THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, for in Council Regulation (EEC) No 1416/82 (*) and the amount withheld for measures to improve the quality of olive oil provided for in Council Regulation (EEC) No 1916/87 (*) must be taken into account ; Whereas in Spain and Portugal, the amount of the production aid is different from that in the other Member States ; whereas the amount of the advance in those two Member States must therefore be different ; whereas, on the basis of the data available, the estimated quantity and the abovementioned amount should be fixed at the levels given below ; Whereas the Management Committee for Oils and Fats has not delivered an opinion within the time limit set by its chairman, Having regard to Council Regulation No 136/66/EEC of 22 September 1966 on the establishment of a common organization of the market in oils and fats ('), as last amended by Regulation (EEC) No 1098/88 (2), Having regard to Council Regulation (EEC) No 2261 /84 of 17 July 1984 laying down general rules on the granting of aid for the production of olive oil and of aid to olive oil producer organizations^3), as last amended by Regulation (EEC) No 892/88 (4), and in particular Article 17a ( 1 ) thereof, HAS ADOPTED THIS REGULATION : Whereas Article 5 of Regulation No 136/66/EEC provides that the unit production aid must be reduced where the actual production in a given marketing year exceeds the maximum guaranteed quantity fixed for that marketing year ; whereas, however, producers whose average production does not exceed 200 kilograms of olive oil per marketing year are not afected by such a reduction ; Article 1 Whereas Article 17a of Regulation (EEC) No 2261 /84 provides that in order to determine the unit amount of the production aid for olive oil that can be paid in advance, the estimated production for the marketing year concerned should be determined ; whereas that amount must be fixed at a level avoiding any risk of unwarranted payment to olive growers ; For the 1987/88 olive oil marketing year : ” the estimated production shall be 1 630 000 tonnes, ” the unit amount of the production aid that may be paid in advance shall be : ” 14,37 ECU/100 kilograms for Spain, ” 9,49 ECU/100 kilograms for Portugal, ” 50,84 ECU/100 kilograms for the other Member States.Whereas, in order to establish the estimated production, the Member States must forward to the Commission the "data for the olive oil production estimates for each marketing year ; whereas the Commission may avail itself of other sources of information ; Article 2 Whereas the amount of the advance withheld for the establishment of the register of olive cultivation provided This Regulation shall enter into force on the dayfollowing its publication in the Official Journal of the European Communities. (') OJ No 172, 30. 9 . 1966, p. 3025/66. (2) OJ No L 110, 29. 4. 1988 , p. 10 . (3) OJ No L 208, 3 . 8 . 1984, p. 3 . (&lt;) OJ No L 89, 6 . 4. 1988 , p. 1 . 0 OJ No L 162, 12. 6. 1982, p . 12. ¥) OJ No L 183, 3 . 7. 1987, p . 12. 25. 6. 88 Official Journal of the European Communities No L 158/ 13 This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 24 June 1988 . For the Commission Frans ANDRIESSEN Vice-President

Exhibit 10.4   Electronic Arts Inc. 209 Redwood Shores Parkway Attn: Russ Evans           Electronic Arts Inc. 209 Redwood Shores Parkway   Attn: Controller       Transfer tax paid per R & T 11932   SPACE ABOVE THIS LINE FOR RECORDER’S USE GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, SELCO SERVICE CORPORATION (“Grantor”), an Ohio corporation doing business in California as OHIO SELCO SERVICE CORPORATION, hereby GRANTS to ELECTRONIC ARTS INC. (“Grantee”), a Delaware corporation, the real property (the “Property”) in the City of Redwood City, County of San Mateo, State of California, particularly described on Schedule 1 attached hereto and made part of this Grant Deed. This Grant Deed is made by Grantor and accepted by Grantee subject to: (i) non-delinquent real property taxes and assessments; (ii) all covenants, conditions, restrictions and easements and all rights of way, encumbrances, and all other exceptions to the title of record; (iii) all matters ascertainable by a reasonable inspection or survey of the Property; and (iv) all matters affecting the condition of title to the Property suffered or created by or with the written consent of Grantee.   SELCO SERVICE CORPORATION, an Ohio corporation doing business in California as OHIO SELCO SERVICE CORPORATION By:   Name:   Todd T. Oliver Title:   Vice President State of Colorado County of Boulder The foregoing instrument was acknowledged before me this 8th day of July, 2009, by Todd T. Oliver, Vice President of SELCO Service Corporation, an Ohio   /s/    Desiré Leaf Notary Public My commission expires 7/15/09 20014021548 (serial number & expiration date) Schedule 1 to Grant Deed Legal Description Real property in the City of Redwood City, County of San Mateo, State of Parcel I: Lot 5, as shown on that certain map entitled “ELECTRONICS ARTS”, filed March 27, 1997, Book 127 of Maps at Pages 86 through 89, San Mateo County Records. Parcel II: Lot 6, as shown on that certain map entitled “ELECTRONICS ARTS”, filed March 27, 1997, Book 127 of Maps at Pages 86 though 89, San Mateo County Records. Parcel III: Non-exclusive easements appurtenant to Parcel II above for utilities and covered walkways as defined in that certain Easement and Covenants Agreement dated March 27, 1997, by and between Shores Business Center Association and Flatirons Funding, Limited Partnership, recorded March 27, 1997, Document No. 97034607, San Mateo County Records, as amended by First Amendment to Easement and Covenants Agreement dated August 31, 1998, recorded September 2, 1998, Document No. 98141940, San Mateo County Records, and by Second Amendment to Easements and Covenants Agreement dated June 13, 2000, and recorded July 10, 2000, Document No. 2000-084044 (“Second Amendment”) over under and across that area described as “Utility and Covered Walkway Easement No. 6-Lot E”, in Exhibit D of the Second Amendment. Parcel IV: Non-exclusive easements appurtenant to Parcels I and II above for utiltities as defined in that certain Easement and Covenants Agreement dated March 27, 1997, by and between Shores Business Center Association and Flatirons Funding, Limited Partnership, recorded March 27, 1997, Document No. 97034607, San Mateo County Records, as amended by First Amendment to Easement and Covenants Agreement dated August 31, 1998, recorded September 2, 1998, Document No. 98141940, San Mateo County Records, and by Second Amendment to Easements and Covenants Agreement dated June 13, 2000, and recorded July 10, 2000, Document No. 2000-084044 (“Second Amendment”) over under and across that area described as “Utility Easement No. 7-Lot E” in Exhibit D of the Second Amendment. Parcel V: Non-exclusive easements appurtenant to Parcels I and II above for utiltities and access as defined in that certain Easement and Covenants Agreement dated as “Utility and Access Easement No. 8-Lot E” in Exhibit D of the Second Amendment. Parcel VI: Easements appurtenant to Parcels I and II above for the purposes set forth in Sections 11.4(a), 11.4(c), 11.5(a) and 11.6 in the Declaration of Covenants, Conditions, Easements and Restrictions, Electronic Arts Business Park recorded September 18, 1998, Document No. 98150182, San Mateo County Records.   APN:    095-481-060    095-481-070 JPN:    127-086-000-05    127-086-000-06

Name: Commission Regulation (EEC) No 1864/82 of 12 July 1982 fixing the import levies on white sugar and raw sugar Type: Regulation Date Published: nan No L 205/ 14 Official Journal of the European Communities 13 . 7 . 82 COMMISSION REGULATION (EEC) No 1864/82 of 12 July 1982 fixing the import levies on white sugar and raw sugar at present in force should be altered to the amounts set out in the Annex hereto, HAS ADOPTED THIS REGULATION : Article 1 THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector ('), as last amended by Regulation (EEC) No 606/82 (2), and in particular Article 16 (8 ) thereof, Whereas the import levies on white sugar and raw sugar were fixed by Regulation (EEC) No 171 6/82 (3), as last amended by Regulation (EEC) No 1856/82 (4) ; Whereas it follows from applying the detailed rules contained in Regulation (EEC) No 1716/82 to the information known to the Commission that the levies The import levies referred to in Article 16 ( 1 ) of Regu ­ lation (EEC) No 1785/81 shall be, in respect of white sugar and standard quality raw sugar, as set out in the Annex hereto . Article 2 This Regulation shall enter into force on 13 July 1982. This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels , 12 July 1982. For the Commission Poul DALSAGER Member of the Commission (') OJ No L 177, I. 7. 1981 , p . 4 . ( 2) OJ No L 74, 18 . 3 . 1982, p . 1 . O OJ No L 189 , 1 . 7 . 1982, p . 42 . (4) OJ No L 203 , 10 . 7 . 1982, p . 21 . ANNEX to the Commission Regulation of 12 July 1982 fixing the import levies on white sugar and raw sugar (ECU/100 k&gt;J CCT heading Description Levy No 17.01 Beet sugar and cane sugar, in solid form : A. White sug;ar : flavoured or coloured sugar 34-80 B. Raw sugar 33-76 (') (') Applicable to raw sugar with a yield of 92 % ; if the yield is other than 92 % , the levy applicable is calculated in accordance with the provisions of Article 2 of Regulation (EEC) No 837/68 .

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) October 22, 2010 TECHE HOLDING COMPANY (Exact name of Registrant as specified in its Charter) Louisiana 1-13712 72-1287456 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 211 Willow Street, Franklin, Louisiana (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (337) 560-7151 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 ¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act ¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act ¨Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act TECHE HOLDING COMPANY INFORMATION TO BE INCLUDED IN THE REPORT Section 2 – Financial Information Item 2.02. Results of Operations and Financial Condition. On October 22, 2010, the Registrant issued a press release to report earnings for the quarter and fiscal year ended June 30, 2010. A copy of the press release is furnished with this Form 8-K as Exhibit 99 and is incorporated herein by reference. Section 9 –Financial Statements and Exhibits Item 9.01. Financial Statements and Exhibits. (d)Exhibits: Exhibit 99 B Press Release dated October 22, 2010 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. TECHE HOLDING COMPANY /s/ J. L. Chauvin Date:October 22, 2010 By: J. L. Chauvin Senior Vice President, Treasurer and Chief Financial Officer

Title: What to do when you go viral Question:One of my posts went viral, and I have been contacted by a few third-party distributors. I do not know what to look for in terms of a contract. Thoughts? Answer #1: For some practical advice, cash out quick, these things tend not to last long in the limelight. IANAL.Answer #2: I worked in that industry as a person who reached out. It's pretty simple. Basically as long as all you want is percentage of profit from the views on YouTube (when I worked in the industry YouTube is the only profit-gainer), then find out who will give you the biggest percent. It gets more complicated if you have a whole channel and plan on posting a lot. They will usually require a certain quota of posts in exchange for essentially being your agent/profit finder for other opportunities.Answer #3: It is not usually worth hiring an attorney unless you have incredibly valuable content. Joe Pieczynski has a good video titled things to think about before licensing on how his negotiations and experiences for a video that went viral. Getting money upfront vs royalties(and if you get royalties how do you know you are not getting shafted), how the sub licensing arrangement works(if you don't understand this you won't get paid for this content), exclusive vs non exclusive, the time lengths for these deals and if you can cancel the deal early are all common things to be aware of. Answer #4: Find an attorney familiar with these sorts of contracts and ask them to review the offers for youAnswer #5: I've had videos go viral before. What to look for depends on who is asking. Some places (usually foreign media companies) are pretty straight forward and not complicated... they will ask for the right to show the content, pay you, and be done. Others try to basically own your content forever, even going as far as demanding merchandising rights. Best case scenario: Have an attorney review the contracts, or someone with experience looking through media contracts. Worst case scenario: If the contract they want you to sign is too complicated, then write your own simplified version where you specifically describe what you are giving them the right to do for how much money. Realistically, your viral video (the UFO halloween one, I'm guessing) is seasonally interesting, so you may not have much time or leverage. Don't sell yourself short, though. I made several thousand dollars off a 15 second video of my dog years ago... so there's definitely money to be made. Good luck.

SPROUT SOCIAL, INC. 2019 CLASS B INCENTIVE AWARD PLAN RESTRICTED STOCK UNIT AWARD GRANT NOTICE AND RESTRICTED STOCK UNIT AGREEMENT 2019 Class B Incentive Award Plan, as amended from time to time (the “Plan”), Restricted Stock Units set forth below (the “RSUs”). The RSUs are subject to the terms and conditions set forth in this Restricted Stock Unit Grant Notice (the “Grant Notice”), the Restricted Stock Unit Agreement attached hereto as Exhibit Participant:   Grant Date:   Number of RSUs:   Class B Common Stock   The RSUs shall be vested in full as of the Grant Date. PARTICIPANT By:              By:              Print Name:   Print Name:   Title:                       EXHIBIT A ARTICLE I. GENERAL of this Agreement, (a)    “Cause” shall mean, unless such term or an equivalent term is otherwise defined by any employment agreement or offer letter between a Participant and a Participating Company, any of the following: (i) the Participant’s theft, Participating Company’s reputation or business or which brings the Participant into widespread public disrepute; (v) the Participant’s repeated failure or Participant’s commission or conviction (including any plea of guilty or nolo her duties with a Participating Company. For purposes of this Agreement, whether its sole discretion. (b)    “Participating Company” shall mean the Company or any of its parents or Subsidiaries. Section 1.2    Incorporation of Terms of Plan. The RSUs and the shares of Class B Common Stock issued to Participant hereunder (“Shares”) are subject to the ARTICLE II.     Section 2.1    Award of RSUs and Dividend Equivalents or service to a Participating Company and for other good and valuable Section 12.2 of the Plan. Each RSU represents the right to receive one Share at the times and subject to the conditions set forth herein. However, unless and until the RSUs have vested, Participant will have no right to the payment of any cash dividends that are paid to all or substantially all holders of the Equivalents for each RSU shall be equal to the amount of cash that is paid as a date. Each additional RSU that results from such deemed reinvestment of Dividend Equivalents granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions that apply to the underlying RSU to which such additional RSU relates. Section 2.2    Vesting of RSUs and Dividend Equivalents. Subject to Participant’s continued employment with or service to a Participating Company on each applicable vesting date and subject to the terms of this forth in the Grant Notice. Each additional RSU that results from deemed reinvestments of Dividend Equivalents pursuant to Section 2.1(b) shall vest whenever the underlying RSU to which such additional RSU relates vests. Section 2.3     in Shares (either in book-entry form or otherwise) as soon as administratively practicable following the vesting of the applicable RSU pursuant to  Section deferral” exemption from Section 409A). Notwithstanding the foregoing, the tax in accordance with Section 2.5 by the Participating Company with respect to Agreement: (a)    The Company or any other Participating Company, as applicable, have the authority to deduct or withhold, or require Participant to remit to the applicable Participating Company, an amount sufficient to satisfy any applicable federal, state, local and foreign taxes (including the employee portion of any FICA obligation) required by Applicable Law to be withheld with respect to any taxable event arising pursuant to this Agreement. A Participating Company may specified below: (i)    by cash or check made payable to the Participating Company with respect Participant; that the Participating Companies withhold a net number of vested Shares otherwise issuable pursuant to the RSUs having a then current Fair Market Value Participating Companies based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income; withholding obligation of the Participating Companies based on the maximum applicable statutory withholding rates in Participant’s applicable jurisdictions are applicable to such taxable income; the Participating Company with respect to which the withholding obligation proceeds is then made to the Company or other applicable Participating Company the RSUs. Participating Company with respect to which the withholding obligation arises. Section 409A. Participating Company takes with respect to any tax withholding obligations that arise in connection with the RSUs. No Participating Company makes any liability. Section 2.6    Rights as Stockholder. Neither Participant nor any Person otherwise provided herein, after such issuance, recordation and delivery, respect to such Shares, including, without limitation, the right to receipt of Section 2.7    Restrictive Covenants. The Participant hereby acknowledges and agrees that he or she is a party to an agreement related to proprietary rights, confidentiality and restrictive covenants by and between Participant and the Company (the “Restrictive Covenant Agreement”), which is incorporated herein by reference, and that such agreement remains in full force and effect. In the event the Participant materially breaches the Restrictive Covenant Agreement or any other written covenants between such Participant and any Participating Company, the Participant shall immediately forfeit any and all RSUs and Dividend Equivalents granted under this Agreement (whether or not vested), and Participant’s rights in any such RSUs and Dividend Equivalents shall lapse and expire. ARTICLE III.     OTHER PROVISIONS Section 3.1    Administration. The Administrator shall have the power to Participant, the Company and all other interested Persons. To the extent and distribution, unless and until the Shares underlying the RSUs have been issued, and all restrictions applicable to such Shares have lapsed. No RSUs or may be transferred to Permitted Transferees, pursuant to any such conditions and procedures the Administrator may require. Section 3.3    Adjustments. The Administrator may accelerate the vesting of all or a portion of the RSUs in such circumstances as it, in its sole discretion, may determine. Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12.2 of the Plan. Section 3.10    Limitations Applicable to Section 16 Persons. Notwithstanding Section 16 of the Exchange Act, the Plan, the RSUs (including RSUs that result from the deemed reinvestment of Dividend Equivalents), the Dividend Equivalents, the Grant Notice and this Agreement shall be subject to any additional employee or other service provider of any Participating Company or shall interfere with or restrict in any way the rights of any Participating Company, between a Participating Company and Participant. Section 3.13    Section 409A. This Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A. However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the Administrator shall indemnify Participant or any other Person for failure to do so) to adopt such this Agreement. Dividend Equivalents. Section 3.17    Broker-Assisted Sales. In the event of any broker-assisted sale Section 2.5(a)(iii) or Section 2.5(a)(v): (a) any Shares to be sold through a Company or other Participating Company with respect to which the withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the Company’s or such other applicable Participating Company’s withholding obligation. US-DOCS\111439344.3

As filed with the Securities and Exchange Commission on April 28, 2011 1933 Act File No. 002-82572 1940 Act File No. 811-03690 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. 36 [ X ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ] Amendment No. 36 [ X ] (Check appropriate box or boxes.) FIRST INVESTORS TAX EXEMPT FUNDS (Exact Name of Registrant as Specified in Charter) 110 Wall Street New York, New York 10005 (Address of Principal Executive Office)(Zip Code) Registrant’s Telephone Number, Including Area Code:(212) 858-8000 Mary Carty, Esq. First Investors Tax Exempt Funds 110 Wall Street New York, New York 10005 (Name and Address of Agent for Service) Copy to: Francine J. Rosenberger, Esq. K&L Gates LLP 1treet, NW Washington, D.C. 20006-1601 It is proposed that this filing will become effective (check appropriate box) [] immediately upon filing pursuant to paragraph (b) [ X ] on May 1, 2011 pursuant to paragraph (b) [] 60 days after filing pursuant to paragraph (a)(1) [] on (date) pursuant to paragraph (a)(1) [] 75 days after filing pursuant to paragraph (a)(2) [] on (date) pursuant to paragraph (a)(2) 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. FIRST INVESTORS TAX EXEMPT FUNDS CONTENTS OF REGISTRATION STATEMENT This registration document is comprised of the following: Cover Sheet Contents of Registration Statement Prospectus for First Investors Tax Exempt Funds Statement of Additional Information for First Investors Tax Exempt Funds Part C – Other Information Signature Page Exhibits Tax Exempt Funds National Tax Exempt Funds Ticker Symbols Tax Exempt Class A: FITAX Class B: FITCX Tax Exempt II Class A: EIITX Class B: EIIUX Single State Tax Exempt Funds Ticker Symbols California Class A: FICAX Class B: − − Connecticut Class A: FICTX Class B: FICUX Massachusetts Class A: FIMAX Class B: FIMGX Michigan Class A: FTMIX Class B: − − Minnesota Class A: FIMNX Class B: − − New Jersey Class A: FINJX Class B: FINKX New York Class A: FNYFX Class B: FNYGX North Carolina Class A: FMTNX Class B: FMTQX Ohio Class A: FIOHX Class B: − − Oregon Class A: FTORX Class B: − − Pennsylvania Class A: FTPAX Class B: FTPDX Virginia Class A: FIVAX Class B: − − The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. THE DATE OF THIS P R O S P E C T U S is MAY 1, 2011 TABLE OF CONTENTS THE FUNDS SUMMARY SECTION 1 Tax Exempt Fund 1 Tax Exempt Fund II 5 California Tax Exempt Fund 9 Connecticut Tax Exempt Fund 13 Massachusetts Tax Exempt Fund 17 Michigan Tax Exempt Fund 21 Minnesota Tax Exempt Fund 25 New Jersey Tax Exempt Fund 29 New York Tax Exempt Fund 33 North Carolina Tax Exempt Fund 37 Ohio Tax Exempt Fund 41 Oregon Tax Exempt Fund 45 Pennsylvania Tax Exempt Fund 49 Virginia Tax Exempt Fund 53 Other Important Information 57 THE FUNDS IN GREATER DETAIL 58 NATIONAL TAX EXEMPT FUNDS 59 Tax Exempt Fund 59 Tax Exempt Fund II 63 SINGLE STATE TAX EXEMPT FUNDS 67 California Minnesota Ohio Connecticut New Jersey Oregon Massachusetts New York Pennsylvania Michigan North Carolina Virginia FUND MANAGEMENT IN GREATER DETAIL 72 SHAREHOLDER INFORMATION 73 How and when do the Funds price their shares? 73 How do I open an account? 74 What about accounts with multiple owners or representatives? 74 How do I make subsequent transactions? 75 How are transactions processed? 76 What are the sales charges? 78 Are sales charge discounts and waivers available? 80 What are the Funds’ policies on frequent trading in the shares of the Funds? 84 What about dividends and capital gain distributions? 84 What about taxes? 85 What if my account falls below the minimum account requirement? 85 Householding policy 85 Other account privileges and policies 86 FINANCIAL HIGHLIGHTS 87 National Tax Exempt Funds 88 Tax Exempt Fund 88 Tax Exempt Fund II 90 Single State Tax Exempt Funds 92 California Minnesota Ohio Connecticut New Jersey Oregon Massachusetts New York Pennsylvania Michigan North Carolina Virginia THE FUNDS SUMMARY SECTION TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from federal income tax and is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.59% 0.59% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.11% 0.11% Total Annual Fund Operating Expenses 1.00% 1.70% 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 Class A shares $671 $875 $1,096 $1,729 Class B shares $573 $836 $1,123 $1,823 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $671 $875 $1,096 $1,729 Class B shares $173 $536 $923 $1,823 1 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.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 18% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from federal income tax, including the AMT. The Fund diversifies its assets among municipal bonds and securities of different states, municipalities, and U.S. territories, rather than concentrating in bonds of a particular state or municipality. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund's duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal taxation, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 2 Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.19% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.01% (for the quarter ended December 31, 2010). 3 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.10% 2.13% 3.27% (Return After Taxes on Distributions) -5.12% 2.05% 3.14% (Return After Taxes on Distributions and Sales of Fund Shares) -1.83% 2.24% 3.26% Class B Shares (Return Before Taxes) -3.75% 2.28% 3.29% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 4 TAX EXEMPT FUND II Investment Objective:The Fund seeks a high level of interest income that is exempt from federal income tax and is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”) and, secondarily, total return. Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.16% 0.16% Total Annual Fund Operating Expenses 1.06% 1.76% 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 Class A shares $677 $893 $1,126 $1,795 Class B shares $579 $854 $1,154 $1,889 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $677 $893 $1,126 $1,795 Class B shares $179 $554 $954 $1,889 5 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.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 107% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from federal income tax, including the AMT. The Fund diversifies its assets among municipal bonds and securities of different states, municipalities, and U.S. territories, rather than concentrating in bonds of a particular state or municipality. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return. The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund seeks total return through actively trading to take advantage of relative value opportunities in the municipal bond market.As a result, the Fund may, at times, engage in short-term trading, which could produce higher transaction costs and taxable distributions and may result in a lower total return and yield for the Fund. The Fund may sell a security for a variety of reasons, including to adjust the Fund's duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal taxation, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Tax Exempt Fund II: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the 6 municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.82% (for the quarter ended September 30, 2009) and the lowest quarterly return was -6.04% (for the quarter ended December 31, 2010). 7 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.10% 2.84% 4.48% (Return After Taxes on Distributions) -5.60% 2.69% 4.27% (Return After Taxes on Distributions and Sales of Fund Shares) -1.90% 2.72% 4.19% Class B Shares (Return Before Taxes) -3.84% 2.98% 4.48% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 8 CALIFORNIA TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of California.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.18% 0.18% Total Annual Fund Operating Expenses 1.08% 1.78% 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 Class A shares Class B shares You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares Class B shares 9 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.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 42% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of California.Such securities include obligations issued by municipalities and other authorities in California and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the California Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 10 Concentration Risk.The Fund’s return will be affected significantly by events that affect California’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.25% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.31% (for the quarter ended December 31, 2010). 11 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.29% 2.11% 3.56% (Return After Taxes on Distributions) -5.32% 2.04% 3.44% (Return After Taxes on Distributions and Sales of Fund Shares) -2.07% 2.20% 3.49% Class B Shares (Return Before Taxes) -4.04% 2.25% 3.55% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 12 CONNECTICUT TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Connecticut.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.17% 0.17% Total Annual Fund Operating Expenses 1.07% 1.77% 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 Class A shares $678 $896 $1,131 $1,806 Class B shares $580 $857 $1,159 $1,899 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $678 $896 $1,131 $1,806 Class B shares $180 $557 $959 $1,899 13 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.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 15% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Connecticut.Such securities include obligations issued by municipalities and other authorities in Connecticut and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Connecticut Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 14 Concentration Risk.The Fund’s return will be affected significantly by events that affect Connecticut’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.37% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.08% (for the quarter ended December 31, 2010). 15 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares ( Return Before Taxes) -5.59% 2.22% 3.54% (Return After Taxes on Distributions) -5.59% 2.18% 3.47% (Return After Taxes on Distributions and Sales of Fund Shares) -2.36% 2.30% 3.51% Class B Shares (Return Before Taxes) -4.38% 2.34% 3.54% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 16 MASSACHUSETTS TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Massachusetts.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.20% 0.20% Total Annual Fund Operating Expenses 1.10% 1.80% 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 Class A shares Class B shares You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares Class B shares 17 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.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 20% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Massachusetts.Such securities include obligations issued by municipalities and other authorities in Massachusetts and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Massachusetts Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 18 Concentration Risk.The Fund’s return will be affected significantly by events that affect Massachusetts’ economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.67% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.31% (for the quarter ended December 31, 2010). 19 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.40% 1.98% 3.39% (Return After Taxes on Distributions) -5.40% 1.91% 3.29% (Return After Taxes on Distributions and Sales of Fund Shares) -2.22% 2.09% 3.37% Class B Shares (Return Before Taxes) -4.27% 2.11% 3.39% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 20 MICHIGAN TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Michigan.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.19% 0.19% Total Annual Fund Operating Expenses 1.09% 1.79% 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 Class A shares $680 $902 $1,141 $1,827 Class B shares $582 $863 $1,170 $1,921 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $680 $902 $1,141 $1,827 Class B shares $182 $563 $970 $1,921 21 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.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 36% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Michigan.Such securities include obligations issued by municipalities and other authorities in Michigan and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Michigan Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 22 Concentration Risk.The Fund’s return will be affected significantly by events that affect Michigan’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.49% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.17% (for the quarter ended December 31, 2010). 23 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -4.75% 2.06% 3.31% (Return After Taxes on Distributions) -4.92% 1.98% 3.18% (Return After Taxes on Distributions and Sales of Fund Shares) -1.56% 2.16% 3.30% Class B Shares (Return Before Taxes) -3.47% 2.20% 3.31% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 24 MINNESOTA TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Minnesota.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.20% 0.20% Total Annual Fund Operating Expenses 1.10% 1.80% 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 Class A shares $681 $905 $1,146 $1,838 Class B shares $583 $866 $1,175 $1,932 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $681 $905 $1,146 $1,838 Class B shares $183 $566 $975 $1,932 25 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.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 30% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Minnesota.Such securities include obligations issued by municipalities and other authorities in Minnesota.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Minnesota Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 26 Concentration Risk.The Fund’s return will be affected significantly by events that affect Minnesota’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 5.68% (for the quarter ended September 30, 2009) and the lowest quarterly return was -4.85% (for the quarter ended December 31, 2010). 27 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.19% 2.42% 3.63% (Return After Taxes on Distributions) -5.19% 2.42% 3.63% (Return After Taxes on Distributions and Sales of Fund Shares) -2.17% 2.50% 3.63% Class B Shares (Return Before Taxes) -3.90% 2.54% 3.64% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 28 NEW JERSEY TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of New Jersey.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.14% 0.14% Total Annual Fund Operating Expenses 1.04% 1.74% 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 Class A shares $675 $887 $1,116 $1,773 Class B shares $577 $848 $1,144 $1,867 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $675 $887 $1,116 $1,773 Class B shares $177 $548 $944 $1,867 29 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.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 21% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of New Jersey.Such securities include obligations issued by municipalities and other authorities in New Jersey and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the New Jersey Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 30 Concentration Risk.The Fund’s return will be affected significantly by events that affect New Jersey’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.29% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.03% (for the quarter ended December 31, 2010). 31 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares ( Return Before Taxes) -5.30% 2.38% 3.47% (Return After Taxes on Distributions) -5.30% 2.30% 3.37% (Return After Taxes on Distributions and Sales of Fund Shares) -2.11% 2.42% 3.43% Class B Shares (Return Before Taxes) -4.17% 2.52% 3.48% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 32 NEW YORK TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of New York.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.12% 0.12% Total Annual Fund Operating Expenses 1.02% 1.72% 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 Class A shares $673 $881 $1,106 $1,751 Class B shares $575 $842 $1,133 $1,845 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $673 $881 $1,106 $1,751 Class B shares $175 $542 $933 $1,845 33 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.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 29% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of New York.Such securities include obligations issued by municipalities and other authorities in New York and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the New York Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 34 Concentration Risk.The Fund’s return will be affected significantly by events that affect New York’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.89% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.11% (for the quarter ended December 31, 2010). 35 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.01% 2.15% 3.31% (Return After Taxes on Distributions) -5.01% 2.15% 3.24% (Return After Taxes on Distributions and Sales of Fund Shares) -1.91% 2.27% 3.31% Class B Shares (Return Before Taxes) -3.72% 2.30% 3.31% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 36 NORTH CAROLINA TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of North Carolina.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.18% 0.18% Total Annual Fund Operating Expenses 1.08% 1.78% 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 Class A shares $679 $899 $1,136 $1,816 Class B shares $581 $860 $1,164 $1,910 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $679 $899 $1,136 $1,816 Class B shares $181 $560 $964 $1,910 37 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.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 18% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of North Carolina.Such securities include obligations issued by municipalities and other authorities in North Carolina and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the North Carolina Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 38 Concentration Risk.The Fund’s return will be affected significantly by events that affect North Carolina’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.98% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.76% (for the quarter ended December 31, 2010). 39 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.02% 2.57% 3.81% (Return After Taxes on Distributions) -5.03% 2.48% 3.73% (Return After Taxes on Distributions and Sales of Fund Shares) -1.96% 2.56% 3.72% Class B Shares (Return Before Taxes) -3.91% 2.71% 3.81% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1992. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 40 OHIO TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Ohio.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.19% 0.19% Total Annual Fund Operating Expenses 1.09% 1.79% 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 Class A shares $680 $902 $1,141 $1,827 Class B shares $582 $863 $1,170 $1,921 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $680 $902 $1,141 $1,827 Class B shares $182 $563 $970 $1,921 41 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.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 30% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Ohio.Such securities include obligations issued by municipalities and other authorities in Ohio and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Ohio Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 42 Concentration Risk.The Fund’s return will be affected significantly by events that affect Ohio’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject toincome tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.45% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.17% (for the quarter ended December 31, 2010). 43 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -4.95% 2.43% 3.61% (Return After Taxes on Distributions) -4.98% 2.32% 3.50% (Return After Taxes on Distributions and Sales of Fund Shares) -1.89% 2.45% 3.55% Class B Shares (Return Before Taxes) -3.70% 2.58% 3.60% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 44 OREGON TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Oregon.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.17% 0.17% Total Annual Fund Operating Expenses 1.07% 1.77% 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 Class A shares $678 $896 $1,131 $1,806 Class B shares $580 $857 $1,159 $1,899 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $678 $896 $1,131 $1,806 Class B shares $180 $557 $959 $1,899 45 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.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 16% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Oregon.Such securities include obligations issued by municipalities and other authorities in Oregon and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Oregon Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 46 Concentration Risk.The Fund’s return will be affected significantly by events that affect Oregon’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 7.51% (for the quarter ended September 30, 2009) and the lowest quarterly return was -5.78% (for the quarter ended December 31, 2010). 47 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -5.19% 2.45% 3.60% (Return After Taxes on Distributions) -5.25% 2.42% 3.57% (Return After Taxes on Distributions and Sales of Fund Shares) -2.15% 2.48% 3.55% Class B Shares (Return Before Taxes) -3.98% 2.59% 3.61% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1992. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and, Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 48 PENNSYLVANIA TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Pennsylvania.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.16% 0.16% Total Annual Fund Operating Expenses 1.06% 1.76% 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 Class A shares $677 $893 $1,126 $1,795 Class B shares $579 $854 $1,154 $1,889 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $677 $893 $1,126 $1,795 Class B shares $179 $554 $954 $1,889 49 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.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 46% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Pennsylvania.Such securities include obligations issued by municipalities and other authorities in Pennsylvania and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Pennsylvania Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 50 Concentration Risk.The Fund’s return will be affected significantly by events that affect Pennsylvania’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.20% (for the quarter ended September 30, 2009) and the lowest quarterly return was -4.57% (for the quarter ended December 31, 2010). 51 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -4.57% 2.51% 3.63% (Return After Taxes on Distributions) -4.68% 2.39% 3.49% (Return After Taxes on Distributions and Sales of Fund Shares) -1.53% 2.50% 3.54% Class B Shares (Return Before Taxes) -3.30% 2.65% 3.63% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 52 VIRGINIA TAX EXEMPT FUND Investment Objective:The Fund seeks a high level of interest income that is exempt from both federal and state income tax for individual residents of the state of Virginia.The Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Fees and Expenses of the Fund:This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.You may qualify for sales charge discounts if you invest, or agree to invest in the future, at least $100,000 in First Investors Funds.More information about these and other discounts is available from your financial representative and in “Are sales charge discounts and waivers available” on page 80 of the Fund’s prospectus and in “Additional Information About Sales Charge Discounts and Waivers” on page II-45 of the Fund’s statement of additional information. Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.75% None Maximum deferred sales charge (load) (as a percentage of the lower of purchase price or redemption price) 1.00% 4.00% Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Management Fees 0.60% 0.60% Distribution and Service (12b-1) Fees 0.30% 1.00% Other Expenses 0.17% 0.17% Total Annual Fund Operating Expenses 1.07% 1.77% 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 Class A shares $678 $896 $1,131 $1,806 Class B shares $580 $857 $1,159 $1,899 You would pay the following expenses if you did not redeem your shares: 1 year 3 years 5 years 10 years Class A shares $678 $896 $1,131 $1,806 Class B shares $180 $557 $959 $1,899 53 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.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 24% of the average value of its whole portfolio. Principal Investment Strategies:The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state of Virginia.Such securities include obligations issued by municipalities and other authorities in Virginia and U.S. possessions and territories, such as Puerto Rico.In certain cases, the interest paid by the Fund may also be exempt from local taxes. The Fund generally invests only in high quality municipal securities that are rated as, or determined by the Fund to be, investment grade at the time of purchase.Typically, the securities purchased by the Fund have maturities of fifteen years or more at the time of purchase.However, the Fund may invest in securities with any maturity and may also invest in the following types of derivatives: inverse floaters, interest rate swaps, futures contracts and options on futures contracts to increase income, hedge against changes in interest rates or enhance potential return.The Fund may purchase or hold securities that are insured against default by independent insurance companies.In selecting investments, the Fund considers a variety of factors, including: a security’s maturity, coupon, yield, credit quality and call protection, its value relative to other types of municipal securities, and the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund’s duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund generally takes taxes into consideration in deciding whether to sell an investment. Principal Risks:You can lose money by investing in the Fund.The Fund is intended for investors who want a high level of income that is exempt from federal and state income tax, are able to assume a moderate degree of risk, and have a long-term investment horizon.Here are the principal risks of investing in the Virginia Tax Exempt Fund: Interest Rate Risk.The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase. Securities with longer maturities are more sensitive to changes in interest rates than securities with shorter maturities.Since the Fund typically purchases securities with longer maturities, the Fund will generally have a high degree of interest rate risk.The Fund’s yield may also decline if interest rates decline. Credit Risk.This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, such as economic, political, regulatory, or legal developments; a downgrade in an issuer’s credit rating; or other adverse news about the issuer. Municipal Securities Risk.The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. 54 Concentration Risk.The Fund’s return will be affected significantly by events that affect Virginia’s economy as well as legislative, political and judicial changes in the state.The Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk.During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk.Investments in inverse floaters, interest rate swaps, futures contracts, and options on futures contracts involve risks, such as possible default by a counterparty to a swap agreement, potential losses if interest rates do not move as expected, and the potential for greater losses than if these techniques had not been used.Investments in derivatives can increase the volatility of the Fund’s share price and may expose the Fund to significant additional costs.Derivatives may be difficult to sell, unwind, or value. Tax Risk.The Fund may invest in municipal securities that pay interest that is subject to income tax (including the AMT) or effect transactions that produce taxable capital gains.Interest income on municipal securities held by the Fund may also become subject to income tax due to an adverse change in the law or other events. Security Selection Risk.Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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 Fund’s performance from year to year for Class A shares.The table shows how the Fund’s average annual returns for 1, 5, and 10 years compare to those of a broad measure of market performance.The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.Updated performance information is available by visiting www.firstinvestors.com or by calling 1 (800) 423-4026. Sales charges are not reflected in the bar chart, and if those charges were included, returns would be less than those shown. Total Annual Returns For Calendar Years Ended December 31 During the periods shown, the highest quarterly return was 6.33% (for the quarter ended September 30, 2009) and the lowest quarterly return was -4.13% (for the quarter ended December 31, 2010). 55 Average Annual Total Returns For Periods Ended December 31, 2010 1 Year 5 Years 10 Years Class A Shares (Return Before Taxes) -4.56% 2.22% 3.48% (Return After Taxes on Distributions) -4.56% 2.11% 3.37% (Return After Taxes on Distributions and Sales of Fund Shares) -1.70% 2.25% 3.42% Class B Shares (Return Before Taxes) -3.36% 2.35% 3.47% BofA Merrill Lynch Municipal Securities Master Index (reflects no deduction for fees, expenses or taxes) 2.25% 4.03% 5.08% The after-tax returns are shown only for Class A shares and are calculated using the highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes.Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Adviser:First Investors Management Company, Inc. is the Fund’s investment adviser. Portfolio Manager:Clark D. Wagner, Director of Fixed Income, has served as the Portfolio Manager of the Fund since 1991. Other Important Information About The Fund:For important information about the Purchase and Sale of Fund Shares, Tax Information and Payments to Broker-Dealers and Other Financial Intermediaries, please refer to the section “Other Important Information” on page 57 of this prospectus. 56 Other Important Information Purchase and Sale of Fund Shares:You may purchase or redeem shares of the Funds on any business day by: contacting your financial intermediary in accordance with its policies; writing to the Funds’ transfer agent at the following address: Administrative Data Management Corp., Raritan Plaza I, Edison, NJ 08837; or calling the Funds’ transfer agent at 1 (800) 423-4026.The minimum initial purchase is $1,000.The minimum initial purchase is reduced for certain types of accounts and also for accounts opened under a systematic investment plan.Subsequent investments can be made in any U.S. dollar amount. Tax Information:Each of the Tax Exempt Funds intends to distribute dividends that are generally exempt from federal income tax, including the federal alternative minimum tax. However, a portion of the Funds’ distribution may be subject to such taxes. In addition, the Single State Tax Exempt Funds intend to distribute dividends that are also exempt from state income taxes and, in certain instances, exempt from local taxes for resident shareholders of the state identified in the Fund’s name; however, certain distributions may be subject to capital gains tax. Payments to Broker-Dealers and Other Financial Intermediaries:The Funds are primarily sold to retail investors through their principal underwriter, First Investors Corporation (“FIC”).FIC is an affiliate of the Funds’ adviser and both are subsidiaries of the same holding company.FIC pays its representatives a higher level of compensation for selling First Investors Funds than for selling other funds.This may create a conflict of interest by influencing the representatives to recommend First Investors Funds over other funds.For more information on FIC’s policies ask your representative, see the Funds’ Statement of Additional Information or visit First Investors website at: www.firstinvestors.com. 57 THE FUNDS IN GREATER DETAIL The following sections provide more information about the First Investors Funds that invest primarily in tax exempt municipal securities. Each individual Fund description in this section provides an explanation of the Fund’s objectives, principal investment strategies and risks.To help you decide which Funds may be right for you, we have included in each section examples of who should consider buying the Fund. If you are interested in a municipal bond fund that diversifies its assets nationally among bonds of different states, you should consider the Tax Exempt Fund or Tax Exempt Fund II.If you are interested in a municipal bond fund that invests primarily in the bonds of a single state, you should consider one of our Single State Tax Exempt Funds. None of the Funds in this prospectus pursues a primary strategy of allocating its assets among stocks, bonds, and money market instruments.For most investors, a complete investment program should include each of these asset classes.While stocks have historically outperformed other categories of investments over long periods of time, they generally carry higher risks.There have also been extended periods during which bonds and money market instruments have outperformed stocks.By allocating your assets among different types of funds, you can reduce the overall risk of your portfolio.Of course, even a diversified investment program can result in a loss. The investment objective of each Fund is non-fundamental, which means that the Board of Trustees may change the investment objective of each Fund without shareholder approval.The Board may take such action when it believes that a change in the objective is necessary or appropriate in light of market circumstance or other events. 58 NATIONAL TAX EXEMPT FUNDS TAX EXEMPT FUND What are the Tax Exempt Fund’s objective, principal investment strategies, and principal risks? Objective: The Fund seeks a high level of interest income that is exempt from federal income tax and is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Principal Investment Strategies: The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from federal income tax, including the AMT.Under normal circumstances, at least 80% of the Fund's net assets will be invested in municipal securities that pay interest that is exempt from federal income tax, including the AMT.This is a fundamental investment policy that can only be changed by shareholder approval. Municipal securities are bonds and notes that are issued by state and local governments, the District of Columbia and commonwealths, territories or possessions of the United States (including Guam, Puerto Rico and the U.S. Virgin Islands), or their respective agencies, instrumentalities and authorities.The Fund diversifies its assets among municipal bonds and securities of different states, municipalities, and U.S. territories, rather than concentrating in bonds of a particular state or municipality. The Fund generally invests in high quality municipal securities that are: (a) rated as investment grade, at the time of purchase, by at least one rating organization, such as Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Fitch Ratings; or (b) if unrated, are determined by the Fund’s Adviser to be of investment grade quality.The Fund may invest a portion of its assets in securities that are insured by independent insurance companies as to timely payment of interest and principal to the extent it determines that the insurance improves the credit quality of the securities and the costs of insurance are reasonable in relation to the benefits. The Fund generally pursues its objective of providing shareholders with a high level of tax exempt interest by investing in municipal bonds with maturities of fifteen years or more ("long-term" municipal bonds).Long-term municipal bonds generally offer higher yields than comparable municipal bonds with shorter maturities.However, they are subject to greater fluctuations in value in response to interest rate changes than municipal bonds with shorter maturities. The Fund may continue to hold bonds after they have been purchased without regard to their maturities.For example, consistent with its investment objective, the Fund may retain bonds purchased in the past that have yields that are higher than those that are available in the current interest rate environment. The Fund may also buy and sell municipal securities of any maturity to adjust the duration of its portfolio.Duration is a measurement of a bond's sensitivity to changes in interest rates.For example, if the Fund believes that interest rates are likely to rise, it may attempt to reduce its duration by purchasing municipal securities with shorter maturities or selling municipal securities with longer maturities. The Fund may invest in variable rate and floating rate municipal securities.Variable and floating rate securities pay interest which adjusts at specific intervals or when a benchmark rate changes. 59 The Fund may also invest in the following types of derivatives: futures contracts, options on futures contracts, interest rate swaps and inverse floaters, to increase income, hedge against changes in interest rates or enhance potential return.Derivatives are instruments that derive their values from other instruments, securities or indices. In selecting investments, the Fund considers, among other factors, a security’s maturity, coupon and yield, relative value, credit quality and call protection, as well as the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund's duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund will not necessarily sell an investment if its rating or the rating of a company that insures the security is reduced or there is a default by the issuer.The Fund generally takes taxes into consideration in deciding whether to sell an investment.Thus, the Fund may decide not to sell a security if it would result in a capital gain distribution to shareholders. The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions.When the Fund is so invested, it may not achieve its investment objective. Information on the Fund’s recent strategies and holdings can be found in the most recent annual report, and information concerning the Fund’s policies and procedures with respect to disclosure of the Fund’s portfolio holdings is available in the Fund’s Statement of Additional Information (see back cover). The Statement of Additional Information also describes non-principal investment strategies that the Fund may use, including investing in other types of securities that are not described in the prospectus. Principal Risks: You can lose money by investing in the Fund.The likelihood of a loss is greater if you invest for a short period of time.Any investment carries with it some level of risk.Here are the principal risks of investing in the Tax Exempt Fund: Interest Rate Risk: The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase.Generally, the longer the maturity and duration of a municipal security, the greater its sensitivity to interest rates.Since the Fund invests in long-term municipal bonds, the Fund's net asset value could decline significantly as a result of interest rate changes. Interest rate risk also includes the risk that the yields on municipal securities will decline as interest rates decline.The investments that the Fund buys generally give the issuer the option to “call” or redeem these investments before their maturity dates.If investments mature or are “called” during a time of declining interest rates, the Fund will have to reinvest the proceeds in investments offering lower yields.The Fund also invests in floating rate and variable rate demand notes.When interest rates decline, the rates paid on these securities may decline. Credit Risk: This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, including but not limited to: (i) A downturn in the national or local economy; 60 (ii) Adverse political or regulatory developments at the local, state or federal level; (iii) Erosion of taxes or other revenues supporting debt obligations; (iv) Constitutional, legislative, executive or voter-initiated limits on borrowing, spending, or raising taxes; (v) Natural disasters, terrorist acts, or energy shortages; (vi) Litigation, including potential lawsuits challenging the Constitutionality or legality of the issuance of municipal debt; and (vii) In the case of revenue bonds, failure of the revenue generated to meet levels sufficient to satisfy debt obligations. A downgrade in an issuer’s credit rating or other adverse news about the issuer can reduce the market value of the issuer’s securities even if the issuer is not in default. The Fund may purchase or hold insured securities.Such insurance is intended to reduce credit risk.However, such insurance does not eliminate credit risk because the insurer may not be financially able to pay interest and principal on the securities that it insures.Moreover, most municipal securities insurers have had their credit ratings downgraded and/or have negative outlooks on their ratings.In the event that the credit rating of an insurance company is downgraded, the market values of the securities insured by such company may be negatively affected.It is also important to note that, although insurance may decrease the credit risk of investments held by the Fund, it decreases the Fund’s yield as the Fund must pay for the insurance directly or indirectly. Municipal Securities Risk: The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. Liquidity Risk: During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk: The use of derivatives involve specific risks, which can increase the volatility of the Fund’s share price and expose the Fund to significant additional costs and the potential for greater losses than if these techniques had not been used.The prices of futures contracts and options on futures contracts can be highly volatile; using them can lower total return; and the potential loss from futures can exceed the Fund’s initial investment in such contracts.Inverse floaters tend to fluctuate significantly more in price in response to changes in interest rates than other municipal securities.Interest rate swaps and certain other derivatives may result in potential losses if interest rates do not move as expected or if the counterparties are unable to satisfy their obligations.The use of derivatives for hedging purpose tends to limit any potential gain that might result from an increase in the value of the hedged position.Moreover, derivatives may be difficult or impossible to sell, unwind, or value due to the lack of a secondary trading market. Tax Risk: The Fund may, from time to time, invest in municipal securities that pay interest that is subject to federal, state, or local income tax, including the federal AMT, or effect transactions that produce taxable capital gains.In addition, tax-exempt interest income received on municipal securities held by the Fund may become subject to federal, state or local income tax due to, among other things, a change in the law, an Internal Revenue Service ruling, noncompliant conduct by a municipal 61 issuer, or a judicial decision, such as a holding that debt was issued in violation of a Constitutional or statutory requirement.As a result of such events, the Fund may make taxable distributions to shareholders. Security Selection Risk: Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations.This may be a result of specific factors relating to the issuer’s financial condition or operations or changes in the economy, governmental actions or inactions, or changes in investor perceptions regarding the issuer. Who should consider buying the Tax Exempt Fund? The Tax Exempt Fund may be used by individuals as a core holding for an investment portfolio or as a base on which to build a portfolio.The Fund is intended for investors who: n Are seeking a relatively conservative investment which provides a high degree of credit quality, n Are seeking income that is exempt from federal income tax, including the AMT, n Are seeking a relatively high level of tax exempt income and are willing to assume a moderate degree of market volatility to achieve this goal, and n Have a long-term investment horizon and are able to ride out market cycles. The Tax Exempt Fund is generally not appropriate for investors who are seeking an investment that does not fluctuate in value, investors who are in very low tax brackets, retirement accounts and corporate or similar business accounts.Different tax rules apply to corporations and other entities. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 62 TAX EXEMPT FUND II What are the Tax Exempt Fund II’s objectives, principal investment strategies, and principal risks? Objectives: The Fund seeks a high level of interest income that is exempt from federal income tax and is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”) and, secondarily, total return. Principal Investment Strategies: The Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from federal income tax, including the AMT.Under normal circumstances, at least 80% of the Fund's net assets will be invested in municipal securities that pay interest that is exempt from federal income tax, including the AMT.This is a fundamental investment policy that can only be changed by shareholder approval. Municipal securities are bonds and notes that are issued by state and local governments, the District of Columbia and commonwealths, territories or possessions of the United States (including Guam, Puerto Rico and the U.S. Virgin Islands), or their respective agencies, instrumentalities and authorities.The Fund diversifies its assets among municipal bonds and securities of different states, municipalities, and U.S. territories, rather than concentrating in bonds of a particular state or municipality. The Fund generally invests in high quality municipal securities that are: (a) rated as investment grade, at the time of purchase, by at least one rating organization, such as Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Fitch Ratings; or (b) if unrated, are determined by the Fund’s Adviser to be of investment grade quality.The Fund may invest a portion of its assets in securities that are insured by independent insurance companies as to timely payment of interest and principal to the extent it determines that the insurance improves the credit quality of the securities and the costs of insurance are reasonable in relation to the benefits. The Fund generally pursues its objective of providing shareholders with a high level of tax exempt interest by investing in municipal bonds with maturities of fifteen years or more ("long-term" municipal bonds).Long-term municipal bonds generally offer higher yields than comparable municipal bonds with shorter maturities.However, they are subject to greater fluctuations in value in response to interest rate changes than municipal bonds with shorter maturities. The Fund may continue to hold bonds after they have been purchased without regard to their maturities.For example, consistent with its investment objective, the Fund may retain bonds purchased in the past that have yields that are higher than those that are available in the current interest rate environment. The Fund may also buy and sell municipal securities of any maturity to adjust the duration of its portfolio.Duration is a measurement of a bond's sensitivity to changes in interest rates.For example, if the Fund believes that interest rates are likely to rise, it may attempt to reduce its duration by purchasing municipal securities with shorter maturities or selling municipal securities with longer maturities. The Fund may invest in variable rate and floating rate municipal securities.Variable and floating rate securities pay interest which adjusts at specific intervals or when a benchmark rate changes. 63 The Fund may also invest in the following types of derivatives: futures contracts, options on futures contracts, interest rate swaps and inverse floaters, to increase income, hedge against changes in interest rates or enhance potential return.Derivatives are instruments that derive their values from other instruments, securities or indices. In selecting investments, the Fund considers, among other factors, a security’s maturity, coupon and yield, relative value, credit quality and call protection, as well as the outlook for interest rates and the economy. The Fund may sell a security for a variety of reasons, including to adjust the Fund's duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Fund will not necessarily sell an investment if its rating or the rating of a company that insures the security is reduced or there is a default by the issuer.The Fund generally takes taxes into consideration in deciding whether to sell an investment.Thus, the Fund may decide not to sell a security if it would result in a capital gain distribution to shareholders. The Fund seeks total return through actively trading to take advantage of relative value opportunities in the municipal bond market.As a result, the Fund may, at times, engage in short-term trading, which could produce higher transaction costs and taxable distributions and may result in a lower total return and yield for the Fund. The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions.When the Fund is so invested, it may not achieve its investment objectives. Information on the Fund’s recent strategies and holdings can be found in the most recent annual report, and information concerning the Fund’s policies and procedures with respect to disclosure of the Fund’s portfolio holdings is available in the Fund’s Statement of Additional Information (see back cover). The Statement of Additional Information also describes non-principal investment strategies that the Fund may use, including investing in other types of securities that are not described in the prospectus. Principal Risks: You can lose money by investing in the Fund.The likelihood of a loss is greater if you invest for a short period of time.Any investment carries with it some level of risk.Here are the principal risks of investing in the Tax Exempt Fund II: Interest Rate Risk: The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of municipal securities increase.Generally, the longer the maturity and duration of a municipal security, the greater its sensitivity to interest rates.Since the Fund invests in long-term municipal bonds, the Fund's net asset value could decline significantly as a result of interest rate changes. Interest rate risk also includes the risk that the yields on municipal securities will decline as interest rates decline.The investments that the Fund buys generally give the issuer the option to “call” or redeem these investments before their maturity dates.If investments mature or are “called” during a time of declining interest rates, the Fund will have to reinvest the proceeds in investments offering lower yields.The Fund also invests in floating rate and variable rate demand notes.When interest rates decline, the rates paid on these securities may decline. 64 Credit Risk: This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, including but not limited to: (i) A downturn in the national or local economy; (ii) Adverse political or regulatory developments at the local, state or federal level; (iii) Erosion of taxes or other revenues supporting debt obligations; (iv) Constitutional, legislative, executive or voter-initiated limits on borrowing, spending, or raising taxes; (v) Natural disasters, terrorist acts, or energy shortages; (vi) Litigation, including potential lawsuits challenging the Constitutionality or legality of the issuance of municipal debt; and (vii) In the case of revenue bonds, failure of the revenue generated to meet levels sufficient to satisfy debt obligations. A downgrade in an issuer’s credit rating or other adverse news about the issuer can reduce the market value of the issuer’s securities even if the issuer is not in default. The Fund may purchase or hold insured securities.Such insurance is intended to reduce credit risk.However, such insurance does not eliminate credit risk because the insurer may not be financially able to pay interest and principal on the securities that it insures.Moreover, most municipal securities insurers have had their credit ratings downgraded and/or have negative outlooks on their ratings.In the event that the credit rating of an insurance company is downgraded, the market values of the securities insured by such company may be negatively affected.It is also important to note that, although insurance may decrease the credit risk of investments held by the Fund, it decreases the Fund’s yield as the Fund must pay for the insurance directly or indirectly. Municipal Securities Risk: The Fund’s return will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. Liquidity Risk: During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk: The use of derivatives involve specific risks, which can increase the volatility of the Fund’s share price and expose the Fund to significant additional costs and the potential for greater losses than if these techniques had not been used.The prices of futures contracts and options on futures contracts can be highly volatile; using them can lower total return; and the potential loss from futures can exceed the Fund’s initial investment in such contracts.Inverse floaters tend to fluctuate significantly more in price in response to changes in interest rates than other municipal securities.Interest rate swaps and certain other derivatives may result in potential losses if interest rates do not move as expected or if the counterparties are unable to satisfy their obligations.The use of derivatives for hedging purpose tends to limit any potential gain that might result from an increase in the value of the hedged position.Moreover, derivatives may be difficult or impossible to sell, unwind, or value due to the lack of a secondary trading market. 65 Tax Risk: The Fund may, from time to time, invest in municipal securities that pay interest that is subject to federal, state, or local income tax, including the federal AMT, or effect transactions that produce taxable capital gains.In addition, tax-exempt interest income received on municipal securities held by the Fund may become subject to federal, state or local income tax due to, among other things, a change in the law, an Internal Revenue Service ruling, noncompliant conduct by a municipal issuer, or a judicial decision, such as a holding that debt was issued in violation of a Constitutional or statutory requirement.As a result of such events, the Fund may make taxable distributions to shareholders. Security Selection Risk: Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations.This may be a result of specific factors relating to the issuer’s financial condition or operations or changes in the economy, governmental actions or inactions, or changes in investor perceptions regarding the issuer. Who should consider buying the Tax Exempt Fund II? The Tax Exempt Fund II may be used by individuals as a core holding for an investment portfolio or as a base on which to build a portfolio.The Fund is intended for investors who: n Are seeking a relatively conservative investment which provides a high degree of credit quality, n Are seeking income that is exempt from federal income tax, including the AMT, n Are seeking a relatively high level of tax exempt income and are willing to assume a moderate degree of market volatility to achieve this goal, and n Have a long-term investment horizon and are able to ride out market cycles. The Tax Exempt Fund II is generally not appropriate for investors who are seeking an investment that does not fluctuate in value, investors who are in very low tax brackets, retirement accounts and corporate or similar business accounts.Different tax rules apply to corporations and other entities. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 66 SINGLE STATE TAX EXEMPTFUNDS What are the Single State Tax Exempt Funds’ objectives, principal investment strategies, and principal risks? Objectives: The California, Connecticut, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania and Virginia Tax Exempt Funds (collectively, the “Single State Tax Exempt Funds” or “Funds”) seek a high level of interest income that is exempt from both federal and state income tax for individual residents of a particular state.Each Fund also seeks income that is not a tax preference item for purposes of the federal alternative minimum tax (“AMT”). Principal Investment Strategies: Each Fund attempts to invest all of its assets in municipal securities that pay interest that is exempt from both federal income tax, including the AMT, and any applicable state income tax for individual residents of the state identified in the name of the Fund.Under normal circumstances, at least 80% of each Fund's net assets will be invested in municipal securities that pay interest that is exempt from federal income tax, including the AMT, and any applicable state income tax for individual residents of the state listed in the name of the Fund.This is a fundamental investment policy that can only be changed by shareholder approval. Municipal securities are bonds and notes that are issued by state and local governments, the District of Columbia and commonwealths, territories or possessions of the United States (including Guam, Puerto Rico and the U.S. Virgin Islands), or their respective agencies, instrumentalities and authorities. Each Fund generally concentrates its assets in municipal bonds and securities of a particular state in order to produce income that is exempt from that state’s income tax for individual residents of the state.For example, the New York Tax Exempt Fund generally invests in New York bonds, the New Jersey Tax Exempt Fund generally invests in New Jersey bonds, and so on.However, each Fund, other than the Minnesota Tax Exempt Fund, may also invest significantly in municipal securities that are issued by U.S. commonwealths, possessions, or territories, such as Puerto Rico, if the interest produced is exempt from state income taxes for residents of the particular state.Under normal circumstances, the Minnesota Tax Exempt Fund will invest only in Minnesota municipal obligations.In certain cases, the interest paid by a Fund may also be exempt from local taxes.For example, for resident shareholders of New York, any exempt-interest dividends paid by the New York Tax Exempt Fund would also be exempt from New York City tax. The Single State Tax Exempt Funds generally invest in high quality municipal securities that are: (a) rated as investment grade, at the time of purchase, by at least one rating organization, such as Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Fitch Ratings; or (b) if unrated, are determined by the Fund’s Adviser to be of investment grade quality.The Single State Tax Exempt Funds may invest a portion of their assets in securities that are insured by independent insurance companies as to timely payment of interest and principal to the extent they determine that the insurance improves the credit quality of the securities and the costs of insurance are reasonable in relation to the benefits. The Funds generally pursue their objectives of providing shareholders with a high level of tax exempt interest by investing in municipal bonds with maturities of fifteen years or more ("long-term" municipal bonds).Long-term 67 municipal bonds generally offer higher yields than comparable municipal bonds with shorter maturities.However, they are subject to greater fluctuations in value in response to interest rate changes than municipal bonds with shorter maturities. The Funds may continue to hold bonds after they have been purchased without regard to their maturities.For example, consistent with their investment objectives, the Funds may retain bonds purchased in the past that have yields that are higher than those that are available in the current interest rate environment. The Funds may also buy and sell municipal securities of any maturity to adjust the duration of its portfolio.Duration is a measurement of a bond's sensitivity to changes in interest rates.For example, if the Funds believe that interest rates are likely to rise, they may attempt to reduce their durations by purchasing municipal securities with shorter maturities or selling municipal securities with longer maturities. Each Fund may invest in variable rate and floating rate municipal securities.Variable and floating rate securities pay interest which adjusts at specific intervals or when a benchmark rate changes. The Funds may also invest in the following types of derivatives: futures contracts, options on futures contracts, interest rate swaps and inverse floaters, to increase income, hedge against changes in interest rates or enhance potential return.Derivatives are instruments that derive their values from other instruments, securities or indices. In selecting investments, the Funds consider, among other factors, a security’s maturity, coupon and yield, relative value, credit quality and call protection, as well as the outlook for interest rates and the economy. The Funds may sell a security for a variety of reasons, including to adjust the Funds’ duration, to replace it with another security that offers a higher yield or better relative value, to respond to a deterioration in its credit quality, or to raise cash to meet redemptions.The Funds will not necessarily sell investments if their ratings or the rating of a company that insures the security are reduced or there is a default by the issuer.The Funds generally take taxes into consideration in deciding whether to sell an investment.Thus, the Funds may decide not to sell a security if it would result in a capital gain distribution to shareholders. The Funds may, from time to time, take temporary defensive positions that are inconsistent with their principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions.When the Funds are so invested, they may not achieve their investment objectives. Information on the Funds’ recent strategies and holdings can be found in the most recent annual report, and information concerning the Funds’ policies and procedures with respect to disclosure of the Funds’ portfolio holdings is available in the Funds’ Statement of Additional Information (see back cover). The Statement of Additional Information also describes non-principal investment strategies that the Funds may use, including investing in other types of securities that are not described in the prospectus. Principal Risks: You can lose money by investing in a Single State Tax Exempt Fund.The likelihood of a loss is greater if you invest for a short period of time.Any investment carries with it some level of risk.Here are the principal risks of investing in the Single State Tax Exempt Funds: Interest Rate Risk: The market value of municipal securities is affected by changes in interest rates.When interest rates rise, the market values of municipal securities decline, and when interest rates decline, the market values of 68 municipal securities increase.Generally, the longer the maturity and duration of a municipal security, the greater its sensitivity to interest rates.Since the Funds invest in long-term municipal bonds, each Fund’s net asset value could decline significantly as a result of interest rate changes. Interest rate risk also includes the risk that the yields on municipal securities will decline as interest rates decline.The investments that the Funds buy generally give the issuer the option to “call” or redeem these investments before their maturity dates.If investments mature or are “called” during a time of declining interest rates, the Funds will have to reinvest the proceeds in investments offering lower yields.The Funds also invest in floating rate and variable rate demand notes.When interest rates decline, the rates paid on these securities may decline. Credit Risk: This is the risk that an issuer of securities will be unable to pay interest or principal when due.A municipal issuer’s ability to pay interest and principal on its debt obligations may be adversely affected by a variety of factors, including but not limited to: (i) A downturn in the national or local economy; (ii) Adverse political or regulatory developments at the local, state or federal level; (iii) Erosion of taxes or other revenues supporting debt obligations; (iv) Constitutional, legislative, executive or voter-initiated limits on borrowing, spending, or raising taxes; (v) Natural disasters, terrorist acts, or energy shortages; (vi) Litigation, including potential lawsuits challenging the Constitutionality or legality of the issuance of municipal debt; and (vii) In the case of revenue bonds, failure of the revenue generated to meet levels sufficient to satisfy debt obligations. A downgrade in an issuer’s credit rating or other adverse news about the issuer can reduce the market value of the issuer’s securities even if the issuer is not in default. The Funds may purchase or hold insured securities.Such insurance is intended to reduce credit risk.However, such insurance does not eliminate credit risk because the insurer may not be financially able to pay interest and principal on the securities that it insures. Moreover, most municipal securities insurers have had their credit ratings downgraded and/or have negative outlooks on their ratings.In the event that the credit rating of an insurance company is downgraded, the market values of the securities insured by such company may be negatively affected.It is also important to note that, although insurance may decrease the credit risk of investments held by each Fund, it decreases a Fund’s yield as the Fund must pay for the insurance directly or indirectly. Municipal Securities Risk: The Funds’ returns will be impacted by events that affect the municipal securities markets, including legislative, political, or judicial developments that are perceived to have a negative effect on municipal securities and economic conditions that threaten the ability of municipalities to raise taxes or obtain the other sources of revenue that back their securities. Concentration Risk: Since each Fund generally invests in the municipal securities of a particular state, each Fund is more vulnerable than more geographically diversified funds to events in a particular state that could reduce the value of municipal securities issued within the state.Such events could include, but are not limited to, economic or demographic factors that may cause a decrease in tax or other revenues for a state or its municipalities, state legislative 69 changes (especially those changes regarding taxes), state constitutional limits on tax increases, judicial decisions declaring particular municipal securities to be unconstitutional or void, budget deficits and other financial difficulties.State economies have been negatively impacted by the recession that began in December 2007.The deterioration of a state’s fiscal situation increases the risk of investing in that state’s municipal securities, including the risk of potential issuer default, and also heightens the risk that the prices of state municipal securities, and a Fund’s net asset value and/or yield, will experience greater volatility.Due to the limited availability of municipal securities that are exempt from taxes in a particular state, each single state Fund’s portfolio may be concentrated in a relatively small number of issuers. Liquidity Risk: During times of market stress, it may be difficult to sell municipal securities at reasonable prices. Derivatives Risk: The use of derivatives involve specific risks, which can increase the volatility of the Funds’ share price and expose the Funds to significant additional costs and the potential for greater losses than if these techniques had not been used.The prices of futures contracts and options on futures contracts can be highly volatile; using them can lower total return; and the potential loss from futures can exceed the Funds’ initial investment in such contracts.Inverse floaters tend to fluctuate significantly more in price in response to changes in interest rates than other municipal securities.Interest rate swaps and certain other derivatives may result in potential losses if interest rates do not move as expected or if the counterparties are unable to satisfy their obligations.The use of derivatives for hedging purpose tends to limit any potential gain that might result from an increase in the value of the hedged position.Moreover, derivatives may be difficult or impossible to sell, unwind, or value due to the lack of a secondary trading market. Tax Risk: Each Fund may, from time to time, invest in municipal securities that pay interest that is subject to federal, state, or local income tax, including the federal AMT, or effect transactions that produce taxable capital gains.In addition, tax-exempt interest income received on municipal securities held by a Fund may become subject to federal, state or local income tax due to, among other things, a change in the law, an Internal Revenue Service ruling, noncompliant conduct by a municipal issuer, or a judicial decision, such as a holding that debt was issued in violation of a Constitutional or statutory requirement.As a result of such events, a Fund may make taxable distributions to shareholders. Security Selection Risk: Securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations.This may be a result of specific factors relating to the issuer’s financial condition or operations or changes in the economy, governmental actions or inactions, or changes in investor perceptions regarding the issuer. 70 Who should consider buying a Single State Tax Exempt Fund? A Single State Tax Exempt Fund may be used by individuals as a core holding for an investment portfolio or as a base on which to build a portfolio.A Single State Tax Exempt Fund is intended for investors who: n Are seeking a relatively conservative investment which provides a high degree of credit quality, n Are seeking income that is exempt from federal income tax, including the AMT, and from state income tax for individual residents of a particular state, n Are seeking a relatively high level of tax exempt income and are willing to assume a moderate degree of market volatility, and n Have a long-term investment horizon and are able toride out market cycles. The Single State Tax Exempt Funds are generally not appropriate for investors who are seeking an investment that does not fluctuate in value, investors who are in very low tax brackets, retirement accounts and corporate or similar business accounts.Different tax rules apply to corporations and other entities. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 71 FUND MANAGEMENT IN GREATER DETAIL The Adviser. First Investors Management Company, Inc. (“FIMCO” or “Adviser”) is the investment adviser to each Fund.FIMCO has been the investment adviser to the First Investors Family of Funds since 1965.Its address is 110 Wall Street, New York, NY 10005.As of December 31, 2010, FIMCO served as investment adviser to 38 mutual funds or series of funds with total net assets of approximately $7.1 billion.FIMCO supervises all aspects of each Fund’s operations. For the fiscal year ended December 31, 2010, FIMCO received advisory fees, net of waiver, in the amount of 0.55% of average daily net assets for each Fund.During the fiscal year ended December 31, 2010, the Adviser waived advisory fees in excess of 0.55% for each Fund.The waivers are not reflected in the Annual Fund Operating Expense tables, which are located in the “The Funds Summary Section” of this prospectus.Any such waiver is voluntary and may be discontinued at anytime without notice. Clark D. Wagner, Director of Fixed Income, has served as Portfolio Manager of each of the Funds since 1991, except for the North Carolina and Oregon Funds, in which case he has been the Portfolio Manager since their inception in 1992.Mr. Wagner also serves as a Portfolio Manager or Co-Portfolio Manager of other First Investors Funds and has been a Portfolio Manager with FIMCO since 1991. Other Information. The Statement of Additional Information provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager, and the portfolio manager’s ownership of securities in a Fund. Descriptions of the factors considered by the Board of Trustees in considering the approval of the Advisory Agreement are available in the Fund’s Semi-Annual Report to shareholders for the six months ending June 30, 2010 and in the Fund’s Annual Report for the fiscal year ending December 31, 2010. The Funds have received an exemptive order from the Securities and Exchange Commission (“SEC”), which permits FIMCO to enter into new or modified subadvisory agreements with existing or new subadvisers without approval of the Funds’ shareholders but subject to the approval of the Funds’ Board of Trustees.FIMCO has ultimate responsibility, subject to oversight by the Funds’ Board of Trustees, to oversee the subadvisers and recommend their hiring, termination and replacement.In addition, there is a rule pending at the SEC, which, if adopted, would permit the Funds to act in such manner without seeking an exemptive order.In the event that a subadviser is added or modified, the prospectus will be supplemented. The BofA Merrill Lynch Municipal Securities Master Index (the “Index”) is used by each Fund in the Average Annual Total Returns table as a benchmark for its performance, which is located in the “The Funds Summary Section” of this prospectus.The Index is a total return performance benchmark for the investment grade tax-exempt bond market. 72 SHAREHOLDER INFORMATION How and when do the Funds price their shares? The share price (which is called “net asset value” or “NAV” per share) for each Fund is calculated as of the close of regular trading on the New York Stock Exchange (“NYSE”) (normally 4:00 p.m. Eastern Time) each day that the NYSE is open (“Business Day”).Shares of each Fund will not be priced on the days on which the NYSE is closed for trading, such as on most national holidays and Good Friday.In the event that the NYSE closes early, the share price will be determined as of the time of the closing. To calculate the NAV, each Fund first values its assets, subtracts its liabilities and then divides the balance, called net assets, by the number of shares outstanding.The prices or NAVs of Class A shares and Class B shares will generally differ because they have different expenses. Each Fund generally values its investments based upon their last reported sale prices, market quotations, or estimates of value provided by a pricing service as of the close of trading on the NYSE (collectively, “current market values”).Debt obligations with maturities of 60 days or less are valued at amortized cost. If current market values for investments are not readily available, are deemed to be unreliable, or do not appear to reflect significant events that have occurred prior to the close of trading on the NYSE, the investments may be valued at fair value prices as determined by the investment adviser of the Funds under procedures that have been approved by the Board of Trustees of the Funds.The Funds may fair value a security due to, among other things, the fact that: (a) a pricing service does not offer a current market value for the security; (b) a current market value furnished by a pricing service is believed to be stale; (c) the security does not open for trading or stops trading and does not resume trading before the close of trading on the NYSE, pending some corporate announcement or development; or (d) the security is illiquid or trades infrequently and its market value is therefore slow to react to information.In such cases, the Fund’s investment adviser will price the security based upon its estimate of the security’s market value using some or all of the following factors: the information that is available as of the close of trading on the NYSE, including issuer-specific news; general market movements; sector movements; or movements of similar securities. In the event that a security is priced using fair value pricing, a Fund’s value for that security is likely to be different than the security’s last reported market sale price or quotation.Moreover, fair value pricing is based upon opinions or predictions on how events or information may affect market prices.Thus, different investment advisers may, in good faith and using reasonable procedures, conclude that the same security has a different fair value.Finally, the use of fair value pricing for one or more securities held by a Fund could cause a Fund’s net asset value to be materially different than if the Fund had employed market values in pricing its securities. 73 How do I open an account? You can open an account through a representative of the Funds’ principal underwriter, First Investors Corporation, orany other financial intermediary that is authorized to sell the Funds (collectively, your “Representative”).It is generally our policy to only open accounts for U.S. citizens or resident aliens.Your Representative will help you complete the necessary paperwork.The minimum Fund account size is $1,000 for a non-retirement account and $500 for a Roth or Traditional IRA account.The Funds offer lower initial minimum investment requirements for certain types of accounts and may waive the minimum account requirement if you maintain a systematic investment program.The Funds offer a variety of different registration options, including individual, joint, and trust registrations.The various types of registrations and additional information about sales charge waivers and discounts (discussed below) are described in the Funds’ Statement of Additional Information (“SAI”). The SAI is available free of charge by calling 1 (800) 423-4026, by visiting our website at www.firstinvestors.com or by visiting the SEC’s website at www.sec.gov. If you are a new customer, to comply with the USA PATRIOT Act, the Funds are required to obtain certain information about you before we can open your account (including your name, residential street address, date of birth, social security or taxpayer identification number (“TIN”), and citizenship status).In certain circumstances, the Funds may obtain and verify this information with respect to any person authorized to effect transactions in an account.We must also attempt to verify your identity using this information.If we are unable to verify your identity to our satisfaction within a maximum of 60 days of opening your account, we will restrict most types of investments in your account.We reserve the right to liquidate your account at the current net asset value within a maximum of 90 days of its opening if we have not been able to verify your identity.We are not responsible for any loss that may occur and we will not refund any sales charge or contingent deferred sales charge (“CDSC”) that you may incur as a result of our decision to liquidate an account. What about accounts with multiple owners or representatives? If you open an account that has more than one legal owner or legal representative, the Funds will accept oral or written instructions of any type without limitation from any one of the owners or representatives as long as the account has telephone privileges and a signature guarantee is not required to process the transaction.For example, if you open a joint account, any one of the joint tenants may, acting alone and without the consent of the other joint tenants, give the Fund instructions, by telephone or in writing, to (a) redeem shares to the address of record for the account, (b) redeem shares to a pre-designated bank account that may not be owned by you, (c) exchange shares, (d) exchange shares into a joint money market fund account that has check-writing privileges that can be used by any one owner, and (e) change the address of record on the account.The Funds (and their affiliates) have no liability for honoring the instructions of any one joint owner; they have no responsibility for questioning the propriety of instructions of any one joint owner; and they have no obligation to notify joint tenants of transactions in their account other than by sending a single confirmation statement to the address of record or by electronic delivery (if elected).The principle of “notice to one is notice to all” applies.Thus, to the extent permitted by law, we are legally considered to have fulfilled all of our obligations to all joint tenants if we fulfill them with respect to one of the joint tenants.If you open or maintain a joint account, you consent to this policy. Similarly, in the case of an account opened for a trust, a partnership, a corporation, or other entity, it is our policy to accept oral or written instructions from any of the persons 74 designated as having authority over the account as long as the account has telephone privileges.Thus, any one of the designated persons is authorized to provide us with instructions of any type without limitation, including instructions to redeem or transfer funds to other persons.We have no responsibility for reviewing trusts, partnership agreements, articles of incorporation, by-laws or similar documents, whether provided to us or not, to determine if they contain any restrictions on the authority of any one authorized person to provide us with instructions or to control the account.We may send confirmations, statements and other required information to any one of the authorized persons at the address of record for the account or by electronic delivery (if elected).We have no obligation to question the purpose or propriety of any instruction of any authorized person or to let other authorized persons know about any transactions or changes that have been made to the account.If you open or maintain an account for an entity, you consent to this policy. If you do not want any one registered owner or representative on your account to have such flexibility and authority, you must instruct the Funds that you do not authorize them to accept instructions from less than all owners or representatives.You should be aware that this could cause you to incur delays, potential market losses, and additional expenses.You should also be aware that written instructions signed by all owners or representatives may be required to establish certain privileges and for any transaction that requires a signature guarantee under the Funds’ policies.The Funds reserve the right to change their policies concerning accounts with multiple owners or representatives without prior notice. How do I make subsequent transactions? Shareholders may make additional purchases into accounts that have a broker-dealer of record.Shareholders may request redemptions and exchanges into other Funds on any Business Day.The following describes how you can make such subsequent transactions if your account is registered in your name with our transfer agent and your financial intermediary does not control your account.If your shares are held in an omnibus account or your account is controlled by your financial intermediary, you must contact your Representative or financial intermediary for information concerning how to effect transactions since we can only accept instructions from your financial intermediary. 1.Contact your Representative. After you have opened your account, you can buy additional shares of your Fund or other Funds in our fund family, redeem shares, or exchange shares into our other Funds by contacting your Representative.He or she will handle your transaction for you and tell you what paperwork, if any, is required.Written signature guaranteed instructions and other paperwork may be required for certain types of transactions.See our Signature Guarantee Policies and other requirements below. 2.Contact the Funds directly through their transfer agent. You can also buy (provided your account has a broker-dealer of record), sell, or exchange shares of our Funds by contacting the Funds directly through their transfer agent, Administrative Data Management Corp. (“ADM”), Raritan Plaza I, Edison, NJ 08837-3620 or by telephone at 1 (800) 423-4026.You can generally request redemptions or exchanges either by telephone, if you have telephone privileges, or in writing.Certain redemptions may not be transacted by telephone because they require a signature guarantee under our Signature Guarantee Policies, require account specific paperwork, or are not eligible for telephone redemption.The Funds do not generally accept transaction instructions via e-mail, fax, or other electronic means. 75 To confirm that telephone instructions are genuine, the Funds’ transfer agent records each telephone call, asks the caller for information to verify his or her identity and authority over the account (such as the account registration, account number, address of record, and last four digits of the owner’s social security number or the owner’s personal identification number), and sends a confirmation of each transaction to the address of record or by electronic delivery (if elected).The Funds and their transfer agent are not liable for acting on telephone instructions as long as they reasonably believe such instructions to be genuine and the procedures that they use to verify the caller’s identity and authority are reasonable. Telephone privileges are automatically granted to all new customers.It is your responsibility to decline telephone privileges if you do not want them.You may decline telephone privileges by notifying the Fund’s transfer agent that you do not want them.This will not affect your ability to place telephone orders through your Representative.However, declining telephone privileges will prevent you from effecting transactions directly through the Funds by telephone.This may cause you to incur delays, potential market losses, and costs.Additional information about telephone privileges is included in the Funds’ SAI. 3.Signature Guarantee Policies and Other Requirements. The Funds require written instructions signed by all owners with a signature guarantee from a financial institution that is a member of the Securities Transfer Agents Medallion Program for: all redemption requests over $100,000, except for redemptions made via draft check; redemption checks made payable to any person(s) other than the registered shareholder(s); redemption checks mailed to an address other than the address of record; and for redemptions to the address of record when the address of record has changed within thirty (30) days of the request (unless the written address change request was signed by all owners and signature guaranteed).The Funds may also require signature guarantees to establish or amend certain account privileges or services and in certain other situations.These are described in the Funds’ SAI. For trusts, estates, attorneys-in-fact, corporations, partnerships, and other entities, additional documents are required to confirm legal authority over the account, unless they are already on file.For example, the Funds require a Certificate of Authority to be on file before they will honor a request for a redemption for an account established for a partnership, corporation, or trust.Similarly, the Funds require official records, such as death certificates and letters testamentary or court orders, before honoring redemptions of accounts registered to decedents or wards under guardianships or conservatorships.If we are being asked to redeem a retirement account and transfer the proceeds to another financial institution, we may also require a Letter of Acceptance from the successor custodian and, for a 403(b) or 457 account, the signature of your employer or third-party administrator.The Funds’ transfer agent may, in its discretion, waive certain requirements for redemptions. Exchanges may only be made into the same class of shares of another First Investors Fund owned by the same customer that is available for sale to the customer.There is no sales charge on an exchange.However, since an exchange of Fund shares is a redemption and a purchase, it may create a gain or loss which is reportable for tax purposes.Additional information regarding how to purchase, redeem and exchange shares of the Funds is included in the Funds’ SAI.The Funds reserve the right to change their Signature Guarantee Policies and other policies without prior notice. How are transactions processed? If a purchase, redemption or exchange order is received in good order by the Fund’s 76 transfer agent at its offices in Edison, NJ by the close of regular trading on the NYSE, it will be priced at that day's NAV plus any applicable sales charge for a purchase (“offering price”) or minus any applicable CDSCs for a redemption.If you place your order with your Representative by the close of regular trading on the NYSE, your transaction will also be priced at that day's offering price provided that your order is received by our transfer agent in its Edison, NJ offices by our processing deadline.Orders placed after the close of regular trading on the NYSE, or received in our Edison, NJ offices after our processing deadline, will be priced at the next Business Day's offering price. Each Fund reserves the right to refuse any order to buy shares, without prior notice, if the Fund determines that doing so would be in the best interests of the Fund and its shareholders.The Funds are not responsible for losses stemming from delays in executing transactions that are caused by instructions not being in good order. Payment of redemption proceeds generally will be made within 7 days.If you are redeeming shares which you recently purchased by check or electronic funds transfer, payment may be delayed to verify that your check or electronic funds transfer has cleared (which may take up to 15 days from the date of purchase). The Funds may not suspend or reject a redemption request that is received in good order or delay payment for a redemption for more than seven days (except as described above), except during unusual market conditions affecting the NYSE, in the case of an emergency which makes it impracticable for a Fund to dispose of or value securities it owns or as permitted by the SEC. Each Fund reserves the right to make in-kind redemptions.This means that it could respond to a redemption request by distributing shares of the Fund's underlying investments rather than distributing cash.To the extent a Fund redeems its shares in-kind, the redeeming shareholder assumes any risk of the market price of such securities fluctuating.In addition, the shareholder will bear any brokerage and related costs incurred in disposing of or selling the portfolio securities received from the Fund.For additional information about in-kind redemptions, please refer to the Funds’ SAI. 77 What are the sales charges? Each Fund has two classes of shares, Class A and Class B.While each class invests in the same portfolio of securities, the classes have separate sales charge and expense structures.Because of the different expense structures, each class of shares generally will have different NAVs and dividends. The Class A shares of each Fund are sold at the public offering price, which includes a front-end sales charge.The sales charge declines with the size of your purchase, as illustrated in the Class A shares chart below.Class A shares sold without a sales charge may in some circumstances be subject to a contingent deferred sales charge (“CDSC”), as described below. Class A Shares* Your investment Sales Charge as a percentage of offering price** Sales Charge as a percentage of net amount invested** Less than $100,000 5.75% 6.10% $100,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 or more 0*** 0*** * If you were a shareholder of the Tax Exempt Fund II prior to December 18, 2000, you will continue to be able to purchase additional Class A shares of the Fund at a lower sales charge which was then in effect for as long as you maintain your investment in the Fund – that is, a sales charge (expressed as a percentage of offering price) of 4.75% on investments of less than $100,000; 3.90% on investments of $100,000-$249,999; 2.90% on investments of $250,000-$499,999; and 2.40% on investments of $500,000-$999,999. ** Due to rounding of numbers in calculating a sales charge, you may pay more or less than what is shown above. *** If you invest $1,000,000 or more, you will not pay a front-end sales charge.However, if you make such an investment and then sell your shares within 24 months of purchase, you will pay a CDSC of 1.00% except in certain circumstances.As described further in this prospectus, any applicable CDSCs may be waived under certain circumstances. 78 By contrast, Class B shares are sold at net asset value without any initial sales charge.However, you generally pay a CDSC when you sell your shares.The CDSC declines the longer you hold your shares, as illustrated in the Class B shares chart below.Class B shares convert to Class A shares after eight years. Class B Shares* Year of Redemption CDSC as a percentage of Purchase Price or NAV at Redemption Within the 1st or 2nd year 4% Within the 3rd or 4th year 3 In the 5th year 2 In the 6th year 1 Within the 7th year and 8th year 0 * There is no CDSC on Class B shares that are acquired through reinvestment of dividends or distributions.The CDSC is imposed on the lower of the original purchase price or the net asset value of the shares being sold.For purposes of determining the CDSC, all purchases made during a calendar month are counted as having been made on the first day of that month at the average cost of all purchases made during that month.To keep your CDSC as low as possible, each time you place a request to sell shares, we will first sell any shares in your account that carry no CDSC.If there is an insufficient number of these shares to meet your request in full, we will then sell those shares that have the lowest CDSC.As described further in this prospectus, any applicable CDSCs may also be waived under certain circumstances. The principal advantages of Class A shares are the lower annual operating expenses, the availability of quantity discounts on sales charges for volume purchases and certain account privileges that are available only on Class A shares.The principal advantages of Class B shares are that all of your money is invested from the outset and that the CDSC may be waived under certain circumstances. Because of the annual operating expenses and available volume discounts on Class A shares, we recommend Class A shares (rather than Class B shares) for purchases of $100,000 or more in the aggregate (based upon your holdings in all of our Funds).The Funds will not accept a purchase order for Class B shares of $100,000 or more for a single Fund account unless they are contacted before the order is placed and agree to accept it.If you fail to tell the Funds what class of shares you want, they will purchase Class A shares for you. As a matter of policy, FIC does not permit its representatives to recommend Class B shares of any funds, including the First Investors Funds.If your account is held by a broker-dealer other than FIC, your broker-dealer may also have policies with respect to Class B shares that are more restrictive than those of our Funds.For more information concerning FIC’s policies with respect to Class B Shares, please refer to the Funds’ SAI under the section “Potential Conflicts Of Interests In Distribution Arrangements” or visit First Investors website at: www.firstinvestors.com.You should also be aware that we are not able to monitor purchases that are made through an omnibus account with another broker-dealer.In such case, it is the responsibility of the broker-dealer to observe our $100,000 limit.Your broker-dealer is also responsible for ensuring that you receive any applicable sales charge waivers or discounts that are described in this prospectus. Each Fund has adopted plans pursuant to Rule 12b-1 for its Class A and Class B shares.Each plan allows the Fund to pay fees for the distribution related activities and the ongoing maintenance and servicing of shareholder accounts.The plans provide for payments at annual rates (based on average daily net assets) of up to 0.30% on Class A shares and 1.00% on Class B shares.No more than 0.25% of each Fund’s average daily net assets may be paid under the plans as service fees and no more than 0.75% of each Fund’s 79 average daily net assets may be paid under the Class B plans as asset-based sales charges.Because these fees are paid out of a Fund's assets on an ongoing basis, the higher fees for Class B shares will increase the cost of your investment.Rule 12b-1 fees may cost you more over time than paying other types of sales charges. Are sales charge discounts and waivers available? A.Rights of Accumulation and Letters of Intention. You may qualify for Class A share sales charge discount under our Rights of Accumulation (“ROA”) policy.If you already own shares of First Investors Funds, you are entitled to add the current values of those shares (measured by the current offering price) to your purchase in computing your sales charge.Thus, for example, if you already own shares of First Investors Funds on which you have paid sales charges and those shares are worth $100,000 based on the current offering price, your current purchase of $10,000 is entitled to the $100,000 sales charge discount.Class A shares of our Cash Management Fund are not counted for ROA purposes if they were purchased directly without a sales charge. In computing your sales charge discount level, you are also entitled to credit for the current values of First Investors Fund shares held in the accounts of other shareholders whose accounts are registered under your address of record (i.e., your mailing address on your account) and are serviced by your broker-dealer firm (“Eligible Accounts”).For example, you are entitled to combine the current values of all First Investors Fund shares (measured by the current offering price) owned by you, your spouse, your children, and any other individuals as long as you all share the same address of record and are serviced by the same broker-dealer firm. You can also qualify for a sales charge discount by signing a non-binding letter of intent (“LOI”) to purchase a specific dollar amount of shares within 13 months.For example, your current purchase of $10,000 will be processed at the $100,000 sales charge discount level if you sign an LOI for $100,000. You can include in your LOI, accounts owned jointly by you and your spouse, accounts owned individually by either you or your spouse and accounts that you or your spouse control as custodian or as a responsible individual for your children and trust accounts for which only you and/or your spouse serve as trustee, as long as all accounts share the same address of record and are serviced by the same broker-dealer.For purposes of our LOI policies, spouse is broadly defined to include common law and life partners.Furthermore, an LOI covers both existing accounts and those that are subsequently opened by a designated person during the LOI period.You must use our LOI Agreement Form to designate any additional person(s) you wish to cover and the amount of your LOI.Once an LOI is established, it cannot be amended to add persons who were not specified initially nor can an LOI be “back dated” to cover prior purchases. To ensure that you receive the proper sales charge discount, you must advise your broker-dealer of all Eligible Accounts that can be aggregated with your own accounts for ROA purposes as well as your desire to enter into an LOI (if applicable).In addition, the Fund or your broker-dealer may also ask you to provide account records, statements or other information related to all Eligible Accounts.You should be aware that we are not able to monitor purchases that are made through an omnibus account with another broker-dealer.Your broker-dealer is responsible for processing your order at the correct discount level and for offering you the opportunity to enter into an LOI. You are not legally required to complete the LOI.However, if you fail to do so, your share balance will be reduced to reflect the appropriate sales charge without the LOI.Once an LOI is established, a change of legal 80 ownership of the account to someone else in the LOI group or a change of address will not affect the LOI.However, a change of broker-dealer or a full or partial transfer of ownership of a covered account to someone outside the LOI group will terminate the LOI.If two or more customers are covered by an LOI and one customer changes the broker-dealer on his or her account or transfers a covered account to someone outside of the LOI group before the LOI is complete, the LOI will be terminated on all customers’ accounts and the sales charges on all purchases made under the LOI will be adjusted. By purchasing under an LOI, you agree to the following: n You authorize First Investors to reserve 5% of the shares held under an LOI in escrowed shares until the LOI is completed or is terminated; n You authorize First Investors to sell any or all of the escrowed shares to satisfy any additional sales charges owed if the LOI is not fulfilled or is terminated; and n Although you may exchange all your shares among the Funds, you may not sell the reserve shares held in escrow until you fulfill the LOI or pay the higher sales charge. Purchases made without a sales charge in Class A shares of the Cash Management Fund or pursuant to any of the sales charge waiver provisions set forth below do not count toward the completion of an LOI.For example, if you make a redemption before your LOI is completed and reinvest that amount without paying a sales charge pursuant to our ninety (90) day reinstatement privilege, the amount reinvested will not count towards completion of your LOI.Similarly, any shares that you purchase without paying a sales charge under our free exchange privilege will not count towards completion of your LOI. Additional information about our ROA and LOI policies is included in the Funds’ SAI. B. Sales Charge Waivers and Discounts. Class A Shares May be Purchased Without a Sales Charge: 1.By a current registered representative, employee, officer, director, or trustee of the Funds, First Investors Corp. (“FIC”), or their affiliates (“Associate”), the spouse, life partner, children and grandchildren of such Associate provided that they reside at the same address and they maintain their FIC customer account (“Eligible Relatives”), and any other person who maintains an account that has been coded as an associate account since January 30, 2004.The accounts of such persons are referred to as “Associate Accounts.” 2.By a former Associate or former or current Eligible Relative thereof provided that such person (a) already owns an Associate Account, or (b) is rolling over the proceeds from a First Investors 401(k) or First Investors Profit Sharing Plan account into a Fund account. 3.By an employee of a subadviser of a Fund who is identified in the prospectus as a portfolio manager of the Fund. 4.When Class A share dividends and distributions are automatically reinvested in Class A shares of the same or a different Fund account within the same customer account. 5.When Class A shares are free-exchanged into Class A shares of a different Fund account within the same customer account. 6.When Class A share systematic withdrawal plan payments from one Fund account, other than the Cash Management Fund, are automatically invested into shares of another Fund account in the same class of shares for the same customer account.Class A shares of the Cash Management Fund account may be automatically invested into shares of another Fund account in the same class of shares for the same customer account at NAV if the customer is eligible for the free exchange privilege. 81 7.When loans are repaid, unless the loan was made by redeeming Cash Management Fund shares that were directly purchased. 8.When a qualified group retirement plan (e.g., 401(k), money purchase pension, or profit sharing plan) is reinvesting redemption proceeds back into the same plan from another Fund on which a sales charge or CDSC was paid.* 9.By a qualified group retirement plan with 100 or more eligible employees at the time the account is opened.* 10.By a qualified group retirement plan with $1,000,000 or more in assets in the Funds.* 11.In amounts of $1 million or more.* 12.By individuals under a LOI or ROA of $1 million or more.* 13.When a customer who is at least age 70½ authorizes a distribution from a retirement account and at the same time directs the proceeds to be invested into an account the customer owns individually or jointly provided both accounts have the same broker-dealer and address of record.This waiver applies to Class A money market shares only to the extent that a sales charge had been paid. 14.When a customer requests the removal of an overcontribution made to a retirement account and directs the proceeds to be invested into an account the customer owns individually or jointly provided both accounts have the same broker-dealer and address of record.This waiver applies to Class A money market shares only to the extent that a sales charge had been paid. 15.When you are reinvesting into a Fund, within the same customer account, proceeds of a redemption made within the prior ninety (90) days, from Class A shares of a Fund, on which you paid a front end sales charge.This will reduce your reinstatement privilege to the extent that it results in a waiver of sales charge.You must notify us in writing that you are eligible for the reinstatement privilege.Furthermore, if you are opening or reactivating an account, your investment must meet the Fund’s minimum investment policy. * For items 8 through 12 above, a CDSC will be deducted from shares that are redeemed within 24 months of purchase, unless such shares are exchanged into another Fund.If shares are exchanged into another Fund, the CDSC and the holding period used to calculate it will carry over to the new Fund with one exception.If the exchange is into Class A shares of the Cash Management Fund, the holding period used to calculate the CDSC will be tolled on such shares as long as they remain in the Cash Management Fund, the holding period will resume if the shares are exchanged back into a load Fund, and the CDSC will be imposed if the shares are redeemed from the Cash Management Fund.In order to ensure that the holding period and CDSC are properly computed on shares that are exchanged into the Cash Management Fund, we will create a separate account to hold such exchanged shares.This account will not be entitled to draft check or expedited redemption privileges. In addition, a group retirement plan with 99 or fewer eligible employees at the time the account is opened and less than $1,000,000 in assets in the Funds may purchase Class A shares at a sales charge of 3% (as expressed as a percentage of the offering price). Sales charge waivers and discounts are also available for participants in certain other retirement programs and other categories of investors. Any applicable CDSC on Class A and Class B shares is waived for (or does not apply to): 1.Appreciation on redeemed shares above their original purchase price and shares acquired through dividend or capital gains distributions. 2.Redemptions of shares following the death or disability (as defined in Section 72(m)(7) of the Internal Revenue Code) of an account 82 owner (or in the case of joint accounts, the death of the last surviving joint owner), provided that in the case of disability the shares must have been purchased prior to the disability and the redemptions must be made within one (1) year of the disability.Proof of death or disability is required. 3.Distributions from employee benefit plans due to plan termination. 4.Redemptions to remove an excess contribution from an IRA or qualified retirement plan. 5.Annual redemptions of up to 8% of your account’s value redeemed by a Systematic Withdrawal Plan.Free shares not subject to a CDSC will be redeemed first and will count towards the 8% limit. 6.Redemptions by the Fund when the account falls below the minimum account balance. 7.Redemptions to pay account fees. 8.Required minimum distributions upon reaching age 70½ provided you notify us about the required minimum distribution and you have held the shares for at least three (3) years.Free shares not subject to a CDSC will be redeemed first. 9.When a customer who is at least age 70½ authorizes a distribution from a retirement account and at the same time directs the proceeds to be invested into an account the customer owns individually or jointly provided both accounts have the same broker-dealer and address of record.* 10.When a customer requests the removal of an over contribution made to a retirement account and directs the proceeds to be invested into an account the customer owns individually or jointly provided both accounts have the same broker-dealer and address of record.* 11.If you reinvest into the same class of a load Fund within the same customer account with proceeds from a redemption within the prior ninety (90) days of Class A or B shares on which you paid a CDSC and you notify us in writing of your desire to reinvest the amount, you will be credited, in additional shares, for any CDSC that you paid.If you are reinvesting only a portion of your redemption, you only will be credited with a pro-rated percentage of any CDSC that you paid.If you are opening or reactivating an account, your investment must meet the Fund’s minimum investment policy. *For items 9 and 10, the CDSC will carry over to the new account.The holding period used to calculate the CDSC will also carry over to the new account. The foregoing front end sales charge and CDSC waiver privileges on Class A and Class B shares do not apply to: n Reinvestments of systematic withdrawal amounts; n Automated payments such as Money Line and API; n Salary reduction/Employer contributions sent directly to First Investors for investment into Traditional or Roth 403(b)(7), 457(b), SEP-IRA, SIMPLE IRA or SARSEP-IRA accounts; n Investments made through your representative or broker-dealer over the phone if the amount of the investment that is eligible for the free exchange is less than $100; or n Accounts that are redeemed after ninety (90) days due to a client not verifying his or her identity to our satisfaction. For additional information about sales charge waivers and discounts, please refer to the Funds’ SAI. 83 What are the Funds’ policies on frequent trading in the shares of the Funds? Each Fund is designed for long-term investment purposes and it is not intended to provide a vehicle for frequent trading.The Board of Trustees of the Funds has adopted policies and procedures to detect and prevent frequent trading in the shares of each of the Funds.These policies and procedures apply uniformly to all accounts.However, the ability of the Funds to detect and prevent frequent trading in certain accounts, such as omnibus accounts, is limited. It is the policy of each Fund to decline to accept any new account that the Fund has reason to believe will be used for market timing purposes, based upon the amount invested, the Fund or Funds involved, and the background of the shareholder or broker-dealer involved.Alternatively, a Fund may allow such an account to be opened if it is provided with written assurances that the account will not be used for market timing. It is the policy of the Funds to monitor activity in existing accounts to detect market-timing activity.The criteria used for monitoring differ depending upon the type of account involved.It is the policy of the Funds to reject, without any prior notice, any purchase or exchange transaction if the Funds believe that the transaction is part of a market timing strategy.The Funds also reserve the right to reject exchanges that in the Funds’ view are excessive, even if the activity does not constitute market timing. If the Funds reject an exchange because it is believed to be part of a market timing strategy or otherwise, neither the redemption nor the purchase side of the exchange will be processed.Alternatively, the Funds may restrict exchange activity that is believed to be part of a market timing strategy or refuse to accept exchange requests via telephone, or any other electronic means. In the case of all the Funds, to the extent that the policies of the Funds are not successful in detecting and preventing frequent trading in the shares of the Funds, frequent trading may: (a) interfere with the efficient management of theFunds by, among other things, causing the Funds to hold extra cash or to sell securities to meet redemptions; (b) increase portfolio turnover, brokerage expenses, and administrative costs; and (c) harm the performance of the Funds, particularly for long-term shareholders who do not engage in frequent trading. What about dividends and capital gain distributions? The Tax Exempt Fund, Tax Exempt Fund II, and each Single State Tax Exempt Fund will declare on a daily basis, and pay on a monthly basis, dividends from net investment income.Each Fund will distribute any net realized capital gains on an annual basis, usually before the end of each Fund’s fiscal year.Each Fund may also make an additional distribution in any year, if necessary, to avoid a Federal excise tax on certain undistributed income and capital gains. Dividends and other distributions declared on both classes of each Fund's shares are calculated at the same time and in the same manner.Dividends on Class B shares of each Fund are expected to be lower than those for its Class A shares because of the higher distribution fees borne by the Class B shares. Dividends on each class also might be affected differently by the allocation of other class-specific expenses. You may choose to reinvest all dividends and other distributions at NAV in additional shares of the same class of the distributing Fund or certain other First Investors Funds or receive all dividends and other distributions in cash.If you do not select an option when you open your account, all dividends and other distributions will be reinvested in additional shares of the distributing Fund.If you do not cash a dividend or distribution check, you will 84 not receive interest on the amount of the check while it remains outstanding.If a Fund is unable to obtain a current address for you, it will reinvest your future dividends and other distributions in additional Fund shares in accordance with our “Returned Mail” policy, as described in the Funds’ SAI.No interest will be paid to you while a distribution remains uninvested. A dividend or other distributions declared on a class of shares will be paid in additional shares of the distributing class if it is under $10 or if a Fund has received notice that all account owners are deceased (until written alternate payment instructions and other necessary documents are provided by your legal representative). What about taxes? For individual shareholders, income dividends paid by the Funds should generally be exempt from federal income taxes, including the AMT. However, the Funds reserve the right to buy securities that may produce taxable income. Generally, dividends paid by the Single State Tax Exempt Funds should also be exempt from state income taxes (if any) for individual resident shareholders of the state identified in the Fund’s name and, in certain cases, from local income taxes.For Minnesota residents, exempt interest dividends paid to shareholders from the Minnesota Fund that are derived from specified Minnesota obligations are exempt from the regular Minnesota personal income tax only if 95% or more of the exempt interest dividends paid by the Minnesota Fund are derived from specified Minnesota obligations. Distributions of long-term capital gains (if any) are taxed to you as long-term capital gains, regardless of how long you owned your Fund shares.Distributions of interest income from taxable obligations (if any) and short-term capital gains (if any) are taxed to you as ordinary income.You are taxed in the same manner whether you receive your dividends and capital gain distributions in cash or reinvest them in additional Fund shares. Your sale or exchange of Fund shares may be considered a taxable event for you.Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or a loss on the transaction.You are responsible for any tax liabilities generated by your transactions. What if my account falls below the minimum account requirement? If your account falls below the minimum account balance for any reason other than market fluctuation, each Fund reserves the right to redeem your account without your consent or to impose an annual low balance account fee of $25.Each Fund may also redeem your account or impose a low balance account fee if you have established your account under a systematic investment program and discontinue the program before you meet the minimum account balance.The Funds will give you sixty (60) days notice before taking such action.You may avoid redemption or imposition of a fee by purchasing additional Fund shares, if permitted by law, during this sixty (60) day period to bring your account balance to the required minimum.If you own Class B shares, you will not be charged a CDSC on a low balance redemption. Householding policy It is the policy of each Fund described in this prospectus to mail only one copy of a Fund’s prospectus, annual report, semi-annual report and proxy statements to all shareholders who reside at the same address and share the same last name and have invested in a Fund covered by the same document.You are deemed to consent to this policy unless you specifically revoke this policy and request that separate copies of such documents be mailed to you.In such case, you will begin to receive your own copies within 30 days after our receipt of the revocation.It is the policy of the Funds to mail confirmations and account statements separately to each customer who resides at the 85 same address.The Funds will, however, mail quarterly statements for different customers who reside at the same address in one envelope if each customer consents to this procedure.We are not responsible for any losses that result from your use of this procedure.You may request that separate copies of these disclosure documents be mailed to you by writing to us at:Administrative Data Management Corp., Raritan Plaza I, Edison, NJ 08837-3620 or calling us at: 1 (800) 423-4026. Other account privileges and policies The Funds offer a full range of special privileges, including systematic investments, automatic payroll investments, systematic redemptions, electronic fund transfers, expedited redemptions, draft check writing, a variety of retirement account options, and transfer on death (“TOD”) registration.These privileges are described in the Funds’ SAI.There is an annual custodial fee of $15 for each First Investors Fund IRA, SIMPLE-IRA, SEP-IRA, SARSEP-IRA, MPP/PSP,403(b), 457(b) and ESA custodial account that you maintain, irrespective of the number of Funds that are held in the account.The Funds currently pay this fee.To the extent the Funds pay these fees, the fees are reflected in the overall expenses of the Funds.Therefore, all shareholders of the Funds indirectly bear such fees.If the custodial account holds more than one Fund the fee is allocated equally among each of the Funds.The Funds reserve the right to discontinue paying this fee at any time on forty-five (45) days written notice to account holders.In such event, the fee will be charged to account holders.The custodian also reserves the right to increase or modify the fee on prior written notice.TOD accounts are administered in accordance with First Investors TOD Guidelines.These guidelines are set forth in the Funds’ SAI, which is available for free upon request by calling 1 (800) 423-4026 and by visiting our website at www.firstinvestors.com. 86 FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand the financial performance of each Fund for the years indicated.The following tables set forth the per share data for each fiscal year ended December 31, except as otherwise indicated.The financial highlights shown in the tables for the Funds’ fiscal year ended 2006 represent the financial history of the predecessor funds of the same name, which were acquired by the Funds in a reorganization on April 28, 2006.Each Fund has adopted the financial history of its respective predecessor fund.Certain information reflects financial results for a single Fund share.The total returns in the tables represent the rates that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all dividends and other distributions).The information has been audited by Tait, Weller & Baker LLP, an independent registered public accounting firm, whose report, along with the Funds’ financial statements, is included in the Funds’ SAI, which is available for free upon request and on our website at www.firstinvestors.com. 87 NATIONAL TAX EXEMPT FUNDS TAX EXEMPT FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $9.99 $.411 $(.079) $.332 $.408 $.054 $.462 2007 9.86 .412 (.094) .318 .408 — .408 2008 9.77 .417 (.488) (.071) .413 .006 .419 2009 9.28 .423 .523 .946 .426 — .426 2010 9.80 .424 (.346) .078 .426 .012 .438 CLASS B 2006 $9.97 $.327 $(.067) $.260 $.336 $.054 $.390 2007 9.84 .403 (.156) .247 .337 — .337 2008 9.75 .351 (.483) (.132) .342 .006 .348 2009 9.27 .359 .507 .866 .356 — .356 2010 9.78 .364 (.346) .018 .356 .012 .368 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. a Ratios include 0.11% of interest expense and fees, which is not an operating expense. b Ratios include 0.08% of interest expense and fees, which is not an operating expense. 88 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $9.86 3.41 $704,319 1.10a 1.10a 4.14 1.14a 4.10 22 9.77 3.32 723,211 1.04b 1.04b 4.20 1.10b 4.14 38 9.28 (.73) 678,260 .96 .96 4.38 1.02 4.32 50 9.80 10.36 715,079 .96 .96 4.40 1.02 4.34 26 9.44 .71 686,589 .96 .96 4.30 1.00 4.26 18 CLASS B $9.84 2.66 $2,502 1.83a 1.83a 3.41 1.87a 3.37 22 9.75 2.58 7,866 1.74b 1.74b 3.50 1.80b 3.44 38 9.27 (1.36) 6,981 1.66 1.66 3.68 1.72 3.62 50 9.78 9.47 6,338 1.66 1.66 3.70 1.72 3.64 26 9.43 .11 4,081 1.66 1.66 3.60 1.70 3.56 18 89 TAX EXEMPT FUND II Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions From Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $15.33 $.532 $.192 $.724 $.538 $.136 $.674 2007 15.38 .528 (.155) .373 .523 — .523 2008 15.23 .551 (.702) (.151) .539 — .539 2009 14.54 .597 1.414 2.011 .591 — .591 2010 15.96 .604 (.483) .121 .616 .285 .901 CLASS B 2006 $15.33 $.419 $.185 $.604 $.418 $.136 $.554 2007 15.38 .425 (.162) .263 .413 — .413 2008 15.23 .455 (.712) (.257) .433 — .433 2009 14.54 .498 1.410 1.908 .488 — .488 2010 15.96 .511 (.503) .008 .513 .285 .798 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. 90 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $15.38 4.82 $115,234 1.00 1.01 3.47 1.18 3.29 112 15.23 2.49 116,011 .99 1.00 3.47 1.07 3.39 118 14.54 (.98) 125,623 1.00 1.01 3.72 1.08 3.65 146 15.96 14.02 174,905 1.00 1.00 3.89 1.07 3.82 110 15.18 .67 192,875 1.01 1.01 3.75 1.06 3.70 107 CLASS B $15.38 4.01 $13,781 1.75 1.76 2.72 1.93 2.54 112 15.23 1.75 11,159 1.69 1.70 2.77 1.77 2.69 118 14.54 (1.69) 8,433 1.70 1.71 3.02 1.78 2.95 146 15.96 13.27 8,436 1.70 1.70 3.19 1.77 3.12 110 15.17 (.04) 5,860 1.71 1.71 3.05 1.76 3.00 107 91 SINGLE STATE TAX EXEMPT FUNDS CALIFORNIA FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.19 $.470 $.027 $.497 $.461 $.056 $.517 2007 12.17 .467 (.162) .305 .470 .025 .495 2008 11.98 .476 (.882) (.406) .475 .009 .484 2009 11.09 .475 1.015 1.490 .480 — .480 2010 12.10 .479 (.408) .071 .480 .021 .501 CLASS B 2006 $12.20 $.387 $.011 $.398 $.372 $.056 $.428 2007 12.17 .395 (.165) .230 .385 .025 .410 2008 11.99 .410 (.909) (.499) .392 .009 .401 2009 11.09 .392 1.025 1.417 .397 — .397 2010 12.11 .426 (.438) (.012) .397 .021 .418 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. 92 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income(%) CLASS A $12.17 4.16 $26,592 .85 .86 3.84 1.07 3.62 30 11.98 2.56 25,669 .85 .87 3.89 1.06 3.68 49 11.09 (3.46) 25,264 .85 .86 4.09 1.08 3.87 65 12.10 13.62 29,206 1.01 1.01 4.04 1.08 3.97 60 11.67 .50 31,423 1.03 1.03 3.94 1.08 3.89 42 CLASS B $12.17 3.32 $1,899 1.60 1.61 3.09 1.82 2.87 30 11.99 1.93 1,375 1.55 1.57 3.19 1.76 2.98 49 11.09 (4.23) 953 1.55 1.56 3.39 1.78 3.17 65 12.11 12.92 1,089 1.71 1.71 3.34 1.78 3.27 60 11.68 (.18) 675 1.73 1.73 3.24 1.78 3.19 42 93 CONNECTICUT FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $13.24 $.498 $(.002) $.496 $.501 $.045 $.546 2007 13.19 .488 (.107) .381 .481 — .481 2008 13.09 .499 (.766) (.267) .493 — .493 2009 12.33 .505 1.062 1.567 .507 — .507 2010 13.39 .502 (.465) .037 .507 — .507 CLASS B 2006 $13.22 $.398 $(.008) $.390 $.405 $.045 $.450 2007 13.16 .394 (.096) .298 .388 — .388 2008 13.07 .408 (.759) (.351) .399 — .399 2009 12.32 .415 1.048 1.463 .413 — .413 2010 13.37 .411 (.470) (.059) .411 — .411 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. 94 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $13.19 3.83 $35,707 .88 .89 3.77 1.08 3.57 32 13.09 2.96 36,062 .90 .91 3.75 1.06 3.59 27 12.33 (2.08) 33,740 .90 .91 3.90 1.08 3.73 55 13.39 12.88 36,229 1.01 1.01 3.87 1.08 3.80 20 12.92 .20 33,912 1.02 1.02 3.74 1.07 3.69 15 CLASS B $13.16 3.01 $3,299 1.63 1.64 3.02 1.83 2.82 32 13.07 2.31 2,244 1.60 1.61 3.05 1.76 2.89 27 12.32 (2.72) 1,885 1.60 1.61 3.20 1.78 3.03 55 13.37 12.00 1,557 1.71 1.71 3.17 1.78 3.10 20 12.90 (.52) 888 1.72 1.72 3.04 1.77 2.99 15 95 MASSACHUSETTS FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $11.87 $.467 $(.070) $.397 $.462 $.055 $.517 2007 11.75 .462 (.141) .321 .468 .033 .501 2008 11.57 .463 (.789) (.326) .468 .006 .474 2009 10.77 .453 .921 1.374 .444 — .444 2010 11.70 .456 (.406) .050 .450 — .450 CLASS B 2006 $11.88 $.386 $(.074) $.312 $.377 $.055 $.432 2007 11.76 .390 (.151) .239 .386 .033 .419 2008 11.58 .388 (.793) (.405) .389 .006 .395 2009 10.78 .388 .907 1.295 .365 — .365 2010 11.71 .412 (.450) (.038) .372 — .372 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. 96 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $11.75 3.42 $24,004 .78 .80 3.98 1.12 3.64 16 11.57 2.81 24,120 .75 .77 3.98 1.08 3.65 40 10.77 (2.90) 22,642 .75 .76 4.13 1.11 3.78 39 11.70 12.94 24,776 1.03 1.03 3.97 1.10 3.90 42 11.30 .35 24,258 1.05 1.05 3.88 1.10 3.83 20 CLASS B $11.76 2.69 $2,217 1.53 1.55 3.23 1.87 2.89 16 11.58 2.09 1,726 1.45 1.47 3.28 1.78 2.95 40 10.78 (3.57) 1,485 1.45 1.46 3.43 1.81 3.08 39 11.71 12.15 1,177 1.73 1.73 3.27 1.80 3.20 42 11.30 (.41) 697 1.75 1.75 3.18 1.80 3.13 20 97 MICHIGAN FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.35 $.487 $(.044) $.443 $.503 $.080 $.583 2007 12.21 .479 (.139) .340 .480 — .480 2008 12.07 .479 (.641) (.162) .478 — .478 2009 11.43 .480 .696 1.176 .486 — .486 2010 12.12 .479 (.340) .139 .486 .123 .609 CLASS B 2006 $12.33 $.393 $(.046) $.347 $.407 $.080 $.487 2007 12.19 .394 (.141) .253 .393 — .393 2008 12.05 .399 (.637) (.238) .392 — .392 2009 11.42 .406 .686 1.092 .402 — .402 2010 12.11 .399 (.344) .055 .402 .123 .525 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. 98 Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $12.21 3.68 $29,016 .90 .91 3.96 1.11 3.75 39 12.07 2.86 28,063 .90 .90 3.97 1.09 3.78 26 11.43 (1.35) 28,056 .90 .91 4.08 1.10 3.89 31 12.12 10.46 27,142 1.03 1.03 4.04 1.10 3.97 31 11.65 1.07 25,111 1.04 1.04 3.92 1.09 3.87 36 CLASS B $12.19 2.88 $2,043 1.65 1.66 3.21 1.86 3.00 39 12.05 2.13 1,846 1.60 1.60 3.27 1.79 3.08 26 11.42 (1.99) 1,473 1.60 1.61 3.38 1.80 3.19 31 12.11 9.69 823 1.73 1.73 3.34 1.80 3.27 31 11.64 .38 504 1.74 1.74 3.22 1.79 3.17 36 99 MINNESOTA FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $11.84 $.472 $.009 $.481 $.471 — $.471 2007 11.85 .460 (.112) .348 .458 — .458 2008 11.74 .457 (.400) .057 .457 — .457 2009 11.34 .426 .712 1.138 .418 — .418 2010 12.06 .440 (.356) .084 .434 — .434 CLASS B 2006 $11.86 $.388 $(.002) $.386 $.386 — $.386 2007 11.86 .382 (.116) .266 .376 — .376 2008 11.75 .395 (.417) (.022) .378 — .378 2009 11.35 .354 .695 1.049 .339 — .339 2010 12.06 .412 (.406) .006 .356 — .356 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income(%) CLASS A $11.85 4.16 $15,967 .65 .67 4.01 1.14 3.52 35 11.74 3.02 16,070 .67 .69 3.92 1.13 3.46 47 11.34 .53 19,104 .67 .68 4.00 1.11 3.57 25 12.06 10.16 21,211 1.05 1.05 3.60 1.12 3.53 22 11.71 .63 21,784 1.05 1.05 3.63 1.10 3.58 30 CLASS B $11.86 3.32 $616 1.40 1.42 3.26 1.89 2.77 35 11.75 2.30 527 1.37 1.39 3.22 1.83 2.76 47 11.35 (.16) 319 1.37 1.38 3.30 1.81 2.87 25 12.06 9.33 276 1.75 1.75 2.90 1.82 2.83 22 11.71 (.02) 144 1.75 1.75 2.93 1.80 2.88 30 NEW JERSEY FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.93 $.484 $(.033) $.451 $.480 $.071 $.551 2007 12.83 .483 (.131) .352 .484 .068 .552 2008 12.63 .484 (.599) (.115) .484 .011 .495 2009 12.02 .508 .990 1.498 .498 — .498 2010 13.02 .521 (.453) .068 .518 — .518 CLASS B 2006 $12.91 $.388 $(.033) $.355 $.374 $.071 $.445 2007 12.82 .395 (.134) .261 .393 .068 .461 2008 12.62 .406 (.515) (.109) .394 .107 .501 2009 12.01 .437 .982 1.419 .409 — .409 2010 13.02 .448 (.479) (.031) .429 — .429 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $12.83 3.57 $56,712 .95 .96 3.77 1.06 3.66 19 12.63 2.82 50,444 .95 .96 3.80 1.07 3.68 37 12.02 (.92) 48,137 .95 .96 3.90 1.08 3.78 37 13.02 12.63 52,592 .99 .99 4.00 1.06 3.93 40 12.57 .44 52,542 .99 .99 3.99 1.04 3.94 21 CLASS B $12.82 2.80 $4,929 1.70 1.71 3.02 1.81 2.91 19 12.62 2.09 4,231 1.65 1.66 3.10 1.77 2.98 37 12.01 (1.64) 2,616 1.65 1.66 3.20 1.78 3.08 37 13.02 11.94 1,727 1.69 1.69 3.30 1.76 3.23 40 12.56 (.31) 1,285 1.69 1.69 3.29 1.74 3.24 21 NEW YORK FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $14.37 $.543 $(.044) $.499 $.539 — $.539 2007 14.33 .536 (.136) .400 .540 — .540 2008 14.19 .543 (.742) (.199) .541 — .541 2009 13.45 .578 .949 1.527 .567 — .567 2010 14.41 .576 (.450) .126 .576 — .576 CLASS B 2006 $14.35 $.434 $(.043) $.391 $.431 — $.431 2007 14.31 .435 (.127) .308 .438 — .438 2008 14.18 .443 (.744) (.301) .439 — .439 2009 13.44 .481 .944 1.425 .465 — .465 2010 14.40 .481 (.447) .034 .474 — .474 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $14.33 3.55 $159,859 .97 .98 3.78 1.03 3.73 24 14.19 2.87 148,128 .96 .97 3.78 1.03 3.71 42 13.45 (1.42) 138,706 .97 .97 3.93 1.04 3.86 42 14.41 11.52 149,941 .96 .96 4.10 1.03 4.03 38 13.96 .79 149,798 .97 .97 3.97 1.02 3.92 29 CLASS B $14.31 2.77 $5,847 1.72 1.73 3.03 1.78 2.98 24 14.18 2.20 4,881 1.66 1.67 3.08 1.73 3.01 42 13.44 (2.15) 3,092 1.67 1.67 3.23 1.74 3.16 42 14.40 10.73 2,382 1.66 1.66 3.40 1.73 3.33 38 13.96 .16 1,453 1.67 1.67 3.27 1.72 3.22 29 NORTH CAROLINA FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $13.30 $.512 $.035 $.547 $.506 $.071 $.577 2007 13.27 .504 (.131) .373 .504 .019 .523 2008 13.12 .511 (.601) (.090) .506 .004 .510 2009 12.52 .513 1.001 1.514 .514 — .514 2010 13.52 .520 (.408) .112 .519 .013 .532 CLASS B 2006 $13.29 $.411 $.039 $.450 $.409 $.071 $.480 2007 13.26 .410 (.133) .277 .408 .019 .427 2008 13.11 .421 (.597) (.176) .410 .004 .414 2009 12.52 .421 1.007 1.428 .418 — .418 2010 13.53 .428 (.422) .006 .423 .013 .436 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $13.27 4.20 $22,128 .75 .77 3.85 1.09 3.51 34 13.12 2.89 22,905 .75 .76 3.85 1.07 3.53 20 12.52 (.67) 22,817 .75 .76 4.00 1.09 3.67 46 13.52 12.28 24,580 1.02 1.02 3.90 1.09 3.83 71 13.10 .74 23,224 1.03 1.03 3.80 1.08 3.75 18 CLASS B $13.26 3.45 $4,116 1.50 1.52 3.10 1.84 2.76 34 13.11 2.14 3,153 1.45 1.46 3.15 1.77 2.83 20 12.52 (1.34) 2,255 1.45 1.46 3.30 1.79 2.97 46 13.53 11.55 2,217 1.72 1.72 3.20 1.79 3.13 71 13.10 (.04) 1,212 1.73 1.73 3.10 1.78 3.05 18 OHIO FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.50 $.504 $(.032) $.472 $.506 $.026 $.532 2007 12.44 .488 (.074) .414 .492 .062 .554 2008 12.30 .492 (.483) .009 .487 .022 .509 2009 11.80 .483 .719 1.202 .484 .048 .532 2010 12.47 .484 (.369) .115 .488 .017 .505 CLASS B 2006 $12.51 $.412 $(.036) $.376 $.410 $.026 $.436 2007 12.45 .404 (.076) .328 .406 .062 .468 2008 12.31 .411 (.487) (.076) .402 .022 .424 2009 11.81 .402 .717 1.119 .401 .048 .449 2010 12.48 .406 (.374) .032 .405 .017 .422 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $ 12.44 3.86 $21,889 .75 .77 4.05 1.11 3.69 11 12.30 3.42 21,613 .75 .77 3.97 1.08 3.64 59 11.80 .11 22,189 .75 .76 4.10 1.10 3.76 46 12.47 10.33 22,635 1.03 1.03 3.93 1.10 3.86 42 12.08 .84 23,079 1.04 1.04 3.85 1.09 3.80 30 CLASS B $12.45 3.07 $2,952 1.50 1.52 3.30 1.86 2.94 11 12.31 2.69 2,123 1.45 1.47 3.27 1.78 2.94 59 11.81 (0.60) 1,565 1.45 1.46 3.40 1.80 3.06 46 12.48 9.58 1,106 1.73 1.73 3.23 1.80 3.16 42 12.09 0.18 566 1.74 1.74 3.15 1.79 3.10 30 OREGON FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.97 $.480 $.034 $.514 $.480 $.004 $.484 2007 13.00 .468 (.135) .333 .473 — .473 2008 12.86 .474 (.635) (.161) .469 — .469 2009 12.23 .482 1.079 1.561 .481 — .481 2010 13.31 .485 (.397) .088 .487 .021 .508 CLASS B 2006 $12.94 $.384 $.034 $.418 $.384 $.004 $.388 2007 12.97 .376 (.135) .241 .381 — .381 2008 12.83 .386 (.629) (.243) .377 — .377 2009 12.21 .392 1.076 1.468 .388 — .388 2010 13.29 .393 (.397) (.004) .395 .021 .416 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $13.00 4.04 $31,552 .85 .87 3.73 1.10 3.48 41 12.86 2.63 34,257 .90 .91 3.65 1.08 3.47 29 12.23 (1.26) 35,975 .90 .91 3.79 1.09 3.61 44 13.31 12.91 39,182 1.01 1.01 3.71 1.08 3.64 35 12.89 .58 42,724 1.02 1.02 3.61 1.07 3.56 16 CLASS B $12.97 3.28 $2,436 1.60 1.62 2.98 1.85 2.73 41 12.83 1.90 1,839 1.60 1.61 2.95 1.78 2.77 29 12.21 (1.91) 1,668 1.60 1.61 3.09 1.79 2.91 44 13.29 12.14 1,413 1.71 1.71 3.01 1.78 2.94 35 12.87 (.11) 967 1.72 1.72 2.91 1.77 2.86 16 PENNSYLVANIA FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A 2006 $12.93 $.503 $(.005) $.498 $.504 $.064 $.568 2007 12.86 .496 (.114) .382 .495 .027 .522 2008 12.72 .502 (.476) .026 .495 .011 .506 2009 12.24 .525 .743 1.268 .518 — .518 2010 12.99 .533 (.364) .169 .531 .068 .599 CLASS B 2006 $12.93 $.410 $(.006) $.404 $.400 $.064 $.464 2007 12.87 .414 (.122) .292 .405 .027 .432 2008 12.73 .420 (.481) (.061) .408 .011 .419 2009 12.25 .465 .706 1.171 .431 — .431 2010 12.99 .479 (.398) .081 .443 .068 .511 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $12.86 3.94 $43,678 .90 .91 3.89 1.08 3.71 38 12.72 3.05 39,830 .90 .91 3.91 1.06 3.75 40 12.24 .25 36,747 .90 .90 4.04 1.08 3.86 55 12.99 10.50 41,046 1.00 1.00 4.11 1.07 4.04 56 12.56 1.24 38,601 1.01 1.01 4.07 1.06 4.02 46 CLASS B $12.87 3.18 $2,796 1.65 1.66 3.14 1.83 2.96 38 12.73 2.33 2,315 1.60 1.61 3.21 1.76 3.05 40 12.25 (.45) 1,968 1.60 1.60 3.34 1.78 3.16 55 12.99 9.67 1,413 1.70 1.70 3.41 1.77 3.34 56 12.56 .56 961 1.71 1.71 3.37 1.76 3.32 46 VIRGINIA FUND Per Share Data Net Asset Value at Beginning of Year Income from Investment Operations Less Distributions from Net Investment Income Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Net Investment Income Net Realized Gains Total Distributions CLASS A $13.06 $.495 $.009 $.504 $.492 $.102 $.594 2007 12.97 .483 (.151) .332 .488 .054 .542 2008 12.76 .482 (.575) (.093) .475 .002 .477 2009 12.19 .482 .770 1.252 .482 — .482 2010 12.96 .496 (.327) .169 .489 — .489 CLASS B 2006 $13.02 $.395 $.013 $.408 $.386 $.102 $.488 2007 12.94 .393 (.154) .239 .395 .054 .449 2008 12.73 .394 (.569) (.175) .383 .002 .385 2009 12.17 .395 .758 1.153 .393 — .393 2010 12.93 .419 (.342) .077 .397 — .397 * Calculated without sales charges. † Net of expenses waived or assumed by the Adviser. †† The ratios do not include a reduction of expenses from cash balances maintained with the custodian or from brokerage service arrangements. Total Return Ratios/Supplemental Data Net Asset Value at End of Year Total Return* (%) Net Assets at End of Year (in thou- sands) Ratio to Average Net Assets† Ratio to Average Net Assets Before Expenses Waived or Assumed Portfolio Turnover Rate (%) Net Expenses After Fee Credits (%) Expenses Before Fee Credits†† (%) Net Investment Income (%) Expenses (%) Net Investment Income (%) CLASS A $12.97 3.95 $31,839 .90 .91 3.81 1.10 3.61 29 12.76 2.62 32,637 .90 .91 3.77 1.08 3.59 40 12.19 (.72) 29,464 .90 .91 3.87 1.09 3.69 53 12.96 10.42 33,321 1.02 1.02 3.80 1.09 3.73 25 12.64 1.25 34,516 1.02 1.02 3.81 1.07 3.76 24 CLASS B $12.94 3.19 $1,476 1.65 1.66 3.06 1.85 2.86 29 12.73 1.89 1,488 1.60 1.61 3.07 1.78 2.89 40 12.17 (1.37) 1,386 1.60 1.61 3.17 1.79 2.99 53 12.93 9.59 1,176 1.72 1.72 3.10 1.79 3.03 25 12.61 .54 541 1.72 1.72 3.11 1.77 3.06 24 This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. National Tax Exempt Funds Tax Exempt Tax Exempt II Single State Tax Exempt Funds ■CALIFORNIA ■ CONNECTICUT ■ MASSACHUSETTS ■ MICHIGAN ■ MINNESOTA ■ NEW JERSEY ■ NEW YORK ■ NORTH CAROLINA ■ OHIO ■ OREGON ■ PENNSYLVANIA ■ VIRGINIA For more information about the Funds, the following documents are available for free upon request: Annual/Semi-Annual Reports: Additional information about each Fund’s investments is available in the Fund’s annual and semi-annual reports to shareholders.In each Fund’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year. Statement of Additional Information (SAI): The SAI provides more detailed information about the Funds and is incorporated by reference into this prospectus. To obtain free copies of the Reports and SAI or to obtain other information, you may visit our website at: www.firstinvestors.com or contact the Funds at: Administrative Data Management Corp. Raritan Plaza I Edison, NJ 08837-3620 Telephone: 1 (800) 423-4026 To obtain information about the Funds, including your account balance and transaction history, you may also visit our website at: www.firstinvestors.com.To access your account information, you will need a password. You can review and copy Fund documents (including the Reports and the SAI) at the Public Reference Room of the SEC in Washington, D.C.You can also obtain copies of Fund documents after paying a duplicating fee (i) by writing to the Public Reference Section of the SEC, Washington, D.C. 20549-1520 or (ii) by electronic request at publicinfo@sec.gov.To find out more, call the SEC at 1 (202) 551-8090.Text-only versions of Fund documents can be viewed online or downloaded from the EDGAR database on the SEC’s Internet website at http://www.sec.gov. (Investment Company Act File No. 811-03690) FITE01 FIRST INVESTORS TAX EXEMPT FUNDS Statement of Additional Information dated May 1, 2011 TICKER SYMBOLS CLASS A CLASS B TAX EXEMPT FUND TAX EXEMPT FUND II CALIFORNIA TAX EXEMPT FUND CONNECTICUT TAX EXEMPT FUND MASSACHUSETTS TAX EXEMPT FUND MICHIGAN TAX EXEMPT FUND MINNESOTA TAX EXEMPT FUND NEW JERSEY TAX EXEMPT FUND NEW YORK TAX EXEMPT FUND NORTH CAROLINA TAX EXEMPT FUND OHIO TAX EXEMPT FUND OREGON TAX EXEMPT FUND PENNSYLVANIA TAX EXEMPT FUND VIRGINIA TAX EXEMPT FUND FITAX EIITX FICAX FICTX FIMAX FTMIX FIMNX FINJX FNYFX FMTNX FIOHX FTORX FTPAX FIVAX FITCX EIIUX -- FICUX FIMGX -- -- FINKX FNYGX FMTQX -- -- FTPDX -- 110 Wall Street New York, New York 10005 1 (800) 423-4026 This is a Statement of Additional Information ("SAI") for Tax Exempt Fund, Tax Exempt Fund II, California Tax Exempt Fund, Connecticut Tax Exempt Fund, Massachusetts Tax Exempt Fund, Michigan Tax Exempt Fund, Minnesota Tax Exempt Fund, New Jersey Tax Exempt Fund, New York Tax Exempt Fund, North Carolina Tax Exempt Fund, Ohio Tax Exempt Fund, Oregon Tax Exempt Fund, Pennsylvania Tax Exempt Fund and Virginia Tax Exempt Fund, each of which is a series of First Investors Tax Exempt Funds (the “Trust”).Each series is referred to herein as a “Fund,” or collectively the “Funds.” This SAI is not a prospectus and it should be read in conjunction with each Fund’s prospectus dated May 1, 2011.The financial statements and reports of an independent registered public accounting firm contained in the annual reports to shareholders are incorporated by reference.These Fund documents may be obtained free of charge by contacting the Funds at the address or telephone number noted above or by visiting our website at www.firstinvestors.com. This SAI is divided into two parts – Part I and Part II.Part I contains information that is particular to each Fund that is described in this SAI, while Part II contains information that generally applies to the Funds in the First Investors Family of Funds. I-1 Statement of Additional Information dated May 1, 2011 PART I – TABLE OF CONTENTS Part I contains information that is particular to each Fund that is described in this SAI. HISTORY AND CLASSIFICATION OF THE FUNDS 3 INVESTMENT STRATEGIES, POLICIES AND RISKS 3 INSURANCE 3 PORTFOLIO TURNOVER 4 MANAGEMENT OF THE FUNDS 5 INVESTMENT ADVISORY SERVICES AND FEES 9 PORTFOLIO MANAGERS 11 UNDERWRITER AND DEALERS 14 DISTRIBUTION PLANS 16 ALLOCATION OF PORTFOLIO BROKERAGE 17 ADDITIONAL INFORMATION CONCERNING PURCHASES, REDEMPTIONS, PRICING AND SHAREHOLDER SERVICES 17 TAX INFORMATION 17 BENEFICIAL OWNERSHIP INFORMATION 18 FINANCIAL STATEMENTS 23 APPENDIX A:INVESTMENT STRATEGIES USED BY THE FIRST INVESTORS TAX EXEMPT FUNDS A-1 APPENDIX B:INVESTMENT POLICIES OF THE FIRST INVESTORS TAX EXEMPT FUNDS B-1 PART II – TABLE OF CONTENTS DESCRIPTIONS OF INVESTMENT STRATEGIES AND RISKS 1 I. DEBT SECURITIES 1 II. EQUITY SECURITIES 8 III. FOREIGN SECURITIES EXPOSURE 9 IV. RESTRICTED AND ILLIQUID SECURITIES 11 V. WHEN-ISSUED SECURITIES 11 VI. STANDBY COMMITMENTS 11 VII. FUTURES AND OPTIONS 12 VIII. DERIVATIVES 16 IX. REPURCHASE AGREEMENTS 18 X. TEMPORARY BORROWING 18 XI. TEMPORARY DEFENSIVE INVESTMENTS 18 PORTFOLIO HOLDINGS INFORMATION POLICIES AND PROCEDURES 19 PORTFOLIO TURNOVER 21 MANAGEMENT OF THE FUNDS 21 RESPONSIBILITIES OF THE BOARD OF THE FUNDS 27 UNDERWRITER AND DEALERS 29 POTENTIAL CONFLICTS OF INTERESTS IN DISTRIBUTION ARRANGEMENTS 29 DISTRIBUTION PLANS 30 ADDITIONAL INFORMATION CONCERNING PURCHASES, REDEMPTIONS, PRICING, AND SHAREHOLDER SERVICES 31 DETERMINATION OF NET ASSET VALUE 53 ALLOCATION OF PORTFOLIO BROKERAGE 55 CREDIT RATINGS INFORMATION 56 GENERAL INFORMATION 60 APPENDIX A:TAX INFORMATION A-1 I-2 Statement of Additional Information Part I dated May 1, 2011 HISTORY AND CLASSIFICATION OF THE FUNDS The Trust is an open-end management investment company commonly referred to as a mutual fund.It was organized as a Delaware statutory trust on August 17, 2005.The Trust is authorized to issue an unlimited number of shares of beneficial interest without par value.The Trust consists of the Funds listed on the cover page, each of which is a separate and distinct series of the Trust.Each Fund is diversified.Each Fund has designated two classes of shares, Class A shares and Class B shares (each, a “Class”).Each share of each Class has an equal beneficial interest in the assets, has identical voting, dividend, liquidation and other rights and is subject to the same terms and conditions, except that expenses allocated to a Class may be borne solely by that Class as determined by the Board of Trustees (“Board” or “Trustees”) and a Class may have exclusive voting rights with respect to matters affecting only that Class. On April 28, 2006, each Fund acquired all of the assets of a predecessor fund through a reorganization.Since each Fund’s objective(s) and policies are similar in all material aspects to those of the predecessor fund and since each Fund has the same investment adviser, each Fund has adopted the performance and financial history of the predecessor fund.Consequently, certain information included in the Fund’s prospectus and in this SAI, that is as of a date prior to the date of the Fund’s prospectus and this SAI, represents information of the predecessor fund.On August 10, 2007, the Insured Intermediate Tax Exempt Fund and Florida Insured Tax Exempt Fund reorganized into the Insured Tax Exempt Fund.As of May 26, 2009, the word “Insured” was removed from the name of the Connecticut Tax Exempt Fund, Massachusetts Tax Exempt Fund, Michigan Tax Exempt Fund, Minnesota Tax Exempt Fund, New Jersey Tax Exempt Fund, North Carolina Tax Exempt Fund, Ohio Tax Exempt Fund, Oregon Tax Exempt Fund, Pennsylvania Tax Exempt Fund and Virginia Tax Exempt Fund and, at that time, each Fund also eliminated its investment policy of investing in insured securities.As of February 1, 2010, the word “Insured” was removed from the name of the Tax Exempt Fund, Tax Exempt Fund II, California Tax Exempt Fund and New York Tax Exempt Fund and, at that time, each Fund also eliminated its investment policy of investing in insured securities. The Trust is not required to hold annual shareholder meetings unless required by law.If requested in writing to do so by the holders of at least 10% of a Fund’s or Class’ outstanding shares entitled to vote, as specified in the By-Laws, or when ordered by the Trustees or the President, the Secretary will call a special meeting of shareholders for the purpose of taking action upon any matter requiring the vote of the shareholders or upon any other matter as to which vote is deemed by the Trustees or the President to be necessary or desirable. INVESTMENT STRATEGIES, POLICIES AND RISKS Each Fund’s objective(s), principal investment strategies, and principal risks are described in the prospectus of the Fund.A summary of each of the investment strategies that are used by each Fund is set forth in Appendix A to Part I of this SAI.Each Fund also has investment policies that limit or restrict its ability to engage in certain investment strategies.These policies are set forth in Appendix B to Part I of this SAI.Part II of this SAI provides more detailed descriptions of the investment strategies that may be used by the Funds and the related risks, including strategies that are not considered principal investment strategies and therefore are not described in the prospectus. INSURANCE Each of the Funds may invest in municipal securities that are insured as to their scheduled payments of principal and interest by an independent insurance company that is rated, at the time that a security is purchased, as investment grade by Standard & Poor’s Ratings Services (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”), Fitch Ratings (“Fitch”) or any other rating organization. The insurance is generally provided under an insurance policy obtained by the issuer or underwriter of such municipal security at the time of original issuance (a “New Issue Insurance Policy”).In general, the non-insured securities held by each Fund are limited to municipal securities that are rated as investment grade or, if unrated, are determined by the Fund’s Adviser to be of investment grade quality. I-3 PORTFOLIO TURNOVER The following table reflects the portfolio turnover rate with respect to each Fund for the fiscal years ended December 31, 2009 and 2010.Part II of this SAI provides additional information concerning portfolio turnover, including the methodology that is used to compute portfolio turnover rates. Portfolio Turnover Rates Fund Fiscal Year Ended December 31, 2009 Fiscal Year Ended December 31, 2010 Tax Exempt Fund 26% 18% Tax Exempt Fund II 110% 107% California Tax Exempt Fund 60% 42% Connecticut Tax Exempt Fund 20% 15% Massachusetts Tax Exempt Fund 42% 20% Michigan Tax Exempt Fund 31% 36% Minnesota Tax Exempt Fund 22% 30% New Jersey Tax Exempt Fund 40% 21% New York Tax Exempt Fund 38% 29% North Carolina Tax Exempt Fund 71% 18% Ohio Tax Exempt Fund 42% 30% Oregon Tax Exempt Fund 35% 16% Pennsylvania Tax Exempt Fund 56% 46% Virginia Tax Exempt Fund 25% 24% I-4 MANAGEMENT OF THE FUNDS The First Investors Family of Funds share one common investment adviser, First Investors Management Company, Inc. (“FIMCO” or “Adviser”), and one common Board of Trustees.Part II of the SAI contains additional information concerning FIMCO,the leadership structure and risk oversight responsibilities of the Board, additional information about each Trustee, any standing committees of the Board and the Code of Ethics that has been adopted by the Board. Set forth below is information about the Trustees and certain Officers of the Funds.The information concerning each Trustee’s and Officer’s positions with the Funds and length of service includes positions and length of service with the predecessors of the Funds that were reorganized with and into the Funds on April 28, 2006.Thus, for example, if a Trustee was a Trustee or Director of the predecessor Fund since January 1, 1999, the information will state “Trustee since 1/1/1999”. The address of each Trustee and officer listed below is c/o First Investors Legal Department, 110 Wall Street, New York, NY 10005. Trustees and Officers INDEPENDENT TRUSTEES Name and Date of Birth Position(s) held with Funds covered by this SAI and Length of Service* Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen Other Trusteeships/ Directorships Held Charles R. Barton, III 3/1/65 Trustee since 1/1/2006 Chief Operating Officer since 2007, Board Director since 1989 and Trustee since 1994 of The Barton Group/Barton Mines Corporation (mining and industrial abrasives distribution); and President of Noe Pierson Corporation (land holding and management service provider) since 2004. 38 None Stefan L. Geiringer 11/13/34 Trustee since 1/1/2006 President and Owner of SLG Energy LLC (energy consulting) since 2010; Co-Founder and Senior Vice President (2005-2010) of Real Time Energy Solutions, Inc.; and President and Owner of SLG, Inc. (natural gas shipper) since 2003. 38 None Robert M. Grohol 1/16/32 Trustee since 6/30/2000 and Chairman since 1/1/2010 None/Retired. 38 None Arthur M. Scutro, Jr. 11/9/41 Trustee since 1/1/2006 None/Retired. 38 None Mark R. Ward 11/3/52 Trustee since 1/1/2010 Self employed, Consultant since 2008; Senior Partner, Ernst & Young, LLP, Leader, Mid-Atlantic Asset Management Practice (2003-2007). 38 None I-5 INTERESTED TRUSTEES Name and Date of Birth Position(s) held with Funds covered by this SAI and Length of Service* Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen Other Trusteeships/ Directorships Held Christopher H. Pinkerton** 1/27/58 Trustee and President since 1/19/2011 President and Director of First Investors Consolidated Corporation since 1/19/2011; President and Director since 1/19/2011 and Chairman since 2/4/2011 of First Investors Management Company, Inc. and Administrative Data Management Corp.; Chairman and Director of First Investors Corporation since 1/19/2011; Director since 1/19/2011 and Chairman since 2/11/2011 of First Investors Life Insurance Company; President, US Division, The Independent Order of Foresters, Chairman, Foresters Equity Services (broker-dealer), Chairman, Foresters Financial Partners (independent marketing organization) since 2005; Senior Vice President, Foresters North American Sales and Marketing (2005-2007); President and CEO, USAllianz Investor Services (variable insurance); and Chairman, President and CEO, USAllianz Investment Advisor (investment adviser) (1999-2005). 38 None * Each Trustee serves for an indefinite term until his or her successor is elected and duly qualified, or until his or her death, resignation or removal as provided in the Trust’s organizational documents or by statute. ** Mr. Pinkerton is an interested Trustee because he is an officer and director of the Adviser and principal underwriter of the Funds. I-6 OFFICERS WHO ARE NOT TRUSTEES Name and Date of Birth Position(s) held with Funds covered by this SAI and Length of Service* Principal Occupation(s) During Past 5 Years Joseph I. Benedek 8/2/57 Treasurer since 1988 Treasurer and Principal Accounting Officer of First Investors Management Company, Inc. Mary Carty 11/11/50 Secretary since 11/19/2010 Assistant Counsel of First Investors Management Company, Inc., since 2010.Special Counsel and Associate at Willkie Farr & Gallagher LLP (1998-2009). Marc Milgram 6/9/57 Chief Compliance Officer since 11/22/2010 Investment Compliance Manager of First Investors Management Company, Inc., since 2009; First Investors Federal Savings Bank, President since 2000, Treasurer since 1987 and Director since 2004; First Investors Corporation, Vice President (2008-2009); Administrative Data Management Corp., Vice President (2008-2009); and First Investors Name Saver, Inc. f/k/a School Financial Management Services, Inc., Treasurer since 1992 and Director (1992-2007). * Officers are elected and appointed by the Board for one-year terms. I-7 Trustee Ownership of First Investors Funds As of December 31, 2010 INDEPENDENT TRUSTEES Trustee Funds covered by this SAI Dollar Range of Ownership of Funds covered by this SAI Aggregate Dollar Range of Equity Securities – all Registered Investment Companies overseen by Trustee in First Investors Family of Funds† Charles R. Barton, III None None $50,001-$100,000 Stefan L. Geiringer None None None Robert M. Grohol None None Over $100,000 Arthur M. Scutro, Jr. Tax Exempt Fund $10,001-$50,000 $50,001-$100,000 Mark R. Ward None None None INTERESTED TRUSTEES Trustee Funds covered by this SAI Dollar Range of Ownership of Funds covered by this SAI Aggregate Dollar Range of Equity Securities – all Registered Investment Companies overseen by Trustee in First Investors Family of Funds† Christopher H. Pinkerton None None None † The First Investors Family of Funds consists of 4 registered investment companies with 38 Series funds. As of April 6, 2011, the Trustees and officers, as a group, owned less than 1% of either Class A or Class B shares of each Fund. Compensation of Trustees The following table lists compensation paid to the Trustees by the Trust for the fiscal year ended December 31, 2010. Trustee Aggregate Compensation From Tax Exempt Funds Total Compensation From First Investors Funds Complex Paid to Trustees† Christopher H. Pinkerton1 $0 $0 Charles R. Barton, III $14,079 $64,400 Stefan L. Geiringer $14,079 $64,400 Robert M. Grohol $15,500 $70,900 Arthur M. Scutro, Jr. $14,735 $67,400 Mark R. Ward $13,642 $62,400 1. Compensation to officers and interested Trustees of the Fund is paid by the Adviser. † The First Investors Funds Complex consists of 4 registered investment companies with 38 Series funds. No pension or retirement benefits are proposed to be paid under any existing plan to any Trustee by any Fund, any of its subsidiaries or any other investment companies in the First Investors Family of Funds. I-8 INVESTMENT ADVISORY SERVICES AND FEES Part II of this SAI describes the terms of the Trust’s Advisory Agreement with FIMCO and the respective responsibilities of the Funds and FIMCO under the Agreement. Set forth below are the methods for calculating the current advisory fee paid by each Fund, the fee schedule for each Fund in tabular form, and the actual fees paid and fees waived for each Fund for the past three fiscal years.The fee is accrued daily by each Fund, covered by this SAI, based on the Fund’s net assets, and is allocated daily to each Fund’s Class A shares and Class B shares based on the net assets of that class of shares in relation to the net assets of the Fund as a whole.The fees waived reflect fee schedules that were in effect during the relevant periods shown. Under the Advisory Agreement, each Fund is obligated to pay the Adviser an annual fee that is paid monthly according to the following schedule: Average Daily Net Assets Annual Rate Up to $500 million 0.60% In excess of $500 million up to $1.0 billion 0.58% In excess of $1.0 billion up to $1.5 billion 0.56% Over $1.5 billion 0.54% The following tables reflect the advisory fees paid and advisory fees waived with respect to each Fund for the fiscal years ended December 31, 2008, December 31, 2009 and December 31, 2010. Fiscal Year Ended 12/31/08 Fund Advisory Fees Paid Advisory Fees Waived Tax Exempt Fund Tax Exempt Fund II California Tax Exempt Fund Connecticut Tax Exempt Fund Massachusetts Tax Exempt Fund Michigan Tax Exempt Fund Minnesota Tax Exempt Fund New Jersey Tax Exempt Fund New York Tax Exempt Fund North Carolina Tax Exempt Fund Ohio Tax Exempt Fund Oregon Tax Exempt Fund Pennsylvania Tax Exempt Fund Virginia Tax Exempt Fund I-9 Fiscal Year Ended 12/31/09 Fund Advisory Fees Paid Advisory Fees Waived Tax Exempt Fund Tax Exempt Fund II California Tax Exempt Fund Connecticut Tax Exempt Fund Massachusetts Tax Exempt Fund Michigan Tax Exempt Fund Minnesota Tax Exempt Fund New Jersey Tax Exempt Fund New York Tax Exempt Fund North Carolina Tax Exempt Fund Ohio Tax Exempt Fund $141,838 $16,548 Oregon Tax Exempt Fund Pennsylvania Tax Exempt Fund Virginia Tax Exempt Fund Fiscal Year Ended 12/31/10 Fund Advisory Fees Paid Advisory Fees Waived Tax Exempt Fund $4,294,004 $316,931 Tax Exempt Fund II $1,185,009 $98,751 California Tax Exempt Fund $186,749 $15,562 Connecticut Tax Exempt Fund $222,876 $18,573 Massachusetts Tax Exempt Fund $156,102 $13,008 Michigan Tax Exempt Fund $166,556 $13,880 Minnesota Tax Exempt Fund $132,949 $11,079 New Jersey Tax Exempt Fund $329,831 $27,486 New York Tax Exempt Fund $933,585 $77,799 North Carolina Tax Exempt Fund $159,746 $13,312 Ohio Tax Exempt Fund $144,196 $12,016 Oregon Tax Exempt Fund $259,345 $21,612 Pennsylvania Tax Exempt Fund $250,093 $20,841 Virginia Tax Exempt Fund $212,895 $17,741 I-10 PORTFOLIO MANAGERS The following provides certain information for the portfolio managers of the Adviser who have responsibility for the daily management of the Funds. A. Other Accounts Managed by Portfolio Managers for Fiscal Year Ended December 31, 2010 Name of Portfolio Manager and Fund(s) Covered by this SAI Other Accounts Managed Number of Other Accounts Total Assets of Other Accounts (in millions) Number of Accounts which Advisory Fee is Based on Account Performance Total Assets in the Accounts which Advisory Fee is Based on Account Performance (in millions) FIMCO’s Portfolio Managers: Clark D. Wagner: Tax Exempt Fund Tax Exempt Fund II California Tax Exempt Fund Connecticut Tax Exempt Fund Massachusetts Tax Exempt Fund Michigan Tax Exempt Fund Minnesota Tax Exempt Fund New Jersey Tax Exempt Fund New York Tax Exempt Fund North Carolina Tax Exempt Fund Ohio Tax Exempt Fund Oregon Tax Exempt Fund Pennsylvania Tax Exempt Fund Virginia Tax Exempt Fund Other Registered Investment Companies 6 $1,306.8 0 $0 Other Pooled Investment Vehicles 1 $22.1 0 $0 Other Accounts 2 $221.2 0 $0 B. Potential Conflicts of Interest in Other Managed Accounts for Fiscal Year Ended December 31, 2010 Mr. Wagner manages each of the Funds covered by this SAI in addition to other First Investors mutual funds that are not covered by this SAI.In many cases, the First Investors Funds that are managed by Mr. Wagner are managed similarly, except to the extent required by differences in cash flow, investment policy, or law.Moreover, Mr. Wagner also participates in the day-to-day management of First Investors’ profit sharing plan, the general account of our life insurance company affiliate and FIMCO’s own investment account.Portions of these non-fund accounts may be managed similarly to one or more of the Funds covered by this SAI. The side-by-side management of two or more First Investors Funds or non-fund accounts presents a variety of potential conflicts of interest.For example, the portfolio manager may purchase or sell securities for one portfolio and not another portfolio, and the performance of securities purchased for one portfolio may vary from the performance of securities purchased for other portfolios.A FIMCO portfolio manager may also want to buy the same security for two Funds that he manages or a Fund and a non-fund account.In some cases, there may not be sufficient amounts of the security available (for example, in the case of a hot initial public offering (“IPO”) or new bond offering) to cover the needs of all of the accounts managed by a FIMCO portfolio manager or the buying activity of the accounts could affect the market value of the security.Similar potential conflicts could arise when two or more Fund or non-fund accounts managed by the same portfolio manager or managers want to sell the same security at the same time.Finally, a portfolio manager may want to sell a security that is held by a Fund or non-fund account and at the same time buy the same security for another one of his accounts.This could occur even if the accounts were managed similarly because, for example, the two accounts have different cash flows. FIMCO has adopted a variety of policies and procedures to address these potential conflicts of interest and to ensure that each Fund and non-fund account is treated fairly.For example, FIMCO has adopted policies for bunching and allocating trades when two or more Funds or non-fund accounts wish to buy or sell the same security at the same time.These policies prescribe the procedures for placing orders in such circumstances, determining allocations in the event that such orders cannot be fully executed, and determining the price to be paid or received by I-11 each account in the event that orders are executed in stages.FIMCO has also adopted special policies that address investments in IPOs and new bond offerings, the side-by-side management of Funds and the non-fund accounts, and internal crosses between FIMCO managed accounts that are effected under Rule 17a-7 of the Investment Company Act.FIMCO’s Investment Compliance Manager also conducts reviews of trading activity to monitor for compliance with these policies and procedures.FIMCO has also adopted a Code of Ethics restricting the personal securities trading and conduct of portfolio managers of the Funds. C. Structure of Portfolio Managers Compensation for Fiscal Year Ended December 31, 2010 Mr. Wagner, the portfolio manager of each Fund covered by this SAI, receives a salary.He also receives a bonus for each Fund if the Fund’s performance ranks in the middle quintile or higher of the funds in its selected Lipper Peer Group as of the end of the calendar year.The rate of the bonus (in basis points) increases in steps as the Fund’s performance ranking increases within the Fund’s selected Lipper Peer Group.A portion of the bonus is dependent on other performance factors, including the portfolio manager’s compliance record.The amount of the bonus is computed by multiplying the applicable bonus rate by the average net management fee received by FIMCO for managing the Fund during the year.All bonuses are paid as follows: one-third of the bonus is paid within the first quarter of the following year.The remaining amount is invested in the Fund and then paid in two installments over the next two years.In the case of each bonus installment, Mr. Wagner must remain actively employed by FIMCO and also be in good standing with FIMCO until each installment is paid; otherwise the installment is forfeited.He is also entitled to participate on the same basis as other employees in the profit sharing and deferred bonus plans that are offered by FIMCO’s parent company.The amount that is contributed to these plans is determined in the sole discretion of the parent company based upon the overall profitability of FIMCO and its affiliates from all lines of business.The profitability of FIMCO is an important factor in determining the amount of this contribution. The following table shows each Fund’s Lipper Peer Group for purposes of determining each portfolio manager’s potential bonus for the fiscal year ended December 31, 2010. Fund Peer Group Tax Exempt Fund Insured Municipal Debt Tax Exempt Fund II Insured Municipal Debt California Tax Exempt Fund Single State Insured Municipal Debt Connecticut Tax Exempt Fund Single State Insured Municipal Debt Massachusetts Tax Exempt Fund Single State Insured Municipal Debt Michigan Tax Exempt Fund Single State Insured Municipal Debt Minnesota Tax Exempt Fund Single State Insured Municipal Debt New Jersey Tax Exempt Fund Single State Insured Municipal Debt New York Tax Exempt Fund Single State Insured Municipal Debt North Carolina Tax Exempt Fund Single State Insured Municipal Debt Ohio Tax Exempt Fund Single State Insured Municipal Debt Oregon Tax Exempt Fund Single State Insured Municipal Debt Pennsylvania Tax Exempt Fund Single State Insured Municipal Debt Virginia Tax Exempt Fund Single State Insured Municipal Debt I-12 In addition to managing the Funds covered by this SAI and other First Investor Funds, Mr. Wagner is also primarily responsible for managing the fixed income investments in the company’s own profit sharing plan and the investment accounts of FIMCO and its life insurance company affiliate (collectively, “the company’s proprietary accounts”).Mr. Wagner does not receive any compensation (apart from his normal FIMCO salary and entitlement to participate on the same basis as other employees in the company’s profit sharing and deferred bonus plans) for managing the investments of the proprietary accounts.Nor does he receive any form of bonus for assisting in the management of the proprietary accounts.Although Mr. Wagner does not receive any compensation or bonus for managing the company’s proprietary accounts, as discussed above, he is a participant in the company’s profit sharing and deferred bonus plans.Moreover, the proprietary accounts invest in assets that are eligible investments for the Funds that Mr. Wagner manages or oversees in his capacity as Director of Fixed Income.Thus, in theory, he could have an economic incentive to favor the proprietary accounts over the Funds in determining which investments to buy, sell or hold.FIMCO monitors trading in the proprietary accounts to address such potential conflicts. D. Portfolio Manager Fund Ownership for Fiscal Year Ended December 31, 2010 Name Funds Covered by this SAI Dollar Range of Fund Ownership* (dollars) Clark D. Wagner Tax Exempt Fund $10,001-$50,000 Tax Exempt Fund II None California Tax Exempt Fund None Connecticut Tax Exempt Fund None Massachusetts Tax Exempt Fund None Michigan Tax Exempt Fund None Minnesota Tax Exempt Fund None New Jersey Tax Exempt Fund $10,001-$50,000 New York Tax Exempt Fund None North Carolina Tax Exempt Fund None Ohio Tax Exempt Fund None Oregon Tax Exempt Fund None Pennsylvania Tax Exempt Fund None Virginia Tax Exempt Fund None * The amounts shown do not include any deferred bonuses earned by a FIMCO Portfolio Manager that may have been invested in the Fund that he manages as further described under section “C. Structure of Portfolio Managers Compensation for Fiscal Year Ended December 31, 2010.” I-13 UNDERWRITER AND DEALERS Part II of this SAI describes the Underwriting Agreement of each Fund that has an underwriting agreement with First Investors Corporation (“FIC”), the applicable sales charge on Class A shares expressed both as a percentage of the offering price and net amount invested, and the dealer concession that is paid by FIC to outside dealers expressed as a percentage of the offering price. The following tables list the underwriting fees paid to FIC during the fiscal years ended December 31, 2008, 2009 and 2010. Fiscal Year Ended December 31, 2008 Fund Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation* Tax Exempt Fund N/A N/A Tax Exempt Fund II N/A N/A California Tax Exempt Fund N/A N/A Connecticut Tax Exempt Fund N/A N/A Massachusetts Tax Exempt Fund N/A N/A Michigan Tax Exempt Fund $0 N/A N/A Minnesota Tax Exempt Fund N/A N/A New Jersey Tax Exempt Fund N/A N/A New York Tax Exempt Fund N/A N/A North Carolina Tax Exempt Fund N/A N/A Ohio Tax Exempt Fund N/A N/A Oregon Tax Exempt Fund N/A N/A Pennsylvania Tax Exempt Fund N/A N/A Virginia Tax Exempt Fund N/A N/A Fiscal Year Ended December 31, 2009 Fund Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation* Tax Exempt Fund N/A N/A Tax Exempt Fund II N/A N/A California Tax Exempt Fund N/A N/A Connecticut Tax Exempt Fund N/A N/A Massachusetts Tax Exempt Fund N/A N/A Michigan Tax Exempt Fund N/A N/A Minnesota Tax Exempt Fund $0 N/A N/A New Jersey Tax Exempt Fund N/A N/A New York Tax Exempt Fund N/A N/A North Carolina Tax Exempt Fund N/A N/A Ohio Tax Exempt Fund N/A N/A Oregon Tax Exempt Fund N/A N/A Pennsylvania Tax Exempt Fund N/A N/A Virginia Tax Exempt Fund N/A N/A I-14 Fiscal Year Ended December 31, 2010 Fund Net Underwriting Discounts and Commissions Compensation on Redemptions and Repurchases Brokerage Commissions Other Compensation* Tax Exempt Fund $1,035,847 $5,217 N/A N/A Tax Exempt Fund II $1,680,622 $6,734 N/A N/A California Tax Exempt Fund $193,705 $1,206 N/A N/A Connecticut Tax Exempt Fund $121,653 $3,404 N/A N/A Massachusetts Tax Exempt Fund $81,874 $680 N/A N/A Michigan Tax Exempt Fund $29,037 $2,925 N/A N/A Minnesota Tax Exempt Fund $71,589 $0 N/A N/A New Jersey Tax Exempt Fund $111,897 $914 N/A N/A New York Tax Exempt Fund $576,811 $2,759 N/A N/A North Carolina Tax Exempt Fund $17,001 $2,876 N/A N/A Ohio Tax Exempt Fund $53,850 $108 N/A N/A Oregon Tax Exempt Fund $219,542 $2,485 N/A N/A Pennsylvania Tax Exempt Fund $75,806 $5,564 N/A N/A Virginia Tax Exempt Fund $143,219 $1,786 N/A N/A * As shown in a separate chart, FIC may receive distribution fees (i.e., Rule 12b-1 fees) from each Fund covered by this SAI. I-15 DISTRIBUTION PLANS Part II of this SAI describes the distribution plans of those Funds that have adopted such plans.For the fiscal year ended December 31, 2010, the Funds paid the following in fees pursuant to their plans: Class A Fund Compensation to Underwriter Compensation to Dealers Compensation to Sales Personnel Total Distribution Plan Fees Paid Tax Exempt Fund $1,341,029 $51,031 $761,549 $2,153,609 Tax Exempt Fund II $221,938 $125,730 $223,312 $570,980 California Tax Exempt Fund $39,962 $10,759 $39,759 $90,480 Connecticut Tax Exempt Fund $48,758 $12,752 $46,252 $107,762 Massachusetts Tax Exempt Fund $37,787 $6,482 $30,899 $75,168 Michigan Tax Exempt Fund $43,391 $13,584 $24,169 $81,144 Minnesota Tax Exempt Fund $32,774 $5,519 $27,485 $65,778 New Jersey Tax Exempt Fund $78,956 $14,973 $66,346 $160,275 New York Tax Exempt Fund $242,413 $13,593 $204,909 $460,915 North Carolina Tax Exempt Fund $34,084 $17,800 $22,244 $74,128 Ohio Tax Exempt Fund $30,943 $7,442 $31,001 $69,386 Oregon Tax Exempt Fund $50,760 $7,023 $68,445 $126,228 Pennsylvania Tax Exempt Fund $61,925 $24,778 $34,594 $121,297 Virginia Tax Exempt Fund $47,418 $4,017 $52,490 $103,925 Class B Fund Compensation to Underwriter Compensation to Dealers Compensation to Sales Personnel Total Distribution Plan Fees Paid Tax Exempt Fund $39,383 $5,398 $7,563 $52,344 Tax Exempt Fund II $27,735 $31,255 $12,757 $71,747 California Tax Exempt Fund $8,085 $1,037 $528 $9,650 Connecticut Tax Exempt Fund $7,029 $812 $4,412 $12,253 Massachusetts Tax Exempt Fund $5,314 $3,833 $464 $9,611 Michigan Tax Exempt Fund $2,686 $4,220 $208 $7,114 Minnesota Tax Exempt Fund $1,563 $305 $454 $2,322 New Jersey Tax Exempt Fund $11,430 $1,355 $2,684 $15,469 New York Tax Exempt Fund $14,208 $2,036 $3,349 $19,593 North Carolina Tax Exempt Fund $13,227 $5,827 $97 $19,151 Ohio Tax Exempt Fund $7,183 $1,160 $696 $9,039 Oregon Tax Exempt Fund $7,111 $252 $4,120 $11,483 Pennsylvania Tax Exempt Fund $8,504 $1,144 $2,848 $12,496 Virginia Tax Exempt Fund $6,721 $511 $1,179 $8,411 I-16 ALLOCATION OF PORTFOLIO BROKERAGE Part II of this SAI describes the brokerage allocation policies of the First Investors Funds.The Funds did not pay brokerage commissions for the last three fiscal years. Ownership of Regular Broker-Dealers and/or their Parent Companies during the Previous Fiscal Year Fund Broker-Dealer Parent Co. 12/31/10 Market Value Tax Exempt Fund: JP Morgan Chase $25,224,200 Tax Exempt Fund II: None $0 California Tax Exempt Fund: None $0 Connecticut Tax Exempt Fund: None $0 Massachusetts Tax Fund: None $0 Michigan Tax Exempt Fund: None $0 Minnesota Tax Exempt Fund: None $0 New Jersey Tax Exempt Fund: None $0 New York Tax Exempt Fund: JP Morgan Chase $5,307,400 North Carolina Tax Exempt Fund: None $0 Ohio Tax Exempt Fund: None $0 Oregon Tax Exempt Fund: None $0 Pennsylvania Tax Exempt Fund: None $0 Virginia Tax Exempt Fund: None $0 ADDITIONAL INFORMATION CONCERNING PURCHASES, REDEMPTIONS, PRICING AND SHAREHOLDER SERVICES Additional information concerning purchases, redemptions, pricing and shareholder services is set forth in Part II of this SAI.This information generally does not repeat information already discussed in the applicable prospectus.Additional information concerning the determination of Net Asset Value (“NAV”) is also set forth in Part II of this SAI. TAX INFORMATION Information concerning tax laws applicable to the Funds is set forth in Part II of this SAI. I-17 BENEFICIAL OWNERSHIP INFORMATION As of April 6, 2011, the following shareholders owned of record or beneficially owned 5%or more of the outstanding Class A shares of each of the Funds listed below. Fund %of Shares Shareholder Connecticut Fund 6.6 Esther C. Fleischman 135 Judwin Avenue New Haven, CT 06515 5.2 Pershing Division of Donaldson, Lufkin & Jenerette Securities Corp. One Pershing Plaza Jersey City, NJ 07399 Minnesota Fund 5.4 Donald J. Kiel 604 Marie Lane North Mankato, MN 56003 7.7 Robert Pfotenhauer and Jeanette Pfotenhauer 4160 Trillium Lane E Minnetrista, MN 55364 New Jersey 5.0 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 North Carolina Fund 10.5 National Financial Services Corp. 200 Liberty Street One World Financial Center New York, NY 10281 9.2 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 Ohio Fund 6.6 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 Pennsylvania Fund 6.1 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 As of April 6, 2011, the following owned of record or beneficially owned 5% or more of the outstanding Class B shares of each of the Funds listed below: Fund % of Shares Shareholder Tax Exempt Fund 5.0 Carol L. Kiser 801 Lincoln Avenue Pittsburgh, PA 15215 Tax Exempt Fund II 17.9 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 I-18 California Fund 21.3 Honey G. Metowski 10 Simpaug Turnpike Redding, CT 06896 12.9 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 5.2 Jacqueline L. Doria 8756 Robles Drive San Diego, CA 92119 5.7 Kathryn Lois Lindquist P.O. Box 31628 Walnut Creek, CA 94598 37.5 Citigroup Global Markets, Inc. 333 West 34th Street-3rd Floor New York, NY 10001 Connecticut Fund 11.8 Kathleen M. Hushin 140 Middle Turnpike W. Manchester, CT 06040 6.7 Donald Levesque 59 Pearl Road Naugatuck, CT 06770 10.4 Roberta Lecardo 14 Ramona Way Brandford, CT 06405 5.5 Marilyn J. Clayton 325 Selden Street Kensington, CT 06037 7.7 Beatrice Ukraincik 9 Chestnut Court Cromwell, CT 06416 7.3 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 Massachusetts Fund 9.7 Edmond J. Boucher and Cynthia J. Boucher 4 Jolly Road Athol, MA 01331 5.2 Linda M. Thatcher 15 Lynnwood Drive Westfield, MA 01085 7.5 Maureen E. Vosburgh 155 Chauncey Walker Street Belchertown, MA 01007 11.8 Charles C. Streeter and Maureen Streeter 30 Kensington Drive Canton, MA 01583 I-19 5.6 Wendy A. Stanick and James A. Stanick 290 White Pond Road Leominster, MA 01453 7.0 UBS Financial Services, Inc. 1000 Harbour Boulevard-7th Floor Weehawken, NJ 07086 11.1 Robert E. Murphy and Joanne R. Murphy 75 Fox Wood Drive Springfield, MA 01129 11.0 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 Michigan Fund 7.5 Ruth M. Heyn 707 Princeton Street Ann Arbor, MI 48103 16.5 Gerald W. Kinney 3849 W. Rose City Road West Branch, MI 48661 45.8 Oppenheimer & Co. 125 Broad Street-16th Floor New York, NY 10005 Minnesota Fund 17.0 Catherine M. Marien 1079 Colette Place Saint Paul, MN55116 8.1 Martin C. Cordes and Elvera O. Cordes 2307 15th Avenue NW Rochester, MN 55901 40.7 Roger A. Schutz 5142 15th Street SE Rochester, MN 55904 7.7 Evelyn G. Tischer Unit 337 2205 2nd Street SW Rochester, MN 55902 9.5 Myrtle Eveland 131 Monroe Street #222 Anoka, MN 55303 6.9 Roger A. Haar and Judith A. Haar P.O. Box 395 Lakefield, MN 56150 New Jersey Fund 11.9 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 I-20 5.8 Pershing Division of Donaldson, Lufkin & Jenerette Securities Corp. One Pershing Plaza Jersey City, NJ 07399 New York Fund 7.2 Dorothy Mekeel tate Rt 376 Hopewell Junction, NY 12533 5.0 Lynn Paul and Robert Paul 25 Sidney Avenue Farrmingville, NY 11738 North Carolina Fund 15.5 Stifel Nicolaus & Company, Inc. 501 North Broadway St. Louis, MO 63102 18.3 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 6.4 Citigroup Global Markets, Inc. 333 West 34th Street-3rd Floor New York, NY 10001 11.8 Ralph M. Feemster and Vida B. Feemster 3 Valley Trace Lane Hamburg Crossing Weaverville, NC 28787 Ohio Fund 5.9 UBS Financial Services, Inc. 1000 Harbour Boulevard-7th Floor Weehawken, NJ 07086 6.4 Jeff Sabatino and Susan Sabatino 120 Franklin Street Saint Clairsville, OH 43950 26.8 Citigroup Global Markets, Inc. 333 West 34th Street – 3rd Floor New York, NY 10001 12.7 William Sperlazza 336 E. Wilson Avenue Girard, OH 44420 9.3 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 Oregon Fund 5.0 Steven E. Harris and Janice M. Harris 1006 Skyline Drive Tillamook, OR 97141 11.3 Ruth Ann Simmonds 5477 Basin View Drive Klamath Falls, OR 97603 I-21 5.0 Alice I. Clark 5estfork Portland, OR 97206 5.1 Michael J. Jarrett and Connie M. Jarrett 415 Jefferson Street Oregon City, OR 97045 7.5 Dale C. Blessing Trust 19615 Alderwood Court Aloha, OR 97006 7.5 Susan Zicker 780 Missouri Street Salem, OR 97302 7.8 Crowell, Weedon & Company One Wilshire Building-Suite 2800 Los Angeles, CA 90071 Pennsylvania Fund 10.8 F. Russell Ferrante and Rachelle Del Collo Ferrante 1305 New Virginia Road Downingtown, PA 19335 11.1 Janney Montgomery Scott, LLC 1801 Market Street Philadelphia, PA 19103 6.6 First Clearing, LLC 1 North Jefferson St. Louis, MO 63103 6.0 Edith W. Johnson Apt. 408 5325 Old York Road Philadelphia, PA 19141 Virginia Fund 5.3 Doris A. Seubert Apt. 103 5107 Downy Lane Richmond, VA 23228 26.1 John P. Voros and Rose M. Voros 891 Catalina Drive Newport News, VA 23608 8.0 Delores G. Paige 5025 Hurop Road Sandston, VA 23150 20.3 Kathleen V. Waldron Apt. 2B 2824 South Abingdon Street Arlington, VA 22206 10.2 Harold W. Graves 4629 John Alden Road Virginia Beach, VA 23455 I-22 As of April 6, 2011, the following owned of record or beneficially owned 25% or more of the outstanding Class B shares of each of the Funds listed below: Fund %of Shares Shareholder California Fund 37.5 Citigroup Global Markets, Inc. 333 West 34th Street-3rd Floor New York, NY 10001 Michigan Fund 45.8 Oppenheimer & Co. 125 Broad Street – 16th Floor New York, NY 10005 Minnesota 40.7 Roger A. Schutz 5142 15th Street SE Rochester, MN 55904 Ohio Fund 26.8 Citigroup Global Markets, Inc. 333 West 34th Street-3rd Floor New York, NY 10001 Virginia 26.1 John P. Voros and Rose M. Voros 891 Catalina Drive Newport News, VA 23608 FINANCIAL STATEMENTS The Funds incorporate by reference the financial statements and reports of an independent registered public accounting firm contained in the annual reports to shareholders for the fiscal year ended December 31, 2010. I-23 APPENDIX A: INVESTMENT STRATEGIES USED BY THE FIRST INVESTORS TAX EXEMPT FUNDS The investment strategies that may be used by each Fund, including strategies to invest in particular types of securities or financial instruments, are listed below.The investment strategies that each Fund currently uses or currently anticipates using are noted by a check (ü) mark.The investment strategies that each Fund does not currently anticipate using are noted by a dash (─) mark.These notations only represent the current intentions of the Funds with respect to using the checked investment strategies.Each Fund may engage in any of the investment strategies listed, even if it has no current intention to do so as noted, as long as there is no specific investment policy prohibiting the Fund from engaging in the strategy.Each Fund also reserves the right to alter its investment strategies or to use other strategies to the extent permitted by its investment policies and applicable regulatory requirements.The investment policies of each Fund are set forth in its prospectus and Appendix B of this SAI.The investment strategies listed below, and their associated risks, are described in Part II of this SAI. Tax Exempt Funds ü Funds use or currently anticipate using ─ Funds do not currently anticipate using Debt Securities ü Commercial Paper and Other Short-Term Investments ü Corporate Bonds and Notes ─ Convertible Debt Securities ─ High Yield Securities ─ Mortgage-Backed Securities ─ Other Asset-Backed Securities ─ Municipal Securities ü Syndicated Bank Loans ─ U.S. Government Securities ─ Variable and Floating Rate Securities ü Zero Coupon and Pay-In-Kind Bonds ü Equity Securities ─ Common Stocks, Preferred Stocks, and Warrants ─ Shares of Other Investment Companies ─ Shares of Exchange Traded Funds ─ Real Estate Investment Trusts ─ Foreign Securities Exposure ─ Depository Receipts ─ Foreign Securities Traded in the U.S. ─ Foreign Securities Traded in Foreign Markets ─ Foreign Securities Traded in Emerging Markets ─ Foreign Currency ─ Derivatives ü Credit-Linked Securities ─ Inverse Floaters ü Interest Rate Swaps ü Options ü Futures ü Restricted and Illiquid Securities ü When-Issued Securities ü Stand-By Commitments ─ Repurchase Agreements ─ Temporary Borrowing ü Temporary Defensive Investments ü I-A-1 APPENDIX B: INVESTMENT POLICIES OF THE FIRST INVESTORS TAX EXEMPT FUNDS The following is a list of the investment policies of each Fund other than those policies that are set forth in the Fund’s prospectus.Each Fund’s investment policies are designed to set limits on or prohibit the Fund from engaging in specified investment strategies.For a description of the investment strategies that each Fund actually uses or currently contemplates using, you should review the prospectus for the Fund and Appendix A of this SAI. Each Fund also has adopted the investment policies that are set forth below.Unless identified as non-fundamental, these investment policies are fundamental policies, which may not be changed without the affirmative vote of a majority of the outstanding voting securities of the Fund, as defined by the Investment Company Act of 1940, as amended (the “1940 Act”).As defined by the 1940 Act, a "vote of a majority of the outstanding voting securities of the Fund" means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares present at a meeting, if more than 50% of the outstanding shares are represented at the meeting in person or by proxy. Each Fund’s investment objective is a non-fundamental policy of the Fund.Non-fundamental policies may be changed by the Board of Trustees (“Board”) without shareholder approval.Except with respect to borrowing, or as otherwise expressly provided, changes in values of a Fund's assets will not cause a violation of the Fund’s investment policies. Fundamental Policies: Each Fund may not: (1)Borrow money, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. (2)Issue senior securities, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. (3)Make loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. (4)Except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, with respect to 75% of the Fund’s total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, and securities of other investment companies) if, as a result, (a) more than 5% of the Fund’s total assets would be invested in the securities of that issuer, or (b) the Fund would hold more than 10% of the outstanding voting securities of that issuer. (5)Except for any Fund that is “concentrated” in an industry or group of industries within the meaning of the 1940 Act, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities) if, as a result, more than 25% of the Fund’s total assets would be invested in the securities of companies whose principal business activities are in the same industry. (6)Purchase or sell real estate, except that, to the extent permitted by applicable law, each Fund may (a) invest in securities or other instruments directly or indirectly secured by real estate, and (b) invest in securities or other instruments issued by issuers that invest in real estate. (7)Purchase or sell commodities or commodity contracts unless acquired as a result of ownership of securities or other instruments issued by persons that purchase or sell commodities or commodities contracts; but this shall not prevent a Fund from purchasing, selling and entering into financial futures contracts (including futures contracts on indices of securities, interest rates and currencies), and options on financial futures contracts (including futures contracts on indices of securities, interest rates and currencies), warrants, swaps, forward contracts, foreign currency spot and forward contracts or other derivative instruments that are not related to physical commodities. (8)Underwrite securities issued by others, except to the extent that a Fund may be considered an underwriter within the meaning of the Securities Act of 1933, as amended (“1933 Act”) in the disposition of restricted securities or in connection with investment in other investment companies. I-B-1 The Tax Exempt Fund and Tax Exempt Fund II, under normal circumstances, will each invest at least 80% of its net assets in municipal bonds and other municipal securities that pay interest that is exempt from federal income tax, including the federal AMT. Each of the Single State Tax Exempt Funds, under normal circumstances, will invest at least 80% of its net assets in municipal bonds and other municipal securities that pay interest that is exempt from both federal income tax, including the federal AMT, and any applicable state income tax for individual residents of the state listed in the name of the single state Fund. Non-Fundamental Policies: A.

Name: 2011/842/EU: Council Decision of 13Â December 2011 on the full application of the provisions of the Schengen acquis in the Principality of Liechtenstein Type: Decision Subject Matter: Europe; European Union law; international law Date Published: 2011-12-16 16.12.2011 EN Official Journal of the European Union L 334/27 COUNCIL DECISION of 13 December 2011 on the full application of the provisions of the Schengen acquis in the Principality of Liechtenstein (2011/842/EU) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis (1) and in particular Article 10(1) thereof, Whereas: (1) Article 10(1) of the said Protocol provides for the provisions of the Schengen acquis to be put into effect for the Principality of Liechtenstein pursuant to a decision of the Council to that effect after the Council has satisfied itself that the necessary conditions for the implementation of that acquis have been fulfilled by Liechtenstein. (2) The Council, having verified that the preconditions for the application of the data protection part of the Schengen acquis concerned had been fulfilled by the Principality of Liechtenstein, rendered, by Decision 2011/352/EU (2), provisions of the Schengen acquis relating to the Schengen Information System applicable to the Principality of Liechtenstein from 9 June 2011. (3) The Council has verified, in accordance with the applicable Schengen evaluation procedures as set out in the Decision of the Executive Committee of 16 September 1998 setting up a Standing Committee on the evaluation and implementation of Schengen (SCH/Com-ex (98) 26 def.) (3), whether the necessary conditions for the application of the Schengen acquis have been met in all other areas of the Schengen acquis in the Principality of Liechtenstein. (4) On 13 December 2011, the Council concluded that the conditions in each of the areas mentioned had been fulfilled by the Principality of Liechtenstein. (5) It is possible to set the date for the application of the Schengen acquis in full by the Principality of Liechtenstein, that is to say the date from which checks on persons at the internal borders with the Principality of Liechtenstein should be lifted. (6) From that date, the restrictions on the use of the Schengen Information System, provided for in Decision 2011/352/EU, should be lifted. (7) In accordance with Article 15 of the Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland (4) and with Article 8 of the Protocol between the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland (5), the latter Agreement has been implemented from 7 March 2011. (8) The Agreement between the Principality of Liechtenstein and the Kingdom of Denmark concerning the implementation, application and development of the Schengen acquis that are based on provisions under Title V of the Treaty on the Functioning of the European Union, signed at Brussels on 18 March 2011, stipulates that it shall be put into effect on the same date as the provisions referred to in Article 2 of the Protocol are put into effect for the Principality of Liechtenstein. (9) In accordance with the second subparagraph of Article 15(1) of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis (6) and as a result of the partial application of the Schengen acquis by the United Kingdom of Great Britain and Northern Ireland provided for in Council Decision 2004/926/EC of 22 December 2004 on the putting into effect of parts of the Schengen acquis by the United Kingdom of Great Britain and Northern Ireland (7),and in particular the first subparagraph of Article 1 thereof, only part of the provisions of the Schengen acquis applicable to the Principality of Liechtenstein in its relations with Member States applying the Schengen acquis in full is to apply in the relations of the Principality of Liechtenstein with the United Kingdom of Great Britain and Northern Ireland. (10) In accordance with the third subparagraph of Article 15(1) of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis and as a result of the partial application of the Schengen acquis by the Republic of Cyprus, on the basis of Article 3(2) of the 2003 Act of Accession, and the Republic of Bulgaria and Romania, on the basis of Article 4(2) of the 2005 Act of Accession, only the part of the Schengen acquis applicable in these Member States should also be applicable to the Principality of Liechtenstein in its relations with these Member States, HAS ADOPTED THIS DECISION: Article 1 1. All the provisions referred to in Annexes A and B to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis and all the provisions listed in the Annex to the Protocol to that Agreement and any act constituting a further development of one or more of these provisions, shall apply to the Principality of Liechtenstein, in its relations with the Kingdom of Belgium, the Czech Republic, the Kingdom of Denmark, the Federal Republic of Germany, the Republic of Estonia, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Latvia, the Republic of Lithuania, the Grand Duchy of Luxembourg, Hungary, Malta, the Kingdom of the Netherlands, the Republic of Austria, the Republic of Poland, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic, the Republic of Finland, and the Kingdom of Sweden as from 19 December 2011. All restrictions on the use of the Schengen Information System by the Member States referred to in the first subparagraph shall be lifted as from the same date. 2. The provisions of the Schengen acquis put into effect by the United Kingdom of Great Britain and Northern Ireland on the basis of Article 1 of Decision 2004/926/EC and any act constituting a further development of one or more of those provisions, shall apply to the Principality of Liechtenstein, in its relations with the United Kingdom of Great Britain and Northern Ireland as from 19 December 2011. 3. The provisions of the Schengen acquis applicable to the Republic of Cyprus on the basis of Article 3(1) of the 2003 Act of Accession, and to the Republic of Bulgaria and Romania, on the basis of Article 4(1) of the 2005 Act of Accession, and any act constituting a further development of any of those provisions, shall apply to the Principality of Liechtenstein in its relations with the Republic of Cyprus, the Republic of Bulgaria and Romania as from19 December 2011. Article 2 This Decision shall enter into force on the day of its publication in the Official Journal of the European Union. Done at Brussels, 13 December 2011. For the Council The President M. CICHOCKI (1) OJ L 160, 18.6.2011, p. 21. (2) OJ L 160, 18.6.2011, p. 84. (3) OJ L 239, 22.9.2000, p. 138. (4) OJ L 53, 27.2.2008, p. 5. (5) OJ L 160, 18.6.2011, p. 39. (6) OJ L 53, 27.2.2008, p. 52. (7) OJ L 395, 31.12.2004, p. 70.

  EXHIBIT 10.41   TO   TARGETED GENETICS CORPORATION’S   ANNUAL REPORT ON FORM 10-K   “[ * ]” = Portions of this exhibit have been omitted based on a request for omitted material has been filed separately with the SEC.   AMENDMENT NO. 1   TO   PRODUCT, DEVELOPMENT AND SUPPLY AGREEMENT   This First Amendment (the “Amendment”) to the Product Development Agreement between Genetics Institute, Inc. and Targeted Genetics Corporation dated as of November 9, 2000 (the “Agreement”) is by and between Genetics Institute LLC, formerly known as Genetics Institute, Inc. (“GI”) and Targeted Genetics Corporation (“TGC”) and is dated as of February 24, 2003.   GI and TGC agree as follows:   1.    Capitalized terms used in this Amendment and not otherwise defined in this   2.    The Agreement has been terminated by GI under Section 8.3 of the Agreement.   3.    The effective date of such termination shall be deemed to be January 31, 2003, notwithstanding any other provision of the Agreement to the contrary. The parties also expressly acknowledge and agree that the Supply Agreement has been terminated as of such date, and that neither party has or shall have any obligation whatsoever to the other party under the Supply Agreement.   4.    GI shall pay to TGC with ten business days of the date of this Amendment Three Million, Two Hundred and Twenty Thousand Dollars ($3,220,000).   5.    GI shall have no obligation to make any other payment to TGC under the provisions of Article 2 or Article 3 or Section 8.6.3 of the Agreement.   6.    Section 8.6.4(a) of the Agreement is amended to read in its entirety “[ * ] upon written notice to GI by TGC exercising its rights under Section 4.4;”.   7.    Section 4.4 of the Agreement is amended by replacing the final sentence of such section with the following sentence: “TGC may exercise the TGC Option by providing written notification thereof to GI at any time prior to July 31, 2004.”   8.    GI has executed and delivered in connection with this Amendment a Release in favor of TGC in the form attached hereto as Exhibit No. 1.   9.    TGC has executed and delivered in connection with this Amendment a Release in favor of GI in the form attached hereto as Exhibit No. 2. 10.    Except as expressly provided herein, the Agreement (including, without limitation, the provisions of the Agreement which apply following termination of the Agreement) remains in effect.   instrument.   IN WITNESS WHEREOF, the parties have executed this Amendment by their proper and duly authorized officers, as of the date and year first written above.   TARGETED GENETICS CORPORATION By:         GENETICS INSTITUTE LLC   formerly known as   GENETICS INSTITUTE, INC. By:   Title:    Vice President   Exhibit 1   GI RELEASE OF TGC   THIS RELEASE by Genetics Institute LLC, a Delaware limited liability company, formerly known as Genetics Institute, Inc., a Delaware corporation (“GI”), in favor of Targeted Genetics Corporation, a Delaware corporation (“TGC”) is dated as of February 24, 2003.   As used herein the term “Affiliate” means as to any person or entity, any other person or entity which is directly or indirectly controlling, controlled by or under common control with the person or entity in question, and shall also mean and include, without limitation and without regard to whether such persons or entities would be included in the foregoing definition, any director, partner, shareholder, agent, officer or employee of the person or entity in question or of any “Affiliate” of such person or entity.   hereby acknowledged, GI, on its own behalf and for its successors and assigns, hereby unconditionally and irrevocably releases, remises and forever discharges TGC and its Affiliates, of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, judgments, executions, orders and any and all claims, demands and liabilities whatsoever, of every name and nature, both in law and in equity, whether known or unknown (collectively, “Liabilities”), which GI now has or may ever have against TGC or its Affiliates or their respective heirs, assigns and successors arising out of any obligation of TGC to GI under (i) Article 2 or Article 3 or Section 8.6.3 of that certain Product Development Agreement by and between TGC and GI dated as of November 9, 2000 or (ii) that certain Supply Agreement by and between TGC and GI dated as of the same date.     IN WITNESS WHEREOF, GI has caused this Release to be executed by its duly authorized representative effective as of the day and year first above written.     GENETICS INSTITUTE LLC formerly known as: By:     Exhibit 2   TGC RELEASE OF GI   THIS RELEASE by Targeted Genetics Corporation, a Delaware corporation (“TGC”), in favor of Genetics Institute LLC, a Delaware limited liability company, dated as of February 24, 2003.     hereby acknowledged, TGC, on its own behalf and for its successors and assigns, GI and its Affiliates, of and from all debts, demands, actions, causes of (collectively, “Liabilities”), which TGC now has or may ever have against GI or any obligation of GI to TGC under (i) Article 2 or Article 3 or Section 8.6.3 of that certain Product Development Agreement by and between GI and TGC dated as of     IN WITNESS WHEREOF, TGC has caused this Release to be executed by its duly     TARGETED GENETICS CORPORATION By:  

Exhibit 10.53 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (“Agreement”) made as of the 1st day of June, 2011, by and between CENTRA BANK, INC., a West Virginia corporation (“Employer”), and Kevin D. Lemley (“Employee”), joined in by CENTRA FINANCIAL HOLDINGS, INC., a West Virginia corporation (“Centra Financial”), and by CENTRA FINANCIAL WITNESSETH THAT: WHEREAS, Employer desires to retain the services of Employee as its SVP and Chief Credit Administration Officer, and Employee is willing to make his or her services available to Employer, on the terms and subject to the conditions set forth herein; and WHEREAS, Employee acknowledges that this Agreement is a benefit to him or her, his or her free will and volition. 1. Employment. Employee is hereby employed as SVP and Chief Credit Administration Officer, to have such duties and responsibilities as are commensurate with such position. Employee hereby accepts and agrees to such advice, and direction of Employer and its Board of Directors. Employee shall other same or similar businesses or enterprises as that engaged in by Employer, and shall also additionally render such other services and duties as may be reasonably assigned to him or her from time to time by Employer, consistent with his position.       2. Term of Agreement. The term of this Agreement (Term) shall commence from and after the date hereof, and shall terminate on May 31, 2013. a. For all services rendered by Employee to Employer under this Agreement, Employer shall pay to Employee, for the stated period beginning on the date hereof, an annual salary of $135,964.00, payable in accordance with the payroll practices of Employer applicable to all officers. This salary may be reviewed for an increase sooner if approved by Employee’s Board of Directors. Any salary increase payable to Employee shall be determined based on a review of Employee’s total compensation package, Employer’s performance, the performance of Employee and market competitiveness. Employee’s annual salary, as it may be adjusted from time to time, will be his or her base salary for purposes of future calculations of benefits. The base salary for purposes of future calculation of benefits may not be reduced. vacation per year. c. Employer shall pay or reimburse Employee for all reasonable travel and other expenses incurred by Employee (and his or her spouse where there is a legitimate business reason for his or her spouse to accompany him or her) in connection with the performance of his or her duties and obligations under this Agreement, subject to Employee’s presentation of appropriate vouchers in accordance with such procedures as Employer may from time to time establish for executive officers generally.   - 2 -   4. Termination. a. Termination of Employment. Except for Just Cause, in the event that Employee shall suffer a termination of employment by Employer or a material change in duties, the Employee shall be entitled to receive two year’s compensation, including base salary for purposes of benefit calculation, and customary and usual incentives and bonuses (based on the average of the incentives and bonuses paid to Employee during or for the previous two full years, or if less than two full years the amount of said incentives and bonuses so paid divided by two, benefits provided for in Section 3 hereof, except use of an automobile and country club membership, will continue to be paid by Employer for a period of two (2) years or until Employee is employed by a third party who provides or makes available such benefits to its employees, generally, whichever is earlier. At the time of said termination, this Agreement shall terminate and the Employer shall be obligated to make the payments as set forth in this Subsection 4(a) as severance compensation to the Employee. Provided, however, that the payments provided for herein shall not be payable to Employee in the event of voluntary termination by Employee, except a voluntary termination by Employee following a material change in title, position, status, pay or benefits, location of employment or authority or duties by Employer without Just Cause. b. Death. If Employee shall die during the Term, this Agreement and the employment relationship hereunder will automatically terminate on the date of   - 3 -   c. Just Cause. Employer shall have the right to terminate Employee’s employment effective immediately. Termination for “Just Cause” shall be defined as (i) the willful and/or continued failure of Employee to perform substantially his or her duties with the Employer to the Employer’s reasonable satisfaction (other than any such failure resulting from Employee’s incapacity due to illness), (ii) the willful engaging by Employee in illegal conduct, personal dishonesty, gross personal misbehavior, or gross misconduct that is demonstrably injurious to Employer, Centra Financial, or CFC, (iii) the Employee’s conviction of, or plea of guilty or nolo contendere to, a felony involving moral turpitude, (iv) breach of any fiduciary duty involving personal profit, (v) failure to pass any legal drug test given by or on behalf of the Employer pursuant to a drug testing policy applicable to Employer’s employees generally, (vi) a material breach by Employee of this Agreement or any employment agreement with Employer or (vii) breach of Section 6 hereof, with a breach to be determined in Employer’s sole discretion. In the event Employee’s employment under this Agreement is d. Non-Competition. During any period in which or for which Employee receives compensation pursuant to this Agreement, including any period represented by payments under Section 4(a) hereof, Employee will not directly or indirectly, either as a principal, agent, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever, engage in the banking and financial services business, which includes consumer, savings, commercial banking and the insurance and trust businesses, or the savings and loan or mortgage banking business, or any other business in which Employer or its   - 4 -   e. No Mitigation. In receiving any payments pursuant to this Section 4, Employee of mitigation of the amounts payable to Employee hereunder and such amounts shall not be reduced or terminated whether or not Employee obtains other employment. f. Parachute Payments. (1) Notwithstanding anything in this Agreement to the contrary, in the event it acceleration of any payment, award, benefit or distribution) by Employer (or any of its affiliated entities) or any successor (or any of its affiliated entities) to or for the benefit of Employee (whether pursuant to the terms of this Agreement or otherwise) (the Payments) would be subject to the excise tax (the Excise Tax) under Section 4999 of the Internal Revenue Code of 1986, as amended (the Code), then the amounts payable to Employee under this Agreement shall be Cap). For purposes of reducing the Payments of the Safe Harbor Cap, only amounts   - 5 -   (2) All determinations required to be made under this Subsection 4(f) shall be made by the public accounting firm that is generally retained by Employer (the Accounting Firm). In the event that the Accounting Firm is serving as accountant or auditor for any individual, entity or group effecting a Change of Control (or if the Accounting Firm fails to make the Determination), Employee may appoint Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to Employee that he or she is fees, costs and expenses (including, but not limited to the costs of retaining experts) of the Accounting Firm shall be borne by Employer, and the determination by the Accounting Firm shall be binding upon Employer and Employee (except as provided in Subsection (3) below). Internal Revenue Service (the IRS) proceeding which has been finally and Subsection 4(f). In the event that it is determined (i) by the Accounting Firm,   - 6 -   g. Key Employee. To the extent that Employee is a “key employee” (as defined provided, however, that the six (6) month delay required under this Section 4(g) “involuntary separation from service” (as defined in Treas. Reg. 1.409A 1(n) and 1.409A i(n)(2) that (a) is payable no later than the last day of the second year exceed two times the lesser of (i) the Employee’s annualized compensation for (ii) the dollar limit described in Section 401 (a)(17) of the Code. To the extent Termination Compensation payable in monthly installments under this Section 4 is required to be deferred under the preceding sentence, the first six months of monthly installments shall be payable in month seven following Employee’s separation from service and the remaining monthly payments shall be made when otherwise scheduled. h. Termination of Employment. Any reference in this Agreement to a termination of employment, severance from employment or separation from employment shall be deemed to mean a “Termination of Employment.” A “Termination of Employment” means the termination of the Employee’s employment with the Company and its Affiliates for reasons other than death or disability. Whether a Termination of Employment takes place is determined based on the facts and circumstances surrounding the termination of the Employee’s employment. A Termination of Employment will be considered to have occurred if it is reasonably anticipated that: employment.   - 7 -   5. Other Employment. Employee shall devote all of his or her business time, entity. 6. Nondisparagement. Employee agrees that during the Term of this Agreement and services. Notwithstanding the foregoing, statements made in the course of sworn be subject to this Section 6. 7. Arbitration. Except as otherwise provided in this Section 7, all disputes arising out of or relating to this Agreement, the interpretation or application of this Agreement, or Employee’s employment with Employer (hereinafter “Covered Disputes”), shall be resolved solely and exclusively by binding arbitration, applying the law of West Virginia. (i) the arbitration will be conducted before a single arbitrator of the American Arbitration Association (“AAA”), in accordance with the rules of the AAA then in effect regarding arbitration of employment disputes; and   - 8 -   a. Injunctions to Enforce Arbitration and to Restrain Violations Pending Arbitration. Notwithstanding the foregoing, either party may file a lawsuit to compel arbitration of disputes between the parties and to enjoin violations of this Agreement pending arbitration. Such lawsuit may be brought only in the Circuit Court of Monongalia County, West Virginia, or the United States District Court for the Northern District of West Virginia, and Employee and Employer hereby waive any right that they might have to challenge the selection of those forums, including but not limited to challenges to personal jurisdiction, venue, or the convenience of the forum. Specifically, by executing this Agreement, Employee and Employer agree, consent, and stipulate that, in any action to compel arbitration of a Covered Dispute or to enjoin violations of this Agreement pending arbitration: (i) the aforesaid courts have personal To the maximum extent permitted by the law, the parties stipulate and agree that b. Arbitration Costs. Employer shall pay all costs and fees charged by AAA for the arbitration, including the arbitrator’s fees and expenses (“Arbitration Costs”) provided, however, the arbitrator shall apportion the award of Arbitration Costs between the parties based upon their relative degree of success. 8. Joinder by Centra Financial and CFC. Centra Financial and CFC join into this Agreement to evidence their consent to the terms hereof. 9. Miscellaneous. thereof. thereto.   - 9 -   d. Any notice or other communication required or permitted under this Agreement To Employer: President 990 Elmer Prince Drive President 990 Elmer Prince Drive P.O. Box 656 To Employee: Kevin D. Lemley 206 Lemley Road Waynesburg, PA 15370   - 10 -   f. The Employer shall not merge or consolidate into or with another bank or sell substantially all its assets to another bank, firm or person until such bank, personal representatives. the Employee, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Employee and the Employer.   - 11 -                             Douglas J. Leech President and CEO                               Douglas J. Leech President and CEO                   CENTRA FINANCIAL CORPORATION- MORGANTOWN, INC.                   Douglas J. Leech President and CEO                   EMPLOYEE:                     Kevin D. Lemley       - 12 -

Form 51-102F3 Material Change Report Item 1. Name and Address of Company CIBT Education Group Inc. (the "Company") Suite 1200, 777 West Broadway Vancouver, BC, V5Z 4J7 Item 2. Date of Material Change April 30, 2010 Item 3. News Release A news release dated May 10, 2010 was disseminated through CNW Newswire. Item 4. Summary of Material Change The Company reported that it has received conditional approval from the Toronto Stock Exchange (“TSX”) to list its common shares for trading on the TSX. Item 5.1 Full Description of Material Change The Company is reported that it has received conditional approval from the TSX to list its common shares for trading on the TSX on or before July 22, 2010, effectively graduating from the TSX-Venture Exchange. The Company plans to fulfill the listing conditions and commence trading on the TSX as soon as feasible. The listing conditions are as follows: 1. filing of a TSX Listing Application in final form; 2. letter from the Company’s transfer agent confirming that it has been appointed as transfer agent and registrar of the Company, and that it is in a position to effect transfers and make prompt delivery of share certificates; 3. a specimen of the Company’s generic share certificate and a letter from the Company’s transfer agent confirming that the generic share certificate complies with all Security Transfer Association of Canada requirements; 4. confirmation of the CUSIP number assigned to the Company’s common shares; 5. a letter from the Company’s legal counsel confirming certain information about the Company; 6. a copy of every material contract referred to in the listing application, if not already provided to the TSX or filed on SEDAR; 7. a completed registration form for TSX SecureFile; 8. a executed copy of the TSX Listing Agreement; and 9. an undertaking that: i) where the Company’s stock option plan defines the term “TSX Venture Exchange”, the Company will treat the plan as if such defined terms means “Toronto Stock Exchange”; and ii) will amend the plan to more fully comply with the policies of the TSX. Item 5.2 Disclosure for Restructuring Transactions Not applicable. Item 6. Reliance on subsection 7.1(2) of National Instrument 51-102 If this Report is being filed on a confidential basis in reliance on subsection 7.1(2) of National Instrument 51-102, state the reasons for such reliance. Not applicable. Item 7. Omitted Information Not applicable. Item 8. Executive Officer Toby Chu, chief executive officer Telephone: ext. 308 Item 9. Date of Report May 10, 2010.

EXHIBIT 10.1   Linster (“Lin”) W. Fox “Employment Agreement”), dated as of August 1, 2009, between Shuffle Master, Employment Agreement. 1.           Due to an inadvertent error, paragraph 6(a)(v) of the Employment Agreement is hereby deleted in its entirety and the following new paragraph 6(a)(v) is substituted therefore, as the new and sole operative paragraph 6(a)(v) of the Employment Agreement. employees of the Company are then being paid their base salaries.  For purposes month period before the Change in Control.  For example, if there were an actual and there shall be no Severance payment.  For purposes of this Agreement, a a.              The Company is no longer a U.S. listed public company for a b.              Fifty-one percent (51%) or more of the Company’s Equity is acquired by or merged with another entity or entities; or c.              An event defined as a Change in Control in any of the Company’s employee stock plans actually closes. in paragraph 2(b) of the Employment Agreement is a non-refundable advance and entitled to for FY2010. EMPLOYER:   EMPLOYEE:           By: Its: Chief Executive Officer     APPROVED: SHUFFLE MASTER COMPENSATION COMMITTEE   By:  /s/ DANIEL M. WADE     Daniel M. Wade Its: Chairman

Exhibit 10.66A FIRST AMENDMENT FIRST AMENDMENT, dated as of July 18, 2008 (this “Amendment”), to the Credit Agreement, dated as of January 18, 2008 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among SBA Senior Finance, entities from time to time parties thereto (the “Lenders”), Toronto Dominion Agent”) and the other agents parties thereto. WHEREAS, the Borrower, SBA Telecommunications, Inc. (“Holdings”) and SBA Communications Corporation (the “Parent”) have requested that the Lenders agree to effect certain modifications to the Credit Agreement as described herein; and herein, to so amend the Credit Agreement. Definitions. Unless otherwise defined herein, terms defined in the Credit Agreement. Amendment of the Credit Agreement. The Credit Agreement is hereby amended, follows: Amendments to Section 1.1. Section 1.1 of the Credit Agreement is hereby amended as follows: by inserting the following new definitions in appropriate alphabetical order: “Optasite”: Optasite Holding Company, Inc., or such other entity surviving the Optasite Merger. “Optasite Credit Agreement”: the Amended and Restated Credit Agreement, dated November 2, 2006, by and among Optasite, Inc., Optasite Towers, Morgan Stanley Asset Funding Inc. and the lenders from time to time parties thereto, as the “Optasite Merger”: the merger of a newly-formed Subsidiary of the Parent or Holdings with and into Optasite Holding Company, Inc., a Delaware corporation. by deleting the final sentence of the definition of Annualized Borrower EBITDA in its entirety and substituting in lieu thereof the following sentence: “For purposes of making the computation referred to above, (A) acquisitions that during such quarter or subsequent to such quarter and on or prior to such date of determination shall be deemed to have occurred on the first day of such quarter and (B) the Consolidated Adjusted EBITDA attributable to Excluded Subsidiaries, to Optasite and its Subsidiaries (to the extent Optasite and such Subsidiaries of Optasite are not Guarantors under (and as defined in) the Guarantee and Collateral Agreement), to discontinued operations, as determined in accordance with GAAP, and to operations or businesses disposed of prior to such date of determination, shall be excluded.” Amendment to Section 6.9. Section 6.9 of the Credit Agreement is hereby amended as follows: by deleting the parenthetical in paragraph (a) thereof in its entirety and substituting in lieu thereof the following parenthetical: “(other than (w) any leasehold, easement or fee interest in real property, (x) any Property subject to a Lien expressly permitted by Section 7.3(g), (y) Property acquired by an Excluded Subsidiary and (z) Property of Optasite and its Subsidiaries so long as the Optasite Credit Agreement does not permit the pledge of such Property to the Administrative Agent)” by deleting the first parenthetical in paragraph (b) thereof in its entirety and “(other than (x) an Excluded Subsidiary or (y) Optasite and its Subsidiaries so long as the Optasite Credit Agreement does not permit, in the case of clauses (i) and (ii) below, the pledge of the Capital Stock of Optasite and such Subsidiaries to the Administrative Agent and, in the case of clause (iii) below, Optasite and such Subsidiaries from becoming parties to the Guarantee and Collateral Agreement)” Amendment to Section 8(k). Section 8(k) of the Credit Agreement is hereby amended by deleting the first parenthetical in each of clauses (iii) and (iv) thereof in its entirety and in each case substituting in lieu thereof the following parenthetical: “(through Subsidiaries that are Guarantors under (and as defined in) the Guarantee and Collateral Agreement)” Consent to Amendment of the Guarantee and Collateral Agreement. Pursuant to Section 10.1 of the Credit Agreement, the Lenders parties hereto hereby consent to the Administrative Agent entering into an amendment to the Guarantee and Collateral Agreement in a form acceptable to it in its reasonable discretion in order to effect the following amendments: Amendments to Section 1.1. Section 1.1 of the Guarantee and Collateral Agreement by deleting clause (ii) of the definition of Excluded Assets in its entirety and “(ii) Foreign Subsidiary Voting Stock and the shares, stock certificates, options and rights in respect of the Capital Stock of Optasite and its Subsidiaries and any Securitization Subsidiary or Excluded Subsidiary, in each case as excluded from the definition of “Pledged Stock” set forth in this Section 1.1 and” by deleting the second proviso to the definition of Pledged Stock in its entirety and substituting in lieu thereof the following new proviso: “provided further that “Pledged Stock” shall not include the shares, stock Capital Stock of (i) any Securitization Subsidiary (other than SBA Network Management, Inc.) or Excluded Subsidiary (other than Excluded Subsidiaries described in clause (A) of the definition of “Excluded Subsidiaries”) to the extent the pledge thereof hereunder would not be permitted by Contractual Obligations of such Securitization Subsidiaries or Excluded Subsidiaries, as applicable, with Persons who are not Affiliates or (ii) Optasite or any of its Subsidiaries to the extent the pledge thereof hereunder would not be permitted by the Optasite Credit Agreement.” Amendment Effective Date”) on which the following conditions have been satisfied: completed counterparts hereof (in the form provided and specified by the Borrower and (y) the Required Lenders. To the extent invoiced, the Administrative Agent shall have received payment or reimbursement of its reasonable out-of-pocket costs and expenses in connection with this Amendment and any other out-of-pocket costs or expenses of the Administrative Agent required to be paid or reimbursed pursuant to the Credit Agreement, including the reasonable fees, charges and disbursements of counsel Credit Agreement. All representations and warranties set forth in Section 4 of the Credit this Amendment, the Borrower hereby represents and warrants to each of the Lenders that each of the representations and warranties set forth in Section 4 Effect of Amendment. affirmed in all respects and shall continue in full force and affect. Nothing General. Costs and Expenses. The Borrower agrees to reimburse the Administrative Agent together shall constitute but one and the same instrument. Delivery of any executed counterpart of a signature page of this Amendment by facsimile or counterpart hereof.   SBA SENIOR FINANCE, INC. By:   Name:   Jeffrey A. Stoops Title:   President and CEO Administrative Agent By:   Name:   Ian Murray Title:   Authorized Signatory TORONTO DOMINION (TEXAS) LLC, as Lender By:   Name:   Ian Murray Title:   Authorized Signatory By:   /s/ Scott Suddreth Name:   Scott Suddreth Title:   Vice President NAME OF LENDER: By:   Name:   Ritam Bhalla Title:   Authorized Signatory NAME OF LENDER: By:   Name:   Ross Levitsky Title:   Vice President NAME OF LENDER: By:   Name:   Christophe Vohmann Title:   Vice President NAME OF LENDER: By:   Name:   Scott Webster Title:   Managing Director NAME OF LENDER: By:   Name:   Anca Trifan Title:   Director By:   Name:   Yvonne Tilden Title:   Director

Exhibit 10.9 Name of Grantee:   Grant Date:     Performance Period:   Vesting Date:   Walmart Identification Number:   WALMART INC. TERMS AND CONDITIONS restricted stock units (“PRSUs”) granted to you by Walmart Inc. (“Walmart”), a Delaware corporation, under the Walmart Inc. Stock Incentive Plan of 2015, as 1. Walmart. applicable to your PRSUs in respect of the Performance Period set forth above which reflects the fiscal year of Walmart or, if different, the Affiliate that employs you (the “Employer”). The Performance Measures (including any applicable weightings thereof) and Performance Goals as set forth in such separate writing Performance Period: applied to each weighted Performance Measure during the Performance Period is expressed as a percentage and may range from 0% (for achieving less than Threshold not achieved. The weighted average of all applicable achievement rates during the Performance Period is referred to herein as the “Performance Achievement Rate.” 1. 2. D.Elective Deferral of Shares. If you are eligible to defer delivery of the Shares upon vesting of Adjusted PRSUs to a future date in accordance with Section 10.9 of the Plan and rules and procedures relating thereto, you will be advised as to when any such deferral election must be made and the rules and procedures applicable to such deferral election. further rights with respect to such PRSUs, any Adjusted PRSUs, or the underlying Shares. by Death or Disability. If your Continuous Status is terminated by reason of your death or Disability prior to the Vesting Date and you have not incurred a Forfeiture Condition, any PRSUs that are scheduled to vest within one year of the date your Continuous Status is terminated by reason of your death or Disability will become immediately vested and such earlier vesting date shall be considered a Vesting Date for purposes of this Agreement; provided, however, that if, as of such date the determination of attainment of Performance Goals for any such PRSUs has not yet been determined for your Plan Award, then assumed for purpose of this Paragraph 8. terminated on the date of your death or the date on which your employment or other service relationship has been legally terminated by reason of your Disability. For purposes of this Agreement, “Disability” shall mean that you would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of Walmart or, if different, the Employer, regardless of whether you are covered by such policy.  If Walmart or, if different, the Employer does not have a long-term disability policy, for purposes of this Agreement, “Disability” means that you are unable to carry out the sufficient to satisfy Walmart in its sole discretion. If your Continuous Status is terminated due to a Disability, you agree to promptly notify the Walmart Global Equity team. Notwithstanding any provision of this Agreement, Walmart will not accelerate your Plan Award if Walmart has not received notification of your termination within such period of time that it determines, in its sole 9. Permanent Transfers Between Walmart and Walmart Affiliates. Tax-Related Items by any other method of withholding, including through withholding from your wages or other cash compensation paid to you by Walmart or any Affiliate. applicable rates in the relevant jurisdictions. Further, if the obligation for are deemed to have been issued the full number of Shares subject to the Adjusted PRSUs, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Tax- Related Items. In the event that any excess amounts are withheld to satisfy the obligation for Tax-Related Items, you may be entitled to receive a refund of any over withheld amount in the form of cash and will have no entitlement to the Share equivalent. without effect. past; D.neither this Agreement nor the Plan creates or amends any contract of employment with any entity involved in the management or administration of the Plan or this Agreement, and nothing in this Agreement or the Plan shall interfere with or limit in any way the right of Walmart or, if different, the Employer to terminate your Continuous Status at any time, nor confer upon you the right to continue in the employ of Walmart or any Affiliate; E.the PRSUs and the Shares underlying the PRSUs, and the income from and value of same, relate exclusively to your Continuous Status during the vesting period H.the PRSUs and the Shares underlying the PRSUs, and the income from and value I.the PRSUs and the Shares underlying the PRSUs, and the income from and value payments; J.unless otherwise agreed with Walmart in writing, the PRSUs and the Shares underlying the PRSUs, and the income from and the value of same, are not granted including as a result of the closing of any transaction or other agreement that results in the Employer ceasing to be an Affiliate of Walmart, unless otherwise set forth in this Agreement your right to vest in the PRSUs under the Plan, if providing services and may not be extended by any notice period under local law determine when you are no longer actively employed for purposes of this services while on a leave of absence or whether the Employer has ceased to be an Affiliate of Walmart); to have the PRSUs, the Shares underlying the PRSUs or any Adjusted PRSUs, or any exchanged, or substituted for, in connection with any corporate transaction affecting the Shares underlying the PRSUs and any Adjusted PRSUs; and O.if you are providing services outside the United States: neither Walmart nor 15.Data Privacy. You hereby explicitly and unambiguously acknowledge that your personal data will be collected, used and transferred, in electronic or other form, as described in this Agreement and any other grant materials by and among, as applicable, Walmart and any Affiliate for the exclusive purpose of understand that Walmart and its Affiliates may hold certain personal information number, email address, date of birth, social insurance identification number, and managing the Plan. You acknowledge that you understand that Data may be transferred to Merrill Lynch, Pierce, Fenner & Smith and its affiliates or such other stock plan service provider as may be selected by Walmart in the future, which is assisting Walmart in the implementation, administration and management of the Plan. You acknowledge that you understand that the recipients of the Data than your country. You acknowledge and understand that you may request a list your local human resources representative. You authorize Walmart, Merrill Lynch, Pierce, Fenner & Smith and any other possible recipients which may assist Walmart (presently or in the future) with implementing, administering and managing the Plan participation in the Plan, including any requisite transfer of Data as may be required to Walmart’s designated broker or other third party. You understand Status with the Employer will not be affected; the only consequence of refusing or withdrawing your consent is that Walmart would not be able to grant PRSUs or other Plan Awards to you or administer or maintain such Plan Awards. Therefore, your local human resources representative. Finally, you acknowledge that no other agreements or consent shall be required to be given to Walmart and/or the Employer for the legitimate purposes of administering your participation in the the future. You understand and acknowledge that you will not be able to participate in the Plan if you later communicate any limitation on this acknowledgment to Walmart and/or the Employer. and heirs. situated. review). G.You acknowledge that you are sufficiently proficient in English, or have allow you to understand the terms and conditions of this Agreement. Furthermore, if you have received this Agreement or any other document related to the Plan will control. foregoing. K.You understand that depending on your or your broker’s country or the country in which the Shares are listed, you may be subject to insider trading and/or market abuse laws which may affect your ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., PRSUs and Adjusted PRSUs) or rights linked to the value of Shares under the Plan during such times you are insider information. Furthermore, you could be prohibited from (i) disclosing inside information to any third party, which may “tipping” third parties or causing them otherwise to buy or sell securities. The restrictions applicable under these laws may be the same or different from Walmart’s insider trading policy. You acknowledge that it is your responsibility to be informed of and compliant with such regulations and any applicable Walmart insider trading policy, and are advised to speak to your personal legal advisor on this matter. comply with securities or other laws, rules or regulations applicable to issuance of Shares. WALMART INC. Stock incentive plan of 2015 AND TERMS AND CONDITIONS COUNTRY-SPECIFIC APPENDIX December 2019. Such laws are often complex and change frequently. As a result, your situation. the same manner. ARGENTINA Notifications PRSUs are publicly offered or listed on any stock exchange in Argentina, as a result, have not been and will not be registered with the Argentina Securities Commission (Comisión Nacional de Valores). Neither this Agreement nor any other materials related to the PRSUs, nor the underlying Shares, may be utilized in connection with any general offering to the public in Argentina. Argentine residents who acquire PRSUs under the Plan do so according to the terms of a private offering made outside Argentina. You should consult with your personal legal advisor to ensure compliance with the applicable requirements. resident, you must report any Shares acquired under the Plan and held by you in a foreign bank account on December 31st of each year on your annual tax return for that year. BRAZIL Terms and Conditions Tax-Related Items associated with the PRSUs, the sale of any Shares acquired under the Plan, and any dividends paid on such Shares. compensation to you. Notifications other assets. Quarterly reporting obligations apply if the value of the assets and rights exceeds US$100,000,000. Please note that foreign individuals holding Individuals holding assets and rights outside Brazil valued at less than US$100,000 are not required to submit a declaration. Please note that the US$100,000 threshold may be changed annually. You must also report income recognized in connection with the PRSUs on the annual Natural Person Income Tax Return (“DIRPF”). CANADA Terms and Conditions T&C’s: employment laws or your employment agreement, if any), unless otherwise set forth in this Agreement, your right to vest in the PRSUs under the Plan, if any, will terminate effective as the earlier of (i) the date on which your Continuous Status is terminated, (ii) the date on which you receive a notice of termination, or (iii) the date you no longer actively provide service to Walmart or any Affiliate, regardless of any notice period or period of pay in lieu of such notice required under local law. The Committee shall have the exclusive discretion to determine when you are no longer employed for purposes of this T&C's: (Wal-Mart Canada Corp. and any Affiliate of Walmart that is controlled by Wal-Mart Canada Corp. being referred to collectively as “WM Canada”), in their sole discretion, also may settle your Adjusted PRSUs in cash, Shares, or a combination of cash and Shares. To the extent your Plan Award will be settled in Shares, you hereby acknowledge and agree that such settlement may be satisfied by WM Canada by forwarding a cash settlement amount in respect of the Adjusted PRSUs to an independent broker who will in turn purchase the Shares on the open market on your behalf. Any Shares so purchased on the open market shall be Resident in Quebec: Notifications Shares acquired under the Plan takes place outside Canada through the facilities during the year. Thus, PRSUs must be reported (generally at a nil cost) if the C$100,000 cost threshold is exceeded because of other specified foreign property cost base (“ACB”) of the Shares. The ACB ordinarily is equal to the fair market value of the Shares at the time of acquisition, but if you own other Shares other Shares. CHILE Terms and Conditions the income from and value of same, shall not be considered as part of your Notifications made subject to general ruling n° 336 of the Chilean Commission of Financial securities are not subject to oversight of the CMF. Given that the PRSUs are not registered in Chile, Walmart is not required to provide public information about the PRSUs or the Shares in Chile. Unless the PRSUs and/or the Shares are registered with the CMF, a public offering of such securities cannot be made in Chile. Comisión para el Mercado Financiero de Chile (“CMF”).  Esta oferta versa sobre repatriate such funds, you acknowledge that you will be required to affect such outside Chile exceeds US$5,000,000 (including Shares and any other cash proceeds status of such investments to the Central Bank of Chile. income tax owed). This information must be submitted on certain electronic sworn statements before June 29 of each year, depending on the assets or taxes being reported. Those statements may be found at the CIRS website at www.sii.cl. You may be ineligible to receive certain foreign tax credits if you fail to meet the applicable reporting requirements. Exchange control and tax reporting requirements in Chile are subject to change and you should consult with your have in connection with the PRSUs. COSTA RICA GUATEMALA HONG KONG Terms and Conditions Form of Settlement. The grant of PRSUs does not provide any right for you to receive a cash payment, and the PRSUs are payable only in Shares. Notifications Schemes Ordinance. INDIA Terms and Conditions annual gross salary. Notifications sale of Shares issued upon vesting of PRSUs to India within such time as prescribed under applicable Indian exchange control laws, as may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should Reserve Bank of India, Walmart or any Affiliate requests proof of repatriation. JAPAN Notifications LUXEMBOURG MEXICO Terms and Conditions Status. the Agreement. Plan. Plan. Spanish Translation forma totalmente comercial. y cualquier compañía afiliada no son responsables por cualquier disminución en el valor de las Acciones (o su equivalente en efectivo) subyacentes a las Unidades bajo el Plan. NIGERIA PERU Terms and Conditions Notifications information concerning this offer, please refer to the Plan, the Agreement, and any other grant documents made available by Walmart. SOUTH AFRICA Term and Conditions accept the PRSUs. the PRSUs. If you do not inform Walmart or the Employer, if different, of the income at vesting, and the Employer is subject to penalties or interest as a result of not being able to withhold Tax-Related Items, the Employer may recover any such penalty and interest amounts from you. In addition, if you fail to advise Walmart or your Employer, if different, of the income at vesting, you may be liable for a fine. Notifications UNITED KINGDOM Terms and Conditions Without limitation to Paragraph 10 of the T&C’s, you agree that you are liable as and when requested by Walmart or any Affiliate or by Her Majesty’s Revenue authority). You also agree to indemnify and keep indemnified Walmart and its Affiliates against any Tax-Related Items that they are required to pay or authority or any other relevant authority). Notwithstanding the foregoing, if you are a director or executive officer of Walmart (within the meaning of Section 13(k) of the Exchange Act), you understand that you may not be able to indemnify Walmart for the amount of any income tax not collected from or paid by you, in case the indemnification could be considered a loan. In this case, the additional income tax and employee national insurance contributions may be for reimbursing Walmart or the Employer, as applicable, for the value of any or the Employer may recover from you at any time thereafter by the means UNITED STATES Terms and Conditions Paragraph 5, your Vesting Date shall be deemed to be the date that is six months after your return from military leave, and the number of Shares corresponding to any Adjusted PRSUs will be delivered to you as soon as administratively feasible but in any event within 74 days of vesting.

Title: My great aunt slipped and fell in the parking lot of a large retail store, how do we sue? Question:Thanks for any help! California whoops Answer #1: Definitely a troll post. How is it the retail store's fault? Where do you live? What damages did she suffer? How was the store negligent?

[Letterhead of The Spectranetics Corporation] August 21, 2015 Dear Stacy: We are pleased to offer you the Chief Financial Officer position with the Spectranetics Corporation (the “Company,” “we,” or “us”) as a regular, full-time, exempt employee. Our goal is to attract, retain, and develop the best talent on the planet, and we are looking forward to your contributions in this role. The following outlines the terms of our employment offer to you: Position:   Chief Financial Officer       Start Date:   September 28, 2015       Reporting to:   Scott Drake, Chief Executive Officer       Compensation:   You will be an exempt employee. Your gross bi-weekly salary will be $16,730.76 or $435,000.00 annually.       Annual Bonus:   You will be eligible to participate in the Company Performance Based Bonus Plan. This bonus plan is based upon corporate goals established by the Company’s Board of Directors. At 100% to plan, this bonus plan will provide an opportunity to earn 65% of your base salary in variable incentive compensation. Actual incentive payout may range from 0% 200% of the target based on performance to goals and prorated based on your Start Date.         You will receive a one-time, taxable sign-on bonus of $172,000.00 to be paid as soon as administratively possible following your Start Date.       Equity Grant:   you will receive a total equity grant value of $529,626.00 USD (based on Black Sholes Valuation). As detailed below, a portion of this grant will be issued in the form of Incentive Stock options and a portion in the form of Performance Share Units. All of your rights and interests to the grants are defined specifically in the 2006 Incentive Award Plan. You will receive an Incentive Stock Option grant valued at approximately $220,251.00 that will vest over four years. The grant price of these options will be the fair market value of Spectranetics common stock on the last business day of the month of your hire date. The grant price, along with award value, will be used to determine the specific number of Incentive Stock Options awarded. You will receive a Performance Stock Unit grant valued at approximately $309,375.00 that will vest based on established performance metrics, subject to the approval of the Compensation Committee of the Board of Directors. The strike price of these shares is the fair market value of Spectranetics common stock on the last business day of the month of your hire date. The strike price, along with award value, will be used to determine the specific number of Performance Stock Units awarded.       Relocation:   For this role, it is expected that you relocate to the Denver/Colorado Springs area within twelve months of your Start Date. Spectranetics will provide you support for your relocation based on the Pikes Peak Executive Relocation Package. The approximate value of this assistance is $150,000.00 and includes up to $54,000.00 for closing costs, $25,000.00 for Temporary Living, $20,000.00 for miscellaneous relocation expenses, and $50,000.00 for the movement of your household goods from Pittsburgh, PA to Denver, CO. If needed, the Company will provide loss protection on the sale of your home of 75% of the documented loss capped at $150,000. The cost basis used to calculate the loss will be $891,968.16. To be eligible for this loss protection you agree to use one of SPNC preferred realtors.       Severance Agreement:   Following six months of employment and subject to your execution of the Severance Agreement and the conditions outlined in the Agreement, Spectranetics will provide you with: (a) an amount equal to 100% of your annual base pay as in effect as of the date of the separation, and (b) Twelve (12) months of COBRA premiums.       Benefits:   You will be eligible to participate in our medical/dental/vision benefits program the first of the month following date of hire. You will also be eligible for the SPNC Flexible Time Off Program. The following additional benefits have a 60-90-day waiting period: 401(k), Company Paid Group Life and AD&D, Short Term and Long Term Disability, Voluntary Life Insurance. You will receive more in-depth information in your orientation packet.       At-will Employment:   Your employment with the Company is on an at-will basis and can be terminated at any time, with or without cause, and with or without advance notice, at the option of either the Company or yourself. Although the terms of your employment outlined above apply at the present time, the Company may modify any term or condition of your employment including compensation, benefits or duties. Neither the terms of this offer letter, nor any other writings or statements of the Company, create either an express or implied contract of employment with the Company. This understanding can only be modified, if at all, in writing signed by an Executive Officer of the Company.       Confidentiality & Non-Compete Agreement:   In the event that you may have entered into an agreement with a prior employer that contains provisions regarding trade secrets, confidentiality, non-compete or the like, we offer no opinion or advice with respect to the meaning or enforceability of any such agreement and encourages you to seek independent legal counsel, if you deem that appropriate. Spectranetics does, however, expect you to honor the terms of any enforceable agreement you may have signed with any prior employer.       Employment Terms:   requirements: 1) Execute and return the Spectranetics Corporation Agreement for Protection of Trade Secrets and Confidential Information, a copy of which is enclosed. 2) Complete the Employment Eligibility Verification Form (Form I-9): All employees are required to prove their eligibility to work in the United States as required by the U.S. Immigration Law. Upon your acceptance of this offer, you will need to fill out an I-9 form and provide proof of identity. 3) Execute and return your signed agreement to comply with Spectranetics Code of Business Conduct, a copy of which is enclosed. This offer is contingent upon the satisfactory results of your reference/criminal/education, employment verification and background check. You will also be required to pass a pre-employment drug screening. If you decide to accept this offer, please return a signed copy of your acceptance, as soon as possible to Human Resources. You may email the signed copy to me at robert.fuchs@spnc.com. Again, Stacy, we are very pleased to offer you this position and are excited about you becoming a member of our team and believe this will be a mutually rewarding experience in a personal and professional way. If you have any questions or concerns, please feel free to contact Scott or me. Sincerely, The Spectranetics Corporation By: /s/ Rob Fuchs Rob Fuchs ACCEPTED: /s/ Stacy McMahan   August 23, 2015   September 28, 2015 Stacy McMahan   Date   Start Date

  Exhibit 10.1 and the Guarantors listed on Schedule B hereto $160,000,000 9.0% Senior Notes due 2014 PURCHASE AGREEMENT dated January 12, 2006 RBC Capital Markets Corporation     PURCHASE AGREEMENT January 12, 2006 RBC Capital Markets Corporation c/o RBC Capital Markets Corporation 1211 Avenue of the Americas, 32nd Floor Ladies and Gentlemen:      Introductory. Allis-Chalmers Energy Inc., a Delaware corporation (the issue and sell to RBC Capital Markets Corporation (“RBC”) and Morgan Keegan & Company, Inc. (“Morgan Keegan” and collectively with RBC, the “Initial Purchasers”) $160,000,000 aggregate principal amount of its 9.0% Senior Notes due 2014 (the “Notes”). The Securities (as defined below) will be issued (as defined in Section 2) among the Company, the Guarantors (as defined below)      Securities issued in book-entry form will be issued in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC” or the “Depositary”) pursuant to a DTC Blanket Letter of Representations, to be dated as of or prior to the Closing Date (as defined in Section 2) (the “DTC Agreement”), from the Company to the Depositary.      The Company’s obligations under the Notes, the Exchange Notes (as defined below) and the Indenture will be, jointly and severally, unconditionally guaranteed, on a senior unsecured basis, by (i) each of the Company’s domestic subsidiaries as of the date hereof, which are listed on Schedule B hereto, and (ii) any subsidiary of the Company formed or acquired on or after the Closing Date that executes the Indenture or a supplemental indenture setting forth an their guarantees included in the Indenture (the “Guarantees”). The Notes and the Guarantees thereof are herein collectively referred to as the “Securities”; and the Exchange Notes (as defined below) and the Guarantees thereof are herein collectively referred to as the “Exchange Securities.” registration rights agreement to be dated as of the Closing Date (the Initial Purchasers, pursuant to which the Company and each of the Guarantors will agree to file with the Securities and Exchange Commission (the “SEC”), under the circumstances set forth therein, (i) a registration statement under the Securities Act of 1933, as amended, relating to an offer (the “Exchange Offer”) to exchange another series of debt securities of the Company with terms substantially identical to the Notes (the “Exchange Notes”) and (ii) to the certain holders of     the Notes. The Securities Act of 1933, as amended, together with the rules and regulations of the SEC promulgated thereunder, is referred to herein as the “Securities Act.”      As more fully described in the Offering Memorandum (as defined below), the Company has agreed to purchase all the equity interests in Specialty Rental Tools, Inc. (“Specialty”), pursuant to a stock purchase agreement dated December 20, 2005. The acquisition by the Company of the equity interests in Specialty is referred to herein as the “Acquisition.” With respect to the representations, warranties and agreements made by the Company in this Agreement concerning its subsidiaries, such representations, warranties and agreements shall be deemed to include Specialty. In connection with the Acquisition, the Company will (i) offer and sell the Securities contemplated by this Agreement; and (ii) enter into a $25.0 million senior secured credit facility (the “New Bank Credit Facility”) provided under a credit agreement among the Company, Royal Bank of Canada, as Administrative Agent, and each of the lenders named therein. in the Offering Memorandum (as defined below) and agrees that the Initial to or through the Initial Purchasers without registration with the SEC under the Securities Act, in reliance upon exemptions therefrom. The terms of the expressly agree that Securities may only be resold or otherwise transferred, after the date hereof, if such resale or transfer is registered under the (“Rule 144A”) or Regulation S (“Regulation S”) thereunder).      The Company has prepared and delivered to each Initial Purchaser copies of a Preliminary Offering Memorandum, dated December 28, 2005 (the “Preliminary copies of a Pricing Supplement dated January 12, 2006 describing the terms of solicitation of offers to purchase the Securities. As used herein, the term “Offering Memorandum” shall mean the Preliminary Offering Memorandum, as supplemented by the Pricing Supplement, and any exhibits thereto, in the most Securities prior to the time this Agreement is executed by the parties hereto Company will prepare and deliver to each Initial Purchaser a Final Offering Memorandum (the “Final Offering Memorandum”) which will consist of the Preliminary Offering Memorandum with only such changes therein as are required to reflect the information contained in the Pricing Supplement, and from and after the time such Final Offering Memorandum is delivered to each Initial refer to both the Offering Memorandum and the Final Offering Memorandum. 2        The Company and the Guarantors hereby confirm their agreement with the      SECTION 1. Representations and Warranties. The Company and the Guarantors, jointly and severally, hereby represent, warrant and covenant to each Initial Purchaser as follows: Agreement and the Offering Memorandum to register under the Securities Act the offer and sale of the Securities hereunder or the initial resale of Securities to Subsequent Purchasers or, until such time as the Exchange Securities are issued pursuant to an effective registration statement, to qualify the Indenture used herein, includes the rules and regulations of the SEC promulgated thereunder).       (b) No Integration of Offerings or General Solicitation; Regulation S Matters. Neither the Company nor any Guarantor has, directly or indirectly, offer and sale of the Securities hereunder or the initial resale to Subsequent Purchasers to be registered under the Securities Act. None of the Company, the Guarantors, their respective affiliates (as such term is defined in Rule 501 their behalf (other than the Initial Purchasers, as to whom neither the Company nor any Guarantor makes any representation or warranty) has engaged or will Regulation S, (i) none of the Company, the Guarantors, their respective Regulation S, (ii) each of the Company, the Guarantors and their respective Purchasers, as to whom neither the Company nor any Guarantor makes any restrictions set forth in Regulation S and, in connection therewith, the Offering Memorandum will contain the disclosure required by Rule 902 of the Securities Act, and (iii) the sale of the Securities pursuant to Regulation S is Securities Act. “Exchange Act”), or quoted in a U.S. automated interdealer quotation system. 3         (d) The Offering Memorandum. As of the Time of Execution, the Offering Memorandum does not, and at the Closing Date will not, include an untrue agreement shall not apply to statements in or omissions from the Offering Memorandum made in reliance upon and in conformity with information furnished to Offering Memorandum. Neither the Company nor any Guarantor has distributed or will distribute, prior to the later of the Closing Date and the completion of connection with the offering and sale of the Securities other than the       (e) The Purchase Agreement. This Agreement has been duly authorized, and each Guarantor, enforceable against the Company and each Guarantor in equitable principles.       (f) The Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by the Company and each Guarantor, and, when duly executed and delivered by the Company and each Guarantor, the Registration Rights Agreement will be a valid and binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with principles and except as rights to indemnification under the Registration Rights Agreement may be limited by applicable law.       (g) The DTC Agreement. At the Closing Date, the DTC Agreement will have been duly authorized, executed and delivered by, and (assuming the due in accordance with its terms except as the enforcement thereof may be limited by equitable principles.       (h) Authorization of the Securities and the Exchange Securities. The Notes to be purchased by the Initial Purchasers from the Company will be in the form contemplated by the Indenture, and have been duly authorized for issuance and sale pursuant to this Agreement and the Indenture, and, when executed by the Company and authenticated by the Trustee in accordance with the terms of the Notes will constitute valid and binding obligations of the Company, enforceable Indenture. The Exchange Notes have been duly and validly 4   and the Exchange Offer, the Exchange Notes will constitute valid and binding of the Notes set forth in the Indenture have been duly authorized for issuance and sale pursuant to this Agreement and the Indenture, and, when the Notes have been executed, authenticated and issued in accordance with the terms of the set forth in the Indenture have been duly authorized for issuance and sale pursuant to this Agreement and the Indenture, and, when the Exchange Notes have been issued and authenticated in accordance with the terms of the Indenture and Exchange Notes will constitute valid and binding obligations of the Guarantors, by the Company and each Guarantor, and, when duly executed and delivered by the Company and each Guarantor, assuming due authorization, execution and delivery thereof by the Trustee, the Indenture will constitute a valid and binding general equitable principles.       (j) Description of the Securities and the Indenture. The Notes, the Exchange Notes, the Guarantees of the Notes and the Exchange Notes and the Offering Memorandum, subsequent to the respective dates as of which information 5         (l) Independent Accountants. Each of the accounting firms listed on Schedule C hereto, who have expressed their opinion with respect to the notes thereto) and supporting schedules included in the Offering Memorandum are independent registered public accounting firms, in the case of UHY Mann Frankfort Stein & Lipp CPAs, LLP, Gordon, Hughes and Banks, LLP and Johnson, Miller & Co., or independent certified public accountants, in the case of the other firms listed on Schedule C hereto, within the meaning of Regulation S-X Offering Memorandum present fairly the consolidated financial position of the Company and its subsidiaries or of Specialty Rental Tools Inc., Diamond Air Drilling Services, Inc., Marquis Bit Co., LLC, W. T. Enterprises, Inc., Downhole Injection Systems, LLC, Delta Rental Service, Inc. and Capcoil Tubing Services, Inc., as the case may be, as of and at the dates indicated and the consolidated results of their respective operations and cash flows for the periods specified. accepted accounting principles, as applied in the United States, applied on a stated in the related notes thereto. The historical financial information set forth in the Offering Memorandum under the captions “Offering Memorandum Summary—Summary Historical and Pro Forma Consolidated Financial Information” and “Selected Historical Consolidated Financial Information” fairly present the financial statements contained in the Offering Memorandum. The pro forma consolidated condensed financial statements of the Company and its subsidiaries and the related notes thereto included under the caption “Offering Memorandum Summary—Summary Historical and Pro Forma Consolidated Financial Information,” “Unaudited Pro Forma As Adjusted Consolidated Financial Information” and elsewhere in the Offering Memorandum present fairly the information contained therein, have been prepared in accordance with the SEC’s rules and guidelines with respect to pro forma financial statements and have been properly presented Each of the Company and its subsidiaries has been duly incorporated, formed or organized and is validly existing as a corporation or limited liability company formation or organization and has corporate, limited liability company or other organization power and authority to own, lease and operate its properties and to the Company and the Guarantors, to enter into and perform their respective DTC Agreement (in the case of the Company only), the Securities, the Exchange Securities and the Indenture. Each of the Company 6   and its subsidiaries is duly qualified as a foreign corporation, limited liability company or other organization to transact business and is in good Adverse Change. Except as disclosed in the Offering Memorandum, all of the issued and outstanding capital stock or membership interests of each subsidiary of the Company has been duly authorized and validly issued, is fully paid and nonassessable and is owned by the Company, directly or through one or more subsidiaries listed in Schedule B hereto. violation of its charter, by-laws or equivalent organizational documents, or is Company’s and each Guarantor’s execution, delivery and performance of this Agreement, the Registration Rights Agreement, the DTC Agreement (in the case of the Company only) and the Indenture, and the issuance and delivery of the violation of the provisions of the charter, by-laws or equivalent organizational the Company or any subsidiary, except for such violations as would not, required for the Company’s or each Guarantor’s execution, delivery and Agreement (in the case of the Company only) or the Indenture, or the issuance (including, but not limited to, the Acquisition), except such as have been obtained or made by the Company or the Guarantors and are in full force and and except such as may be required by federal and state securities laws or blue sky laws with respect to the Company’s or each Guarantor’s obligations under the Registration Rights Agreement. As used herein, a “Debt Repayment Triggering lapse of time would give, the holder of any 7   proceedings pending or, to the best of the Company’s and each Guarantor’s leased by, the Company or any of its subsidiaries, where in any such case (A) it is reasonably expected that such action, suit or proceeding might be determined transactions contemplated by this Agreement and by the Offering Memorandum in the “Use of Proceeds” section. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the best of the Company’s and each of the Guarantor’s knowledge, is threatened or imminent which, if Material Adverse Change.       (q) Intellectual Property Rights. The Company and its subsidiaries own or Property Rights”) reasonably necessary to conduct their businesses as described in the Offering Memorandum; and the expected expiration of any of such Intellectual Property Rights if not renewed or replaced would not result in a Material Adverse Change. Neither the Company nor any of its subsidiaries has received any notice of infringement or conflict with asserted Intellectual unfavorable decision, would result in a Material Adverse Change.       (r) All Necessary Permits, etc. Except as disclosed in the Offering Memorandum, the Company and each subsidiary possess such valid and current businesses as currently conducted, and neither the Company nor any subsidiary       (s) Title to Properties. Except as disclosed in the Offering Memorandum, the Company and each of its subsidiaries have good and marketable title to all the properties and assets reflected as owned in the financial statements referred to in Section 1(n) above (or elsewhere in the Offering Memorandum), in encumbrances, equities, claims and other defects, except (i) such as do not materially and adversely affect the value of such property and (ii) such as do not materially interfere with the current or currently proposed use of such are not material and do not materially interfere with the current or currently 8   proposed use of such real property, improvements, equipment or personal property of them, except, in all cases, for any such tax, assessment, fine or penalty that the Company is contesting in good faith and except, in any case, in which the failure to so file or pay would not in the aggregate result in a Material Adverse Change. The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(m) above in respect subsidiaries has not been finally determined, except where the failure to make such charges, accruals and reserves would not result in a Material Adverse Change.       (u) Company and Guarantors Each Not an “Investment Company”. The Company of 1940, as amended (the “Investment Company Act”). Neither the Company nor any Guarantor is, nor after giving effect to the offering and sale of the Securities and the application of the net proceeds therefrom, as described in the Offering Memorandum, will be, an “investment company” within the meaning of the Investment Company Act, and the Company and each Guarantor intends to conduct Company Act.       (v) Insurance. Except as disclosed in the Offering Memorandum, each of the Company and its subsidiaries are insured by recognized, financially sound damage, destruction, acts of vandalism and earthquakes. Except as disclosed in the Offering Memorandum, the Company has no reason to believe that it or any       (w) No Price Stabilization or Manipulation. The Company has not taken and Securities.       (x) Solvency. The Company and each Guarantor is, and immediately after the Closing Date, will be, Solvent. As used herein, the term “Solvent” means, with respect to the Company and each Guarantor on a particular date, that on such date (i) the fair market value of its assets is greater than the total amount of its liabilities (including contingent liabilities); (ii) the present fair salable value of its assets is greater than the amount that will be required to pay the probable liabilities on its debts as they become due and payable; (iii) it is able to realize upon its 9   obligations, as they become due and payable; and (iv) it does not have unreasonably small capital to carry on its business as conducted and as proposed to be conducted, as set forth in the Offering Memorandum. foreign office in violation of any applicable law or of the character necessary to be disclosed in the Offering Memorandum in order to make the statements therein not misleading.      (z) Company’s Accounting System. Except as disclosed in the Offering Memorandum, the Company maintains a system of accounting controls sufficient to      (aa) Compliance with Environmental Laws. Except as would not, individually or in the aggregate, result in a Material Adverse Change: (i) neither the “Environmental Claims”), pending or, to the best of the Company’s or any Guarantor’s knowledge, threatened against the Company or any of its subsidiaries or any of its subsidiaries has retained 10   the Company’s or any Guarantor’s knowledge, there are no past or present operation of law.      (bb) ERISA Compliance. The Company and its subsidiaries and any “employee with ERISA, except for any such noncompliance as would not, individually or in Affiliates. No “employee benefit plan” (as defined in ERISA Section 3(3)) “amount of unfunded benefit liabilities” (as defined under ERISA) that could reasonably be expected to result in a Material Adverse Change. Neither the (ii) Sections 412, 4971, 4975 or 4980B of the Code that could reasonably be expected to result in a Material Adverse Change. Each “employee benefit plan” which would cause the loss of such qualification, that has given or would give rise to any tax, penalty or other liability that could reasonably be expected to      (cc) New Bank Credit Facility. The New Bank Credit Facility has been duly and validly authorized by the Company and, when duly executed and delivered by remedies of creditors or by general equitable principles      (dd) Sarbanes-Oxley Act. The Company is in compliance in all material respects with applicable provisions of the Sarbanes-Oxley Act of 2002 that are 11        (ee) Disclosure Controls and Procedures. Except as disclosed in the Offering Memorandum, (i) the Company has established and maintains “disclosure Exchange Act) and (ii) the Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and reported within the time periods specified in the rules and regulations thereunder, and that all such information is accumulated and communicated to the disclosure and to make the certifications of the Chief Executive Officer and respect to such reports. Without limiting the generality of the foregoing, as disclosed in the Offering Memorandum, the Company’s disclosure controls and procedures are not effective to enable it to record, process, summarize, and report information required to be included in our SEC filings within the required time period, and to ensure that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.      (ff) Payment of Dividends by Subsidiaries. No subsidiary of the Company is Company or any other subsidiary, from making any other distribution on such any loans or advances to such subsidiary from the Company or any other subsidiary or from transferring any of such subsidiary’s property or assets to      (gg) Forward Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) or presentation of market-related or statistical data contained in the Preliminary Offering Memorandum or Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed in other than good faith. be a representation and warranty by the Company to each Initial Purchaser as to      (a) The Securities. The Company agrees to issue and sell to the several Initial Purchasers all of the Notes upon the terms herein set forth. The Guarantors, jointly and severally, agree to issue to the several Initial Purchasers all of the Guarantees of the Notes upon the terms herein set forth. and upon the terms but subject to the conditions herein set forth, each of the Company the aggregate principal amount of Notes set forth opposite its name in Schedule A, at a purchase price of 97.25% of the principal amount thereof, 12        (b) The Closing Date. Delivery of and payment for the Securities shall be as shall be agreed upon by the Company and the Initial Purchasers at 9:30 AM, New York City time, on January 18, 2006 or at such time on such later date as the Initial Purchasers and the Company shall designate, which date and time may be postponed by agreement between the Initial Purchasers and the Company (such “Closing Date”). The Company hereby acknowledges that circumstances under which the Initial Purchasers may provide notice to postpone the Closing Date as the Company or the Initial Purchasers to recirculate to investors copies of an provisions of Section 18.      (c) Delivery of and Payment for the Securities. The Company shall deliver, or cause to be delivered, to or as directed by RBC for the accounts of the several Initial Purchasers certificates for the Securities at the Closing Date Co., as nominee of the Depository, pursuant to the DTC Agreement, and shall be      (d) Initial Purchasers as Accredited Investors. Each Initial Purchaser Rule 501(a)(1), (2), (3) or (7) under the Securities Act with such knowledge and      SECTION 3. Additional Covenants. The Company and, as applicable, each of the Guarantors, jointly and severally, further covenant and agree with each Until the later of (x) the completion of the placement of the Securities by the Initial Purchasers with the Subsequent Purchasers and (y) the Closing Date, prior to amending or supplementing the Offering Memorandum, the Company shall furnish to the Initial Purchasers for review a copy of each such proposed amendment or supplement, and the Company shall not use any such proposed      (b) Amendments and Supplements to the Offering Memorandum. If, prior to the which it is necessary to amend or supplement the Offering Memorandum in order to make the statements therein, in the light of the circumstances when the Offering Memorandum is delivered to a purchaser, not misleading, or if in the opinion of necessary to amend or supplement the Offering Memorandum to comply with applicable law, the 13   Company agrees to prepare promptly (subject to Section 3(a) hereof), and furnish law. Initial Purchasers, without charge, as many copies of the Offering Memorandum requested.      (d) Blue Sky Compliance. The Company and each Guarantor shall cooperate register the Securities for sale under (or obtain exemptions from the application of) the state securities, or blue sky, laws of those jurisdictions required for the distribution of the Securities. Neither the Company nor any Guarantor shall be required to qualify as a foreign corporation or to take any taxation as a foreign corporation, limited liability company or other entity. The Company will advise the Initial Purchasers promptly of the suspension of the the Company shall use its commercially reasonable efforts to obtain the Proceeds” in the Offering Memorandum. and use its commercially reasonable efforts to permit the Securities to be eligible for clearance and settlement through the facilities of the Depositary.      (g) No Integration. The Company agrees that it will not and will cause its Securities Act provided by Section 4 thereof or by Rule 144A or by Regulation S thereunder or otherwise.      (h) Legended Securities. Each certificate for a Note will bear the legend period and upon the other terms stated in the Offering Memorandum. 14        (i) PORTALSM. The Company will use its commercially reasonable efforts to cause the Notes to be eligible for The PORTALSM Market of the National Association of Securities Dealers, Inc. (“The PORTALSM Market”).      (j) Agreement Not to Offer or Sell Additional Securities. During the period of 90 days following the date of the Offering Memorandum, none of the Company or any Guarantor will, without the prior written consent of RBC (which consent may be withheld at the sole discretion of RBC), directly or indirectly, sell, offer, securities of the Company or any Guarantor substantially similar to the Securities or securities exchangeable for or convertible into debt securities of the Company or any Guarantor substantially similar to the Securities (other than      (k) Rating of Securities. The Company and the Guarantors shall take all commercially reasonable action necessary to enable Standard & Poor’s Rating Services, a division of The McGraw-Hill, Inc. Companies, and Moody’s Investor Services, Inc. to provide their respective credit ratings to the Securities at or prior to the time of their initial issuance.      RBC, on behalf of the several Initial Purchasers, may, in its sole      SECTION 4. Payment of Expenses. The Company and the Guarantors, jointly and the performance of their obligations hereunder and in connection with the transactions contemplated hereby, including without limitation, (i) all expenses incident to the issuance and delivery of the Securities, (ii) all necessary firms or independent certified public accountants and other advisors, (iv) all filing, shipping and distribution of each preliminary Offering Memorandum and the Offering Memorandum (including financial statements and exhibits), and all Agreement, the Indenture, the DTC Agreement, and the Securities, (v) all filing qualifications, registrations and exemptions, (vi) the fees and expenses of the connection with the Indenture, the Securities and the Exchange Securities, Exchange Securities with the ratings agencies and the listing of the Securities with The PORTALSM Market, (viii) all fees and expenses (including reasonable fees and expenses of counsel) of the 15   Company and the Guarantors in connection with approval of the Securities by DTC for “book-entry” transfer, (ix) the transportation and other expenses incurred by or on behalf of the representatives of the Company in connection with presentations to prospective purchasers of the Securities, including, but not limited to, the cost of any chartered aircraft and (x) all other costs and respective other obligations under this Agreement. Except as provided in this counsel. Securities as provided herein on the Closing Date shall be subject to (A) the accuracy in all material respects of the representations and warranties on the part of the Company and the Guarantors set forth in Section 1 hereof that are not qualified by materiality as of the date hereof and as of the Closing Date as though then made, (B) to the accuracy of the representations and warranties on are qualified by materiality as of the date hereof and as of the Closing Date as though then made, (C) the timely performance by the Company of its covenants and other obligations hereunder and (D) each of the following additional conditions: Purchasers shall have received from the accountants listed on Schedule C hereto, in respect of each entity set forth opposite such accountant’s name on Schedule C hereto, a letter from each such accountant, dated the date hereof the financial statements and certain financial information contained in the Preliminary Offering Memorandum and the Pricing Supplement, and the specified than three days prior to the date hereof.      (i) there shall not have occurred any Material Adverse Change; and       (c) Opinion of Counsel for the Company and the Guarantors. The Company shall have requested and caused the following legal opinions dated the Closing Date and addressed to the Initial Purchasers to be furnished to the Initial Purchasers: 16        (i) an opinion of Andrews Kurth LLP, special counsel for the Company and the Guarantors, substantially to the effect set forth in Exhibit A-1; and      (ii) an opinion of Liskow & Lewis, special Louisiana counsel for the Company and the Guarantors, substantially to the effect set forth in Exhibit A-2 hereto.       (d) Opinion of Counsel for the Initial Purchasers. The Initial Purchasers shall have received from Shearman & Sterling LLP, counsel for the Initial the Initial Purchasers, with respect to the issuance and sale of the Securities, the Offering Memorandum (as amended or supplemented at the Closing Date) and the purpose of enabling it to pass upon such matters. Chief Executive Officer or President and the Chief Financial Officer or Chief Accounting Officer of the Company dated as of the Closing Date, to the effect set forth in subsection (b) of this Section 5, and further to the effect that: set forth in Section 1 of this Agreement that are not qualified by materiality are true and correct in all material respects as of the Time of Execution and are true and correct as of the Closing Date, and the representations and warranties and of the Company and the Guarantors that are qualified by materiality are true and correct as of the Time of Execution and are true and correct as of the Closing Date, in each case, with the same force and effect as though expressly made on and as of the Closing Date; and      (ii) the Company and the Guarantors have complied with all the agreements       (f) Bring-down Comfort Letter. On the Closing Date, the Initial Purchasers shall have received from the accountants listed on Schedule C hereto, in respect of each entity set forth opposite such accountant’s name on Schedule C hereto, a letter dated such date, in form and substance satisfactory to the Initial furnished by them pursuant to subsection (a) of this Section 5, except that the no more than three business days prior to the Closing Date and that their procedures shall extend to financial information in the Final Offering Memorandum not contained in the Preliminary Offering Memorandum or the Pricing Supplement.       (g) PORTAL SM Eligibility . At the Closing Date, the Notes shall have been designated for trading on The PORTALSM Market.       (h) Registration Rights Agreement. The Company and each of the Guarantors shall have executed and delivered the Registration Rights Agreement and the Initial Purchasers shall have received executed counterparts thereof. 17         (i) Consummation of the Acquisition. On the Closing Date, the Company shall have consummated the Acquisition in the manner described in the Offering Memorandum.       (j) New Bank Credit Facility. On the Closing Date, the Company shall have executed and delivered the New Bank Credit Facility.       (k) Additional Documents. On or before the Closing Date, the Initial Guarantor to perform any agreement herein or to comply with any provision reimburse the Initial Purchasers upon demand for all out-of-pocket expenses that other hand, hereby establish and agree to observe the following procedures in to (i) persons whom the offeror or seller reasonably believes to be qualified 18   the Securities (and all securities issued in exchange therefor or in substitution thereof, other than the Exchange Securities) shall bear the legend set forth in the Offering Memorandum under the caption “Notice to Investors.” not be liable or responsible to the Company or any Guarantor for any losses, damages or liabilities suffered or incurred by the Company or any Guarantor, from or relating to any resale or transfer of any Security. damage, liability or expense, as incurred, to which such Initial Purchaser or is effected with the written consent of the Company and/or the Guarantors), circumstances under which they were made, not misleading, and to reimburse each Initial Purchaser and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by RBC) as such expenses are reasonably incurred by such Initial Purchaser or such controlling person in information furnished to the Company by the Initial Purchasers expressly for use in the Preliminary Offering Memorandum or the Offering Memorandum (or any Section 8(a) shall be in addition to any liabilities that the Company or the       (b) Indemnification of the Company, the Guarantors and their respective Directors and Officers. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors and each of damage, liability or expense, as incurred, to which the Company or the Guarantors or any 19   (or actions in respect thereof as contemplated below) (i) arises out of or is amendment or supplement thereto), or (ii) arises out of or is based upon the furnished to the Company by the Initial Purchasers expressly for use therein; and to reimburse the Company, the Guarantors or any such director, officer, employee or controlling person for any legal and other expenses reasonably incurred by the Company, the Guarantors or any such director, officer, employee action. The Company and each Guarantor hereby acknowledges that the only for use in the Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or supplement thereto) are (i) the names of the Initial Purchasers as set forth on the front and back covers of the Offering Memorandum and as further set forth in the table in the first paragraph under the caption “Plan of Distribution,” (ii) the statements set forth in the fourth and fifth sentences of the paragraph under the caption “Risk Factors — If an active trading market does not develop for these notes you may not be able to resell them,” and (iii) the statements set forth in the first sentence of the third paragraph, the third sentence of the tenth paragraph and the eleventh, twelfth and thirteenth paragraphs, concerning stabilization by the Initial Purchasers, under the caption “Plan of Distribution” in the Offering Memorandum; and the Initial Purchasers confirm that such statements are correct. The indemnity agreement set the indemnified party in 20   counsel, which such approval shall not be unreasonably withheld, the party, representing the indemnified parties who are parties to such action) or indemnifying party. pursuant to this Agreement shall be deemed to be in the same 21   the Company or the Guarantors, and the total discount received by the Initial Purchasers, bear to the aggregate initial offering price of the Securities. The information supplied by the Company or the Guarantors, on the one hand, or the statement or omission. director, officer and employee of the Company or any Guarantor, and each person, as the Company or any Guarantor. securities shall have been suspended or limited by the SEC or by the American Stock Exchange, or trading in securities generally on the American Stock Exchange, the Nasdaq Stock Market or the New York Stock Exchange shall have been established on any of such stock exchanges by the SEC or the NASD; (ii) a general banking moratorium shall 22   have been declared by any of federal or New York authorities; (iii) there has been a material disruption in commercial banking or securities settlement, payment or clearance services in the United States; (iv) there shall have financial or economic conditions, as in the judgment of the Initial Purchasers the manner and on the terms described in the Offering Memorandum or to enforce contracts for the sale of securities; (v) in the reasonable judgment of the Initial Purchasers there shall have occurred any Material Adverse Change; or (vi) the Company or any Guarantor shall have sustained a loss by strike, fire, judgment of the Initial Purchasers would reasonably be expected to result in a hereof, (ii) any Initial Purchaser to the Company or any Guarantor or (iii) any statements of the Company and the Guarantors, of its officers and of the several of any Initial Purchaser or the Company or the Guarantors or any of its or their hereto as follows: RBC Capital Markets Corporation Facsimile: (212) 703-2295 Shearman & Sterling LLP 599 Lexington Avenue Attention: Bruce Czachor, Esq. 23   If to the Company, the Guarantors or the Guarantors: Houston, TX 77056 Attention: Theodore F. Pound III, Esq. Andrews Kurth LLP 600 Travis, Suite 400 Houston, TX 77002 Attention: Robert V. Jewell, Esq. giving written notice to the others in accordance with this Section 12. pursuant to Section 18 hereof, and to the benefit of the employees, officers, such purchase.      SECTION 14. Partial Unenforceability. The invalidity or unenforceability of and enforceable.      SECTION 16. Consent to Jurisdiction. Any legal suit, action or proceeding submits to the non-exclusive jurisdiction (except for proceedings instituted in court. 24        SECTION 17. New York Contacts. RBC hereby acknowledges and agrees that its chief executive office or an office from which it has conducted a substantial part of the negotiations relating to the transactions contemplated by this Agreement is located in the State of New York. fail or refuse to purchase Securities and the aggregate number of Securities Sections 4, 6, 8, 9, 12, 14, 15, 16, 17, 18 and 19 shall at all times be that the required changes, if any, to the Offering Memorandum or any other      SECTION 19. No Fiduciary Duty. The Company and each Guarantor hereby acknowledges that the Initial Purchasers are each acting solely as an initial purchaser in connection with the purchase and sale of the Securities. The Company further acknowledges that the Initial Purchasers are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis and in no event do the parties intend that the Initial Purchasers act or be responsible as a fiduciary to the Company or any Guarantor, their management, stockholders, creditors or any other person in connection with any activity that the Initial Purchasers may undertake or has undertaken in or similar obligations to the Company or any Guarantor, either in connection to 25   such transactions, and the Company and each Guarantor hereby confirms its understanding and agreement to that effect. The Company, each Guarantor and the independent judgments with respect to any such transactions, and that any opinions or views expressed by the Initial Purchasers to the Company or any Guarantor regarding such transactions, including but not limited to any opinions constitute advice or recommendations to the Company or any Guarantor. The Company and each Guarantor hereby waives and releases, to the fullest extent the Initial Purchasers with respect to any breach or alleged breach of any fiduciary or similar duty to the Company or any Guarantor in connection with the transactions.      SECTION 20. General Provisions. This Agreement constitutes the entire 26               Very truly yours, COMPANY:       By:   /s/ Bruce Sauers         Name:   Bruce Sauers        Title:   Vice President & Controller        GUARANTORS:   Title:   Vice President & Secretary        AIRCOMP L.L.C.   Title:   Vice President & Secretary        CAPCOIL TUBING SERVICES, INC.                 DELTA RENTAL SERVICE, INC.   Title:   Vice President & Secretary        DOWNHOLE INJECTION SYSTEMS, LLC   Title:   Vice President & Secretary        MOUNTAIN COMPRESSED AIR, INC.   Title:   Vice President & Secretary        OILQUIP RENTALS, INC.   Title:   Vice President & Secretary        SAFCO-OIL FIELD PRODUCTS, INC.       Title:   Vice President & Secretary        TARGET ENERGY INC.                         RBC CAPITAL MARKETS CORPORATION     MORGAN KEEGAN & COMPANY, INC.               By:   RBC Capital Markets Corporation for itself and on behalf of the other Initial Purchaser               By:   /s/ Nicholas Daifotis           Name: Nicholas Daifotis         Title: Managing Director         SCHEDULE A Initial Purchasers   Purchased   RBC Capital Markets Corporation   $ 152,000,000       8,000,000             Total   $ 160,000,000   Schedule A-1   SCHEDULE B Allis-Chalmers Tubular Services, Inc. Aircomp L.L.C. Capcoil Tubing Services, Inc. Delta Rental Service, Inc. Downhole Injection Systems, LLC Mountain Compressed Air, Inc. OilQuip Rentals, Inc. Safco-Oil Field Products, Inc. Strata Directional Technology, Inc. Target Energy Inc. Schedule B-1   SCHEDULE C       Name of Accountants   Name of Entity   UHY Mann Frankfort Stein & Lipp CPAs, LLP     Specialty Rental Tools, Inc. Gordon, Hughes and Banks, LLP Accounting & Consulting Group, LLP   Diamond Air Drilling Services, Inc.     Marquis Bit Co., LLC     W. T. Enterprises, Inc. Johnson, Miller & Co. Wright, Moore, Dehart, Dupuis & Hutchinson, LLC Curtis Blakely & Co., PC Schedule C-1   EXHIBIT A-1 Opinion of Andrews Kurth LLP January [__], 2006 To each of the Initial Purchasers named in the Purchase Agreement referenced herein      Re: [___]% Senior Notes due 2014 issued by Allis-Chalmers Energy Inc. Ladies and Gentlemen:      We have acted as special counsel to Allis-Chalmers Energy Inc., a Delaware corporation (the “Issuer”), in connection with the Purchase Agreement dated January [___], 2006 (the “Purchase Agreement”) among (i) the Issuer, (ii) the subsidiaries of the Issuer named therein as parties thereto, and (iii) RBC Capital Markets Corporation and Morgan Keegan & Company, Inc. (collectively, the “Initial Purchasers”), relating to the sale by the Issuer to the Initial Purchasers of $[160,000,000] aggregate principal amount of the Issuer’s [___]% Senior Notes due 2014 (the “Initial Securities”). The Initial Securities are being issued under an Indenture dated as of January [___], 2006 (the “Indenture”) among the Issuer, the subsidiaries of the Issuer named therein as parties thereto and as guarantors of the Initial Securities (collectively, the “Guarantors”) and Wells Fargo Bank, N.A., as trustee (the “Trustee”). The Issuer and the Guarantors are referred to collectively herein as the “Obligors.”      The Obligors and the Initial Purchasers have entered into a Registration Rights Agreement dated as of January [___], 2006 (the “Registration Rights Agreement”), pursuant to which the Obligors have agreed to file, under certain conditions, with the Securities and Exchange Commission (the “SEC”), a “Securities Act”), with respect to an offer (the “Exchange Offer”) by the Obligors to the holders of the Initial Securities to issue and deliver to such holders, in exchange for their Initial Securities, a like principal amount of new securities (the “Exchange Securities”) identical to the Initial Securities in all material respects, except that the Exchange Securities will not (except in specified circumstances) be subject to restrictions on transfer.      We are furnishing this opinion letter to you pursuant to Section 5(c) of the Purchase Agreement. the following:       (a)   the Issuer’s Preliminary Offering Memorandum dated December 28, 2005 (the “Preliminary Offering Memorandum”) relating to the Securities;     (b)   the Issuer’s Offering Memorandum dated January [___], 2006 (the “Offering Memorandum”) relating to the Initial Securities;     (c)   the [___], (such documents, together with the Preliminary Offering Memorandum, being referred to herein as the “Disclosure Package”);     (d)   the Indenture;     (e)   the form of the Initial Securities and the form of the Exchange Securities;     (f)   [each of (i)] the global note executed by the Issuer pursuant to the Indenture, in the aggregate principal amount of $[___], representing the Initial Securities purchased and sold pursuant to the Purchase Agreement with a view toward resale in reliance on Rule 144A under the Securities Act [and (ii) the global note executed by the Issuer pursuant to the Indenture, in the aggregate principal amount of $[___], representing the Initial Securities purchased and sold pursuant to the Purchase Agreement with a view toward resale in reliance on Regulation S under the Securities Act];     (g)   the Purchase Agreement;     (h)   the Registration Rights Agreement;     (i)   the Stock Purchase Agreement dated as of December 20, 2005 (the “Specialty Stock Purchase Agreement”) by and between the Issuer and Joe Van Matre, an individual resident in Lafayette, Louisiana, pursuant to which the Issuer agreed to purchase and Mr. Van Matre agreed to sell, all the issued and outstanding shares of capital stock of Specialty Rental Tools, Inc., a Louisiana corporation (“Specialty”), subject to certain conditions specified in such agreement;     (j)   the Certificate of Incorporation of the Issuer, certified by the Secretary of State of the State of Delaware as in effect on January [___], 2006, and certified by the Secretary of the Issuer as in effect on each of the dates of the adoption of the resolutions specified in paragraph (l) below, the date of the Purchase Agreement and the date hereof (the “Issuer Certificate of Incorporation”);     (k)   the Bylaws of the Issuer, certified by the Secretary of the Issuer as in effect on each of the dates of the adoption of the resolutions specified in paragraph (l) below, the date of the Purchase Agreement and the date hereof (the “Issuer Bylaws”);     (l)   resolutions of the Board of Directors of the Issuer dated [___] [___], 2005, and resolutions of the Pricing Committee of the Board of Directors of the Issuer dated January [___], 2006, certified by the Secretary of the Issuer;       (m)   the Articles of Incorporation of Allis-Chalmers Tubular Services, Inc., certified by the Secretary of State of the State of Texas as in effect on January [___], 2006, and certified by the Secretary of Allis-Chalmers Tubular Services, Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (h) below, the date of the Purchase Agreement and the date hereof;     (n)   the Bylaws of Allis-Chalmers Tubular Services, Inc., certified by the Secretary of Allis-Chalmers Tubular Services, Inc. as in (o)   resolutions of the Board of Directors of Allis-Chalmers Tubular Services, Inc. dated January [___], 2006, certified by the Secretary of Allis-Chalmers Tubular Services, Inc.;     (p)   the Certificate of Formation of Aircomp L.L.C., certified by the Secretary of State of the State of Delaware as in effect on January [___], 2006, and certified by the [Secretary] of Aircomp L.L.C., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (r) below, the date of the Purchase Agreement and the date hereof;     (q)   the Limited Liability Company Agreement of Aircomp L.L.C., certified by the [Secretary] of Aircomp L.L.C. as in effect on each of the dates of the adoption of the resolutions specified in paragraph (r) below, the date of the Purchase Agreement and the date hereof;     (r)   resolutions of the [managers/members] of Aircomp L.L.C. dated January [___], 2006, certified by the [Secretary] of Aircomp L.L.C.;     (s)   the Articles of Incorporation of Capcoil Tubing Services, Inc., certified by the Secretary of State of the State of Texas as in effect on January [___], 2006, and certified by the Secretary of Capcoil Tubing Services, Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (u) below, the date of the Purchase Agreement and the date hereof;     (t)   the Bylaws of Capcoil Tubing Services, Inc., certified by the Secretary of Capcoil Tubing Services, Inc. as in effect (u) below, the date of the Purchase Agreement and the date hereof;     (u)   resolutions of the Board of Directors of Capcoil Tubing Services, Inc. dated January [___], 2006, certified by the Secretary of Capcoil Tubing Services, Inc.     (v)   the Articles of Organization of Downhole Injection Systems, LLC, January [___], 2006, and certified by the [Secretary] of Downhole Injection Systems, LLC, as in effect on each of the dates of the adoption of the resolutions specified in paragraph (x) below, the date of the Purchase Agreement and the date hereof;     (w)   the Regulations of Downhole Injection Systems, LLC, certified by the [Secretary] of Downhole Injection Systems, LLC as in effect on each of the dates of the adoption of the     Agreement and the date hereof;     (x)   resolutions of the [managers/members] of Downhole Injection Systems, LLC dated [___] [___], 2005, certified by the [Secretary] of Downhole Injection Systems, LLC;     (y)   the Articles of Incorporation of Mountain Compressed Air, Inc., certified by the Secretary of State of the State of Texas as in effect on January [___], 2006, and certified by the Secretary of Mountain Compressed Air, Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (aa) below, the date of the Purchase Agreement and the date hereof;     (z)   the Bylaws of Mountain Compressed Air, Inc., certified by the Secretary of Mountain Compressed specified in paragraph (aa) below, the date of the Purchase Agreement and the date hereof;     (aa)   resolutions of the Board of Directors of Mountain Compressed Air, Inc. dated January [___], 2006, certified by the Secretary of Mountain Compressed Air, Inc.;     (bb)   the Certificate of Incorporation of OilQuip Rentals Inc., certified by the Secretary of State of the State of OilQuip Rentals Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (dd) below, the date of the Purchase Agreement and the date hereof;     (cc)   the Bylaws of OilQuip Rentals Inc., certified by the Secretary of OilQuip Rentals Inc. as in effect on each of the dates of the adoption of the resolutions specified in paragraph (dd) below, the date of the Purchase Agreement and the date hereof;     (dd)   resolutions of the Board of Directors of OilQuip Rentals Inc. dated January [___], 2006, certified by the Secretary of OilQuip Rentals Inc.;     (ee)   the Articles of Incorporation of Safco-Oil Field Products, Inc., certified by the Secretary of by the Secretary of Safco-Oil Field Products, Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (gg) below, the date of the Purchase Agreement and the date hereof;     (ff)   the Bylaws of Safco-Oil Field Products, Inc., certified by the Secretary of Safco-Oil Field Products, Inc. as in effect on each of the dates of the adoption of the resolutions specified in paragraph (gg) below, the date of the Purchase Agreement and the date hereof;     (gg)   resolutions of the Board of Directors of Safco-Oil Field Products, Inc. dated January [___], 2006, certified by the Secretary of Safco-Oil Field Products, Inc.;     (hh)   the Articles of Incorporation of Strata Directional Technology, Inc., certified by the Secretary           certified by the Secretary of Strata Directional Technology, Inc., as in paragraph (jj) below, the date of the Purchase Agreement and the date hereof;     (ii)   the Bylaws of Strata Directional Technology, Inc., certified by the Secretary of Strata Directional Technology, Inc. as in effect on each of the dates of the adoption of the resolutions specified in paragraph (jj) below, the date of the Purchase Agreement and the date hereof;     (jj)   resolutions of the Board of Directors of Strata Directional Technology, Inc. dated January [___], 2006, certified by the Secretary of Strata Directional Technology, Inc.;     (kk)   the Certificate of Incorporation of Target Energy Inc., certified by the Secretary of State of the State of Delaware as in effect on January [___], 2006, and certified by the Secretary of Target Energy Inc., as in effect on each of the dates of the adoption of the resolutions specified in paragraph (mm) below, the date of the Purchase Agreement and the date hereof;     (ll)   the Bylaws of Target Energy Inc., certified by the Secretary of Target Energy specified in paragraph (mm) below, the date of the Purchase Agreement and the date hereof;     (mm)   resolutions of the Board of Directors of Target Energy Inc. dated January [___], 2006, certified by the Secretary of Target Energy Inc.;     (nn)   a certificate from the Secretary of State of the State of Delaware dated January [___], 2006 as to the good standing and legal existence under the laws of the State of Delaware of the Issuer;     (oo)   certificates from the Secretary of State of the State of Delaware dated January [___], 2006 as to the good standing and legal existence under the laws of the State of Delaware of the Applicable Guarantors organized in the State of Delaware;     (pp)   (i) certificates from the Secretary of State of the State of Texas dated January [___], 2006 as to the legal existence under the laws of the State of Texas of the Applicable Guarantors organized in the State of Texas, and (ii) certificates from the Comptroller of Public Accounts of the State of Texas dated January [___], 2006 as to the good standing under the laws of the State of Texas of the Applicable Guarantors organized in the State of Texas;     (qq)   a certificate dated the date hereof (the “Opinion Support Certificate”), executed by the President and Chief Operating Officer and by the Chief Financial Officer of the Issuer, a copy of which is attached hereto as Exhibit A;     (rr)   each of the Applicable Orders (as defined below); and     (ss)   each of the Applicable Agreements (as defined below).     identified to our satisfaction, of such records of the Obligors and such agreements, certificates of public officials, certificates of officers or other      As used herein the following terms have the respective meanings set forth below:      “Applicable Agreements” means those agreements and other instruments identified on Schedule 1 to the Opinion Support Certificate.      “Applicable Obligor Organizational Documents” means, collectively, the following instruments, each in the form reviewed by us, as indicated above: (i) the Issuer Certificate of Incorporation, (ii) the Issuer Bylaws, and (iii) the Certificates of Incorporation, Articles of Incorporation, Certificates of Formation, Articles of Organization, Bylaws, Limited Liability Company Agreements and Regulations of the Applicable Guarantors.      “Applicable Orders” means those orders or decrees of governmental authorities identified on Schedule 2 to the Opinion Support Certificate. [However, officers of the Issuer have certified in the Opinion Support of any jurisdiction.      “Transaction Documents” means collectively, the Purchase Agreement, the Registration Rights Agreement, the Indenture, the Initial Securities and the Exchange Securities.      1. Based upon the foregoing and subject to the limitations, qualifications, Issuer is validly existing as a corporation and in good standing under the laws of the State of Delaware. Each of the Applicable Guarantors listed in Exhibit B hereto is validly existing as a corporation or limited liability company as indicated in such Exhibit and in good standing under the laws of its jurisdiction of formation or organization indicated in such Exhibit.      2. The Issuer has the corporate power and corporate authority under the laws of the State of Delaware to (i) execute and deliver, and incur and perform all of its obligations under, the Transaction Documents and (ii) carry on its business and own and lease its properties as     described in the Offering Memorandum. Each of the Applicable Guarantors has the corporate, or limited liability company power and authority under the laws of its jurisdiction of formation or organization indicated in Exhibit B hereto to and own and lease its properties as described in the Offering Memorandum. delivered by the Issuer. The Exchange Securities have been duly authorized by the Issuer. Each of the Purchase Agreement, the Registration Rights Agreement and the Indenture has been duly authorized, executed and delivered by each of the Applicable Guarantors that is a party thereto. performance by the Obligors of their respective obligations under, each of the (ii) the offering, issuance, sale and delivery of the Initial Securities pursuant to the Purchase Agreement, (iii) the offering, issuance, exchange and delivery of the Exchange Securities pursuant to the Exchange Offer contemplated by the Registration Rights Agreement in the manner therein contemplated, (iv) the issuance of the guaranties of the Initial Securities by the Guarantors, as set forth in the Indenture, or (v) the issuance of the guaranties of the Exchange Securities by the Guarantors, as set forth in the Indenture, at such time as the Exchange Securities are issued pursuant to the Exchange Offer contemplated, (A) constituted, constitutes or will constitute a violation of the Applicable Obligor Organizational Documents, (B) constituted, constitutes or applicable laws of the State of Texas, (iii) applicable laws of the United States of America, (iv) the General Corporation Law of the State of Delaware, (v) the Texas Business Corporation Act, (vi) the Delaware Limited Liability Company Act, (vii) the Texas Limited Liability Company Act or (viii) (E) resulted, results or will result in the contravention of any Applicable Order. (i) the execution and delivery by each of the Obligors of, the Transaction Documents to which it is a party or the incurrence or performance of its obligations thereunder, or the enforceability of any of such Transaction Documents against any of the Obligors that is a party thereto or (ii) the consummation of the purchase by the Issuer of all the issued and outstanding shares of capital stock of Specialty, as contemplated by the Specialty Stock Purchase Agreement. As used in this paragraph, “Governmental Approval” means any regulatory body of the State of New York, the State of Texas, the State of Delaware or the United States of America, pursuant to (i) applicable laws of the State of New York, (ii) applicable laws of the State of Texas, (iii) applicable laws of the United States of America, (iv)     the General Corporation Law of the State of Delaware, (v) the Delaware Limited Liability Company Act, (vi) the Texas Business Corporation Act or (vii) the Texas Limited Liability Company Act. Preliminary Offering Memorandum and the Offering Memorandum, insofar as such statements purport to summarize certain provisions of documents referred to therein and reviewed by us as described above, fairly summarize such provisions therein.      7. The statements in the Preliminary Offering Memorandum and the Offering the qualifications and assumptions stated therein. with the Purchase Agreement, the Initial Securities will constitute valid and binding obligations of the Issuer, entitled to the benefits of the Indenture and enforceable against the Issuer in accordance with their terms, under applicable Initial Purchasers in accordance with the Purchase Agreement, the guarantee of the Initial Securities included in the Indenture will constitute a valid and binding obligation of the Guarantors, enforceable against the Guarantors in accordance with the terms of the Indenture, under applicable laws of the State of New York.      11. When validly executed by the Issuer and authenticated by the Trustee in the manner provided in the Indenture and delivered in exchange for Initial      12. When the Exchange Securities have been validly executed by the Issuer and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered in exchange for Initial Securities pursuant to the Exchange Offer contemplated by the Registration Rights Agreement, the guarantee included in the Indenture of the Exchange Securities will constitute a valid and of New York. Exhibit A-8-1        13. The Registration Rights Agreement constitutes a valid and binding obligation of each of the Obligors, enforceable against each of them in accordance with its terms, under applicable laws of the State of New York. Obligors set forth in [___] of the Purchase Agreement, (ii) the due performance by the Obligors and the Initial Purchasers of the covenants and agreements set forth in the Purchase Agreement, (iii) the compliance by the Initial Purchasers with the offering and transfer procedures and the restrictions described in the Offering Memorandum, (iv) the accuracy of the representations and warranties of the Initial Purchasers set forth in Section [___] of the Purchase Agreement, in accordance with the Purchase Agreement and the Offering Memorandum by purchasers to whom the Initial Purchasers initially resell the Initial Securities, and (vi) that purchasers to whom the Initial Purchasers initially resell the Initial Securities have been made aware of the information set forth in the Offering Memorandum under the caption “Notice to Investors,” (A) the offer, issue, sale and delivery of the Initial Securities (and the guaranties thereof by the Guarantors) to the Initial Purchasers and the initial resale of the Initial Securities (and the guaranties thereof by the Guarantors) by the Initial Purchasers, each in the manner contemplated by the Purchase Agreement and the Offering Memorandum, do not require registration under the Securities Act, and (B) prior to the consummation of the Exchange Offer or the effectiveness of the Shelf Registration Statement (as defined in the Registration Rights Agreement), such offer, issue, sale and delivery of the Initial Securities (and the guaranties thereof by the Guarantors) and such initial resale of the Initial Securities (and the guaranties thereof by the Guarantors) do not require qualification of the Indenture under the Trust Indenture Act of 1939, as amended, provided, however, that we express no opinion as to any subsequent resale of any Initial Security (and the guaranties thereof by the Guarantors) or any Exchange Security (and the guaranties thereof by the Guarantors). of proceeds therefrom as described in the Offering Memorandum, will not be, an “investment company” within the meaning of said term as used in the Investment contents of the Disclosure Package and the Offering Memorandum and related matters were discussed and, although we have not independently verified and are completeness or fairness of the statements contained in the Disclosure Package and the Offering Memorandum (except as and to the extent set forth in paragraphs 6 and 7 above), on the basis of the foregoing (relying with respect to factual matters to the extent we deem appropriate upon statements by officers and other led us to believe that (i) the Disclosure Package, as of [___:___] [a.m. / p.m] on January [___], 2006(which you have informed us is a time prior to the time of the first sale of the Securities by the Initial Purchasers), contained an untrue made, not misleading, or (ii) the Offering Memorandum, as of its date Exhibit A-9-1     made, not misleading, it being understood that we express no statement or belief with respect to (i) the historical and pro forma financial statements and related schedules, including the notes and schedules thereto and the auditor’s report thereon[,] [and] (ii) any other financial or accounting data, included Offering Memorandum or excluded therefrom [and (iii) the exclusion from the Disclosure Package of any pricing information (and directly related disclosure) included in the Offering Memorandum]. Without limiting the foregoing, we call to your attention that (i) the Offering Memorandum has been prepared in the context of a Rule 144A transaction and not as part of a registration statement under the Securities Act, and (ii) the Offering Memorandum does not contain all information that would be required in a registration statement under the Securities Act. of Texas, (iii) applicable laws of the United States of America, (iv) certain other specified laws of the United States of America to the extent referred to specifically herein, (v) the General Corporation Law of the State of Delaware, (vi) the Delaware Limited Liability Company Act, (vii) the Texas Business Corporation Act and (viii) the Texas Limited Liability Company Act. References herein to “applicable laws” mean those laws, rules and regulations that, in our the Transaction Documents, without our having made any special investigation as or laws; provided however, that such references (including without limitation those appearing in paragraphs (m)4 and (m)5 above) do not include any municipal or other local laws, rules or regulations, or any antifraud, environmental, labor, securities, tax, insurance or antitrust, laws, rules or regulations. assumptions and qualifications:      (i) The opinions set forth in paragraph (m)1 above as to the valid existence and good standing of the Issuer and the other entities mentioned in such paragraph are based solely upon our review of certificates and other communications from the appropriate public officials.      (ii) In rendering the opinions set forth in paragraph (m)4 above regarding execution or delivery by the Obligors of the Transaction Documents, or the incurrence or performance by any of the Obligors of its obligations thereunder, will constitute a violation of, or a default under or as a result of, any or any aspect of the financial condition or results of operation of any of the Obligors.      (iii) The opinion set forth in paragraph 7 above with respect to U.S. temporary U.S. Treasury regulations, which are subject to change both Exhibit A-10-1          (iv) Treasury Circular 230 Disclosure. This disclosure is provided to comply with Treasury Circular 230. The opinion set forth in paragraph 7 of this for the purpose of avoiding tax penalties that may be imposed on the person. Such opinion was written to support the promoting, marketing or recommending of the transactions or matters addressed by this written advice, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. No limitation has been imposed by our firm on disclosure of the tax treatment or tax structure of the transaction.   (1)   limited by applicable bankruptcy, insolvency, reorganization, or affecting the rights of creditors generally; and     (2)   subject to the      (vi) Our opinions in paragraphs 8, 9, 10, 11, 12 and 13 insofar as they      (vii) We express no opinion as to the validity, effect or enforceability of any provisions: certain Exhibit A-11-1           determinations (including determinations of contracting parties and its sole judgment or to waive rights to notice;     (2)   providing that the assertion or employment of any other right or remedy, or that each and every remedy shall be cumulative and in addition to every other remedy or that any delay or omission to exercise any right or remedy shall not impair any other right or remedy or constitute a waiver thereof;     (3)   relating to severability or separability;     (4)   purporting to limit the liability of, or to exculpate, any Person, including without limitation any provision that purports to waive liability for violation of securities laws;     (5)   [purporting to waive damages;]     (6)   that constitute an agreement to agree in the future on any matter;     (7)   that relate to indemnification, contribution or reimbursement obligations to the extent any such provisions (i) would purport to require any Person to provide indemnification, contribution or reimbursement in respect of the negligence, recklessness, willful misconduct or unlawful or wrongful behavior of any Person, (ii) violate any law, rule or or (iii) are determined to be contrary to public policy;     (8)   purporting to establish any obligation of any party as absolute or unconditional regardless of the occurrence or non-occurrence or existence or non-existence of any event or other state of facts;     (9)   purporting to obligate any party to conform to a standard that may not be objectively determinable or employing items that are vague or have no commonly accepted meaning in the context in which used;     Rights Agreement;     (11)   purporting to require that all amendments, waivers and terminations be in writing or the disregard of any course of dealing or usage of trade;     (12)   relating to consent to jurisdiction insofar as such provisions purport to confer subject matter jurisdiction upon any court that does not have such jurisdiction, whether in respect of bringing suit, enforcement of judgments or otherwise; Exhibit A-12-1       (13)   [purporting to require disregard of mandatory choice of law principles that could require application of a law other than the law expressly chosen to govern the instrument in which such provisions appear;] or     (14)   purporting to waive rights to trial by jury or rights to object to jurisdiction based on inconvenient forum. Exhibit A-13-1          (viii) In making our examination of executed documents, we have assumed (except to the extent that we expressly opine above) (1) the valid existence and good standing of each of the parties thereto, (2) that such parties had the power and authority, corporate, partnership, limited liability company or other, to enter into and to incur and perform all their obligations thereunder, (3) the due authorization by all requisite action, corporate, partnership, limited of such documents and (4) to the extent such documents purport to constitute agreements, that each of such documents constitutes the legal, valid and binding obligation of each party thereto, enforceable against such party in accordance with its terms. In this paragraph (viii), all references to parties to documents      (ix) Except to the extent that we expressly opine above, we have assumed that the execution and delivery of the Transaction Documents, and the incurrence and performance of the obligations thereunder of the parties thereto do not and will not contravene, breach, violate or constitute a default under (with the giving of notice, the passage of time or otherwise) (a) the certificate or articles of incorporation, certificate of formation, articles of organization, charter, bylaws, limited liability company agreement, regulations, limited partnership agreement or similar organic document of any such party, (b) any instrument, (c) any statute, law, rule, or regulation, (d) any judicial or administrative order or decree of any governmental authority, or (e) any or registration with, any governmental authority, in each case, to which any party to the Transaction Documents or any of its subsidiaries or any of their respective properties may be subject, or by which any of them may be bound or affected. Further, we have assumed the compliance by each such party, other than the Obligors, with all laws, rules and regulations applicable to it, as well as the compliance by the each of the Obligors, and each other person (if any) directly or indirectly acting on its behalf, with all laws, rules and regulations that may be applicable to it by virtue of the particular nature of the business conducted by it or any goods or services produced or rendered by it or property owned, operated or leased by it, or any other facts pertaining specifically to it. In this paragraph (ix), all references to parties to the Transaction Documents, other than the first such reference, shall be deemed to mean and include each of such parties, and each other person (if any) directly or indirectly acting on its behalf.      (x) Without limiting the generality of our qualification in clause (1) of paragraph (v) above, we express no opinion as to the applicability or effect of Article 10 of the New York Debtor Creditor Law) on the Transaction Documents or any transactions contemplated thereby or any opinion expressed herein.      (xi) We express no opinion as to the effect of the laws of any jurisdiction in which any holder of any Initial Security or Exchange Security is located (other than the State of New York) that limit the interest, fees or other charges such holder may impose for the loan or use of money or other credit.      (xii) Except to the extent that we expressly opine above, we have assumed that no authorization, consent or other approval of, notice to or registration, recording or filing with any Exhibit A-14-1     court, governmental authority or regulatory body (other than routine informational filings, filings under the Securities Act and filings under the Securities Exchange Act of 1934, as amended) is required to authorize, or is Documents, the execution or delivery of thereof by or on behalf of any party thereto or the incurrence or performance by any of the parties thereto of its obligations thereunder.      (xiii) [We point out that the submissions to jurisdiction and the waivers of objection to venue contained in the Indenture and the Registration Rights Agreement cannot supersede a federal court’s discretion in determining whether to transfer an action to another court.]      (xiv) [We point out that the agent for service of process appointed pursuant to the Indenture and the Registration Rights Agreement, in its discretion, may fail to agree, or terminate its agreement, to serve as agent for service of process for the Obligors, in which event service of process upon such party would not be valid and effective for the purposes described in the Indenture and the Registration Rights Agreement.]      (xv) [We express no opinion as to provisions of the Transaction Documents surety. Furthermore, we advise you that certain of the guaranty and surety waivers contained in the Indenture may be unenforceable in whole or in part.] the Initial Securities under the Purchase Agreement occurring today and is referred to for any other purpose or relied upon by any other Person, including any Initial Security or Exchange Security, without our express written permission. The opinions expressed herein are as of the date hereof only and are based on laws, orders, contract terms and provisions, and facts as of such date, and we disclaim any obligation to update this opinion letter after such date or to advise you of changes of facts stated or assumed herein or any subsequent Very truly yours, Exhibit A-15-1     EXHIBIT A-2 Opinion of Liskow & Lewis January [ ], 2006       To each of the Initial Purchasers named in   03509.003      Re: [___]% Senior Notes due 2013 issued by Allis-Chalmers Energy Inc. Ladies and Gentlemen:      We have acted as special Louisiana counsel to Allis-Chalmers Energy Inc., a (ii) the subsidiaries of the Issuer named therein as parties thereto, and (iii) RBC Capital Markets Corporation and Lehman Brothers Inc. (collectively, Purchasers of $[___] aggregate principal amount of the Issuer’s [___]% Senior Notes due 2013 (the “Initial Securities”). The Initial Securities are being issued under an Indenture dated as of January [___], 2006 (the “Indenture”) among the Issuer, the subsidiaries of the Issuer named therein as parties “Guarantors”) and Wells Fargo Bank, N.A., as trustee.      The Issuer, the Guarantors and the Initial Purchasers have entered into a Registration Rights Agreement dated as of January [___], 2006 (the “Registration Rights Agreement”), pursuant to which the Issuer and the Guarantors have agreed to file, under certain conditions, with the Securities and Exchange Commission, respect to an offer (the “Exchange Offer”) by the Issuer and the Guarantors to the holders of the Initial Securities to issue and deliver to such holders, in exchange for their Initial Securities, a like principal amount of new securities (the “Exchange Securities”) identical to the Initial Securities in all material      We are furnishing this opinion letter to you pursuant to Section [5(c)] of the Purchase Agreement. the following:          (a) the Issuer’s Offering Memorandum dated January [___], 2006 (the “Offering Memorandum”) relating to the Initial Securities;      (b) the Indenture;      (c) the Purchase Agreement;      (d) the Registration Rights Agreement;      (e) the Stock Purchase Agreement dated as of December 20, 2005 (the “Specialty Stock Purchase Agreement”) by and between the Issuer and Joe Van Matre, an individual resident in Lafayette, Louisiana, pursuant to which the Issuer agreed to purchase and Mr. Van Matre agreed to sell, all the issued and outstanding shares of capital stock of Specialty Rental Tools, Inc., a Louisiana corporation (“Specialty”), subject to certain conditions specified in such agreement;      (f) the Articles of Incorporation of Delta Rental Service, Inc., a Louisiana corporation (“Delta Rental Service”), certified by the Secretary of State of the State of Louisiana, as in effect on January 4, 2006, and certified by the Secretary of Delta Rental Service, as in effect on each of the dates of the adoption of the resolutions specified in paragraph (h) below, the date of      (g) the Bylaws of Delta Rental Service, certified by the Secretary of Delta Rental Service as in effect on each of the dates of the adoption of the and the date hereof;      (h) resolutions of the Board of Directors of Delta Rental Service dated January [___], 2006, certified by the Secretary of Delta Rental Service;      (i) a certificate from the Secretary of State of the State of Louisiana dated January 4, 2006 as to the good standing under the laws of the State of Louisiana of Delta Rental Service;      (j) the Articles of Incorporation of Specialty Rental Tools Inc., a Louisiana corporation (“Specialty Rental Tools”), certified by the Secretary of by the Secretary of Specialty Rental Tools, as in effect on each of the dates of the adoption of the resolutions specified in paragraph (l) below, the date of      (k) the Bylaws of Specialty Rental Tools, certified by the Secretary of Specialty Rental Tools as in effect on each of the dates of the adoption of the resolutions specified in paragraph (l) below, the date of the Purchase Agreement      (l) resolutions of the Board of Directors of Specialty Rental Tools dated January [___], 2006, certified by the Secretary of Specialty Rental Tools;      (m) a certificate from the Secretary of State of the State of Louisiana Louisiana of Specialty Rental Tools;     identified to our satisfaction, of such records of the Louisiana Guarantors and such agreements, certificates of public officials, certificates of officers or other representatives of the Louisiana Guarantors and others, and such other as certified or photostatic copies. As to any facts material to the opinions and statements expressed herein that we did not independently establish or verify, we have relied, to the extent we deem appropriate, upon statements, representations and certifications of officers and other representatives of the Louisiana Guarantors, and statements and certifications of public officials and others. below:      “Louisiana Guarantors” means Delta Rental Service and Specialty Rental Tools, collectively.      “Louisiana Guarantors Organizational Documents” means, collectively, the Articles of Incorporation and Bylaws of the Louisiana Guarantors, each in the form reviewed by us as specified above. of any jurisdiction. Exchange Securities.     and in good standing under the laws of the State of Louisiana. The opinion set forth in this paragraph 1 is based solely upon our review of certificates and other communications from the appropriate public officials.      2. Each of the Louisiana Guarantors has the corporate power and authority under the laws of the State of Louisiana to (i) execute and deliver, and to incur and perform all of its obligations under, the Registration Rights Agreement and the Indenture and (ii) carry on its business and own and lease its properties as described in the Offering Memorandum. Delta Rental Service has the corporate power and authority under the laws of the State of Louisiana to execute and deliver, and to incur and perform all of its obligations under, the Purchase Agreement. by Delta Rental Service. Each of the Registration Rights Agreement and the Louisiana Guarantors. performance by the Louisiana Guarantors of their respective obligations under, each of the Registration Rights Agreement and the Indenture, each in accordance with its terms, (ii) the execution and delivery of, or the incurrence or performance by Delta Rental Service of its obligations under the Purchase Agreement, in accordance with its terms, (iii) the issuance of the guaranties of the Initial Securities by the Louisiana Guarantors, as set forth in the Indenture or (iv) the issuance of the guaranties of the Exchange Securities by the Louisiana Guarantors, as set forth in the Indenture, at such time as the (A) constituted, constitutes or will constitute a violation of the Louisiana Guarantor Organizational Documents or (B) resulted, results or will result in any violation of applicable laws of the State of Louisiana. (i) the execution and delivery by each of the Louisiana Guarantors of the Registration Rights Agreement and the Indenture or the incurrence or performance of its obligations thereunder, or the enforceability of the Registration Rights Agreement and the Indenture against any of the Louisiana Guarantors, (ii) the execution and delivery by Delta Rental Service of the Purchase Agreement or the incurrence or performance of its obligations thereunder, or the enforceability of the Purchase Agreement against Delta Rental Service or (iii) the consummation of the purchase by the Issuer of all the issued and outstanding shares of capital stock of Specialty, as contemplated by the Specialty Stock Purchase Agreement. However, we express no opinion as to the enforceability of the Purchase Agreement, the Indenture or the Registration Rights Agreement. As used in this paragraph, “Governmental Approval” means any consent, approval, license,     administrative or regulatory body of the State of Louisiana, pursuant to applicable laws of the State of Louisiana. applicable laws of the State of Louisiana. References herein to “applicable laws” mean those laws, rules and regulations that, in our experience, are Agreement, the Indenture and the Registration Rights Agreement, without our law, rule or regulation; provided however, that such references (including without limitation those appearing in paragraphs 4 and 5 above) do not include any municipal or other local laws, rules or regulations, or any antifraud, regulations. Very truly yours, LISKOW & LEWIS A Professional Law Corporation     ANNEX I      Resale Pursuant to Regulation S. Each Initial Purchaser understands that: offering of the Securities pursuant hereto and the Closing Date, other than in accordance with Regulation S of the Securities Act or another exemption from the permitted by and include the statements required by Regulation S. of Securities by it to any distributor, dealer or person receiving a selling have the meanings assigned to them in Regulation S.”      Such Initial Purchaser agrees that (i) such Initial Purchaser and its affiliates or any person acting on its or their behalf have not engaged in any directed selling efforts within the meaning of Regulation S with respect to the Securities, (ii) the Securities offered and sold by such Initial Purchaser sold only in offshore transactions and (iii) the sale of Securities offered and sold by such Initial Purchaser pursuant hereto in reliance on Regulation S is Securities Act. Annex I-1  

Exhibit 10.3 SEVERANCE AGREEMENT immediately prior to January 1, 2009 by and between S&T Bancorp, Inc. (the “Company”) and Edward Hauck (the “Executive”). WITNESSETH THAT: Executive’s service to the Company is important to the continued success of the Company and S&T Bank (the “Bank”); WHEREAS, the Executive has previously executed a severance agreement with the Company as of January 1, 2007 (the “Prior Agreement”); WHEREAS, the Company wishes to restate the Prior Agreement to reflect recent tax law changes relating to deferred compensation and to make such other changes as are provided herein; forth herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto have agreed, and do hereby 1.1 Affiliate. “Affiliate” means (a) any person, other than a natural person, who, with respect to the Company, is an “affiliate” as defined in Rule 405 under the Securities Act of 1933, as amended, or any successor rule, or (b) any entity more than twenty-five percent (25%) of the common stock or other equity interest of which is owned or controlled by the Company, either directly or indirectly. 1.2 Anticipated Change in Control. “Anticipated Change in Control” means any set of circumstances that, as determined by resolution adopted by the Committee in its sole discretion, poses a real, substantial and immediate probability of leading to a Change in Control. The occurrence of an Anticipated Change in Control shall be treated as and shall have the same effect as an occurrence of a 1.3 Bank. “Bank” means S&T Bank, a Pennsylvania state-chartered bank and 1.4 Change In Control. “Change in Control” means the occurrence of any of the following: Exchange Act in effect on the date first written above), other than a pension, profit-sharing or other employee benefit plan established by the Company or the Bank, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act in effect as of the date first written above), directly or indirectly, of securities of the then outstanding securities; approved in advance by directors representing at least a majority of the or consolidation; (d) The stockholders of the Company or the Board of Directors of the Company or of the Bank approve a plan of complete liquidation or an agreement for the sale of or disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s or the Bank’s assets; Exchange Act in effect on the date first written above) shall have commenced a bona fide tender or exchange offer to purchase shares of common stock of the Company such that upon consummation of such offer such person would own or control 25% or more of the outstanding shares of common stock of the Company; Exchange Act in effect on the date first written above) shall have filed an application or notice with any federal or state regulatory agency for clearance or approval to (i) merge or consolidate, or enter into any similar transaction, with the Company or the Bank, (ii) purchase, lease or otherwise acquire all or substantially all of the assets of the Company or the Bank or (iii) purchase or otherwise acquire (including by way of merger, consolidation, share exchange or any similar transaction) securities representing 25% or more of the voting power of the Company or the Bank; or (g) Any other event that constitutes a change in control of a nature that would be required to be reported by the Company in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act or any successor provision (whether or not the Company then in subject to the requirements of the Exchange Act). A Change in Control shall exclude: (i) A public stock offering by the Company; or   2 (ii) A convertible debt offering by the Company. 1.5 Committee. “Committee” means the Compensation Committee of the Board of Directors of the Company or any successor committee thereto. 1.6 Company. “Company” means S&T Bancorp, Inc., a Pennsylvania corporation. If the Executive is or becomes employed by an Affiliate of S&T Bancorp, Inc., the “Company” shall be deemed to refer to the Affiliate thereof by which the Executive is employed, except for purposes of the definition of “Change in Control.” In such case, references to payments, benefits, privileges or other rights to be accorded by the “Company” shall be deemed to refer to such payments, benefits, privileges or other rights to be accorded by the Affiliate affected by the provisions hereof. Such payments, benefits, privileges or other rights shall be paid and awarded by the Company or such Affiliate as determined by the Company and such Affiliate, but if not promptly paid or awarded by such Affiliate they shall be paid or awarded by the Company. 1.7 Disability. “Disability” shall have the meaning given such term in any long-term disability plan of the Company as from time to time in effect or, in the event of the termination of such plan, in any successor plan, or, in the absence of a successor plan, in such plan as last in effect prior to its termination. 1.8 Exchange Act. “Exchange Act” means the Securities and Exchange Act of 1934, 1.9 Good Reason. “Good Reason” means any of the following which occurs without the Executive’s consent after a Change in Control: (a) The material diminution of the Executive’s duties, authority or responsibility, or any material change in the geographic location at which the Executive must perform services (in this case, a material change means any location more than forty 40 land-miles from the location prior to the Change in Control); (b) A material breach by the Company of Sections 5 or 6.1 of this Agreement; or (c) A material diminution in the Executive’s base salary (in this case, a material diminution means a reduction of more than ten percent (10%) in the Executive’s annual base salary). initial existence of a condition set forth in this Section 1.9 and the Company one (or more) of the conditions set forth in this Section 1.9 which constitutes Good Reason. If an event (the “First Event”) occurs that would have constituted Good Reason (without regard to all notice and cure provisions) under any of clauses (a), (b), (c) or (d) above but for the Executive’s consent to the occurrence of the First Event, each such clause under which the First Event would have constituted Good Reason shall thereafter become inoperative such that no future event described in such clause shall constitute Good Reason whether or not Executive consents.   3 1.10 Termination for Cause. “Termination for Cause” means termination of the employment of the Executive at any age because of: (a) Failure to substantially perform employment duties (other than by reason of Disability), after reasonable demand for substantial performance has been delivered by the Company specifically identifying the manner in which the Company believes the Executive has not performed the Executive’s duties; (b) Willfully engaging in conduct that demonstrably results in material injury to the Company; (c) Personal dishonesty or breach of fiduciary duty to the Company that in (d) Willful violation of any law, rule or regulation (other than traffic order, judgment or supervisory agreement, which violation demonstrably results 1.11 Triggering Event. “Triggering Event” means: (a) Except as provided in subsection (b) of this Section 1.11, (i) any involuntary termination of the Executive’s employment by the Company within 6 months preceding a Change in Control without the Executive’s express written consent; (ii) any involuntary termination of the Executive’s employment by the Company within two years following a Change in Control without the Executive’s express written consent; or (iii) any termination of the Executive’s employment by the Executive for Good (b) The following circumstances shall not constitute a Triggering Event within the meaning of this Section: (i) Termination of the Executive’s employment by reason of Executive’s death; (ii) Termination of the Executive’s employment as a result of Disability; (iii) Termination of the Executive’s employment for Cause; or   4 (iv) Voluntary termination of employment by the Executive other than for Good Reason. 2. Benefits Upon Occurrence of Triggering Event. 2.1 If a Triggering Event occurs, then in lieu of any further salary payment to the Executive for periods subsequent to the date of termination, the Company shall pay as severance to the Executive, in a lump sum and in cash, an amount equal to 200% of the Executive’s annual base salary as in effect immediately preceding the earlier of the date of the Change in Control or the date of the Executive’s termination of employment. For purposes of this Agreement, the Executive’s annual base salary shall mean the stated annual base salary (excluding bonuses, benefits under any benefit plan, incentive compensation, compensation paid in stock, and other fringe benefits) payable to the Executive for services rendered to the Company. The lump sum payment provided for by this Section 2.1 shall be paid no later than 10 business days following the later of (i) the date of the Executive’s termination of employment or (ii) the date of 2.2 If a Triggering Event occurs, for the two-year period immediately following the Executive’s termination of employment (the “2-Year Period”), the Company shall provide the Executive with health insurance coverage that is substantially similar in all material respects to the coverage the Executive was receiving immediately prior to the date of the Executive’s termination of employment. (a) With respect to a Triggering Event described in Section 1.11(a)(i), for the period immediately following the Executive’s termination of employment through the date of a Change in Control, the Executive shall be able to elect COBRA continuation coverage at the Executive’s expense under the Company’s group health plan. Provided a Change in Control occurs within six months following the Executive’s termination of employment, the Company shall pay to the Executive a lump sum cash payment equal to the amount paid by the Executive pursuant to this Section 2.2(a) for COBRA continuation coverage (plus an additional amount to account for income taxes imposed on such lump sum payment and this tax gross-up provision assuming an effective tax rate of 39%) no later than 10 days following the occurrence of a Change in Control. For the remainder of the 2-Year Period, the Company shall provide the required health insurance coverage through one or more third party insurance policies or shall pay or reimburse the Executive for the cost of individual health insurance coverage for the Executive and the Executive’s eligible dependents, provided that such coverage shall in all events qualify as an “accident or health plan” under Sections 105 or 106 of the Code. (b) With respect to a Triggering Event described in Sections 1.11(a)(ii) and (iii), the Company shall provide the required health insurance coverage through one or more third party insurance policies or shall pay or reimburse the Executive for the cost of individual health insurance coverage for the Executive and the Executive’s eligible dependents, provided that such coverage shall in all events qualify as an “accident or health plan” under Sections 105 or 106 of the Code.   5 2.3 If a Triggering Event occurs, for the 2-Year Period, the Company shall provide the Executive with life insurance coverage that is substantially similar in all material respects to the coverage the Executive was receiving immediately prior to the date of the Executive’s termination of employment, provided that the life insurance provided in one year shall not affect the life insurance provided in any other year. During the 2-Year Period, the Executive shall pay employee premiums for such life insurance coverage at the rate the Executive was paying immediately prior to termination. (a) With respect to a Triggering Event described in Section 1.11(a)(i), in the event a Change in Control does not occur within six months following the Executive’s termination of employment, the Executive shall be required to pay to the Company the total amount of the employer portion of the premiums paid for the continued life insurance coverage during the six months following the Executive’s termination of employment no later than 30 days following the expiration of the relevant six month period. (b) In the event that any coverage under this Section 2.3 must be delayed pursuant to the six-month delay rule under Section 409A of the Code (described below), the Executive shall be required to pay the full cost for such coverage during the delay period immediately following the Executive’s termination of employment such that the coverage provided during the delay period is not subject to U.S. federal tax. In such case, on the first day of the seventh month following the Executive’s termination of employment, the Company shall pay the Executive a lump sum cash payment equal to the amount paid by the Executive for such life insurance coverage during the delay, minus the amount of employee premiums the Executive would have otherwise paid for the life insurance notwithstanding the application of the six-month delay. Beginning on the first day of the seventh month, and for the remainder of the period during which the Executive is entitled to the life insurance coverage under the terms of this Agreement, the Company shall resume paying the employer paid portion of the premium for the life insurance. 2.4 Any payments provided for hereunder shall be paid net of any applicable 2.5 Benefits described under Section 2.1 through 2.3 of this Agreement will not be included as additional compensation or service for the purpose of determining qualified or nonqualified retirement benefits under any program sponsored by the Company. 3. Vesting or Payment of Benefits. Upon the occurrence of a Change in Control, all stock options, stock appreciation rights, and shares of restricted stock previously awarded to the Executive, to the extent not previously forfeited, shall fully vest. 4. Termination of Agreement or Benefits. All obligations of the Company under this Agreement shall terminate upon Executive’s death except with respect to benefits that were payable prior to Executive’s death and benefits that by their terms provide for continuation of payments to survivors of the Executive. 5. Benefits Following a Change in Control. 5.1 Following a Change in Control, the Company or its successor shall provide Executive under any of   6 or other welfare plans, but not including any incentive or equity-based compensation plans in which the Executive was participating at the time of the Change in Control, unless the nature of the change in benefit levels is consistent with changes to benefits levels provided to employees at the same or equivalent level or title as the Executive. 5.2 Following a Change in Control, the Company or its successor shall provide entitled to on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of a Change in Control. 6. Miscellaneous. 6.1 Binding Effect. This Agreement shall be binding upon any successor or successors of the Company due to a Change in Control or otherwise. agreements made and to be performed entirely within such jurisdiction, except to the extent that federal law may be applicable. 6.3 Partial Invalidity. The invalidity or unenforceability of any provision or effect. 6.4 No Effect on Other Rights. The payment or obligation to pay any monies, or granting of any rights or privileges to Executive as provided in this Agreement now has under any benefit plan or program presently outstanding. 6.5 No Right to Continued Employment. Nothing in this Agreement shall be construed as giving Executive the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge the Executive at any time and for any lawful reason, subject in all cases to the terms of this Agreement. parties with respect to the transactions contemplated hereunder and supersedes 6.7 Modifications; Waivers. Subject to Section 10.1, no provisions of this or discharge is agreed to in writing signed by Executive and the Company, except that the terms of this Agreement may be terminated or amended by the Company and the Executive at any time prior the occurrence of a Change in Control. No waiver   7 6.8 No Mitigation. The Company agrees that if a Triggering Event occurs, the Agreement. Moreover, the amount of any payment or benefit provided for under otherwise. 6.9 No Assignment of Benefits. Except as otherwise provided herein or by law, no right or interest of any Executive under this Agreement shall be assignable or shall be effective; and no right or interest of the Executive under this such Executive. 6.10 Payment of Benefits Upon Death of Executive. This agreement shall inure to be payable to the Executive hereunder (other than amounts which by their terms, 6.11 Notices. For the purposes of this Agreement, notices, demands and all other deemed to have been duly given when received if delivered in person or by overnight courier or if mailed by United States registered mail, return receipt requested, postage prepaid, to the following addresses: 800 Philadelphia Street Indiana, Pennsylvania 15701 Attention: Chairman If to Executive: Edward Hauck 169 Timber Springs Indiana, PA 15701   8 party in accordance with this Section 5.11. 6.12 Headings. The headings in this Agreement are inserted for convenience only and shall have no significance in the interpretation of this Agreement. 7.1 During the Executive’s employment and during the one-year period after (i) the Executive ceases to be employed by the Company and (ii) the Executive receives or begins to receive benefits under Section 2 of this Agreement, the Executive agrees that: (a) The Executive shall not directly or knowingly and intentionally through another party recruit, induce, solicit or assist any other Person in recruiting, inducing or soliciting any other employee of the Company to leave such employment; (b) The Executive shall not compete or personally solicit, induce or assist any other person in soliciting or inducing any customer of the Company to terminate its business with the Company or Affiliate or to commence its business with a competing entity. 7.2 The Executive agrees and consents that if the Executive commits any breach or threatens to commit a breach of a covenant under this Section 7, the Company will be entitled to enforce its rights under this Agreement to recover damages and costs (including reasonable attorneys’ fees) caused by any breach and to exercise all other rights existing in its favor at law or equity. The parties hereto agree that money damages will not be an adequate remedy for any breach of the provisions of this Section 7 and that the Company shall also be entitled to provisions of this Section 7. The parties hereto agree and acknowledge that the Executive’s services to and association with the Company are unique in nature, that because of the nature of the business in which the Company and its Affiliates are engaged and because of the nature of the client information and confidential information to which the Executive has access, the Executive’s breach of any term or provision of this Section 7 will materially and irreparably harm the Company. The Executive acknowledges and agrees that: (i) the purposes of the covenants contained in this Section 7 are to protect the goodwill and value of the Company and to prevent the Executive from interfering with the business of the Company and its Affiliates as a result of or following termination of employment and (ii) the Executive’s agreement to and compliance with the restrictions contained herein are not burdensome to the Executive in light of the opportunities that remain open to the Executive despite these restrictions and, moreover, the Executive has means available for the pursuit of a livelihood that would not result in a violation of this Section 7.   9 7.3 In the event that any provisions of this Section 7 are finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company hereby agree that such court shall have jurisdiction to reform any of the provisions of this Section 7 so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court’s determination. If any of the covenants of this Section 7 are determined to be wholly or bar to or in any way diminish the rights of the Company to enforce any such 8. Not an Excess Parachute Payment. 8.1 Notwithstanding any other provision of this Agreement, in the event that any payment or benefit received by the Executive in connection with a Change in Control or the termination of the Executive’s employment (whether pursuant to under IRC Section 4999 (the “Excise Tax”), then the Total Benefits shall be subject to the Excise Tax. In the event the Total Benefits must be reduced in order to comply with this Section 8.1, the cash benefits provided in Section 2.1 shall first be reduced (if necessary, to zero), and the non-cash benefits provided in Sections 2.3, 3, and 2.2 shall next be reduced, in that order so that no portion of the Total Benefits is subject to the Excise Tax. 9.1 The term of this agreement shall begin on January 1, 2009, and end at 11:59 p.m. on December 31, 2011, and shall automatically be extended for an additional year each December 31 after January 1, 2009, unless either party delivers written notice of non-renewal to the other party within 90 days prior to the renewal date; provided, however, that if a Change in Control has occurred during the original or extended term, the term of the Agreement shall end no earlier than 36 calendar months after the end of the calendar month in which the Change in Control occurs. 10.1 This Agreement is intended to comply with the requirements of Code such requirements. Notwithstanding any other provision hereof, if any provision of this Agreement conflicts with the requirements of Code Section 409A, the requirements of Code Section 409A shall supersede any such provision. In no penalties that may be imposed on the Executive by Section 409A of the Code or 10.2 Notwithstanding anything to the contrary herein, if a payment or benefit procedures), such payment or benefit shall, to the extent necessary to comply later of the date specified by the other provisions of this Agreement or the   10 10.3 To the extent permitted under Section 409A of the Code, the continued life insurance benefits shall not constitute deferred compensation subject to Section 409A to the extent such benefits, determined by date order, do not exceed the maximum amount allowed under the “two times” rule of Treas. Reg. 10.4 References herein to a termination of employment shall be interpreted to mean a “separation from service” with the Company within the meaning of IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or   S&T BANCORP, INC. By:   /s/ Alan Papernick Name:   Alan Papernick Title:   Chairman, Compensation Committee Date:   12/31/2008   EXECUTIVE: /s/ Edward Hauck Name:   Edward Hauck Title:   Senior Executive Vice President Date:   12/31/2008   11

Exhibit 10.3 SERVICES AGREEMENT This agreement is entered into as of September 24, 2013, between STW Resources Holding Corp, a Nevada corporation (herein referred to as “STW” or the “Company”), its subsidiaries and/or affiliates and Joshua Brooks, an individual residing in (herein referred to as “Brooks”). Whereas STW is seeking assistance in enabling its subsidiaries – STW Oilfield Construction, LLC - to secure equipment through rental or purchase agreement, including, if necessary, providing personal guarantees to lenders and/or suppliers (the “Services”). Whereas Brooks has agreed to provide such Services. TERMS Brooks shall provide STW the Services, specifically (i) a personal guarantee for $20,000 necessary for certain heavy equipment rental (please describe the equipment) (and name the lender)); and (ii) $25,800 for certain light equipment (please describe the equipment) (and name the lender))and recognizes that the contemplated personal guarantees are for a period of up to six months (the “Guarantee”). The term of this agreement shall be for 6 months (the “Term”). As compensation for its services, Brooks shall receive three hundred and eighty two thousand (382,000) shares of common stock of the Company equivalent to the face amount of the at-risk capital, stipulated to be 20%, ($45,800 at $0.12 per common share) upon execution of this Agreement. STW may terminate this agreement at any time with written notice. All compensation due to Brooks pursuant to this Agreement shall be due and payable upon the termination. In the case of STW defaulting on the guaranteed heavy equipment rental, Brooks’ “at risk” obligation is capped at 20%; therefore, any amounts due on a defaulted lease (after liquidation proceeds are applied by the lessor) in excess of 20% of the risk shall be STW’s obligation. In the instance of Brooks’ employment being terminated by the Company, STW shall use its best commercial efforts to make financial arrangements for it or a third party to assume Brooks’ guarantee obligations on the Guarantee. This agreement may only be modified in writing and has to be signed by all parties to this agreement and shall be binding upon and inure to the benefit of the parties hereto and their permitted successors. This agreement shall be joint and several. This agreement is governed and construed under the laws of the State of Texas. If in the event of litigation relating to this agreement, the prevailing party shall pay all reasonable attorney fees and court cost applicable by law. If any part of this agreement is considered invalid, the remaining covenants shall be in full force and effect. -1- This agreement sets forth the entire understanding between the parties with respect to the subject matter hereof; there are no oral agreements, promises or other understandings exist with respect to this agreement, except those specifically set forth herein. Approved and agreed to as of September 24, 2013: ByDate Stanley T. Weiner President & Chief Executive Officer STW Resources, Inc. 619 West Texas Avenue Midland, TX 79701 ByDate Joshua Brooks

Exhibit THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PERVASIP CORP. THAT SUCH REGISTRATION IS NOT REQUIRED. THIS NOTE IS REGISTERED WITH THE AGENT PURSUANT TO SECTION 11.4(B) OF THE PURCHASE AGREEMENT (AS DEFINED BELOW).TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS SET FORTH IN SUCH SECTION 11.4(B) WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE UNTIL THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT PURSUANT TO SUCH SECTION 11.4(B). AMENDED AND RESTATED SECURED TERM NOTE FOR VALUE RECEIVED, PERVASIP CORP. (f/k/a eLEC Communications Corp.), a New York corporation (the “Company”), hereby promises to pay to VALENS OFFSHORE SPV II, CORP. (the “Holder”) or its registered assigns or successors in interest, the sum of Six Hundred Thousand Dollars ($600,000), together with any accrued and unpaid interest hereon, on September 28, 2010 (the “Maturity Date”) if not sooner paid. This Note amends and restates in its entirety (and is given in substitution for and not in satisfaction of) that certain $600,000 Secured Term Note made by the Company in favor of Holder on September 28, 2007. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of September 27, 2007 (as amended, restated, modified and/or supplemented from time to time, the “Purchase Agreement”) among the Company, the Holder, each other Purchaser and LV Administrative Services, Inc., as administrative and collateral agent for the Purchasers (the “Agent” together with the Purchasers, collectively, the “Creditor Parties”). The following terms shall apply to this Note: ARTICLE I CONTRACT RATE AND AMORTIZATION 1.1Contract Rate. (a)Subject to Sections 2.2 and 3.9, interest payable on the outstanding principal amount of this Note (the “Principal

Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the inclusion in this Registration Statement on Form S-1 (Amendment No. 7) of our report dated March 21, 2016 except for Note 7, as to which the date is May 20, 2016, with respect to the audited financial statements of Bare Metal Standard, Inc. as of January 31, 2016 and for the period from November 12, 2015 (inception) through January 31, 2016. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. We also consent to the references to us under the heading “Experts” in such Registration Statement. /s/ MaloneBailey, LLP www.malonebailey.com Houston, Texas December 5, 2016

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 November 10, 2014 Commission File Number 1-15200 Statoil ASA (Translation of registrant’s name into English) FORUSBEEN 50, N-4035, STAVANGER, NORWAY (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover ofForm 20-F or Form 40-F: Form 20-FxForm 40-Fo Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):o Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):o This Report on Form 6-K shall be deemed to be filed and incorporated by reference in the Registration Statement on Form F-3 (File No. 333-188327) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished. 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. STATOIL ASA (Registrant) Date: November 10, 2014 By: /s/ Torgrim Reitan Name: Torgrim Reitan Title: Chief Financial Officer INDEX TO EXHIBITS Exhibit No. Description Underwriting Agreement Standard Provisions. Officers’ Certificate pursuant to Sections 102 and 301 of the Indenture dated as of April 15, 2009, as supplemented by the Supplemental Indenture No. 1, dated as of May 26, 2010, among Statoil ASA, Statoil Petroleum AS and Deutsche Bank Trust Company Americas, as Trustee.

Exhibit 10.3 Packaging Holdings Inc. c/o Burns, Philp & Company Pty Limited Level 23, 56 Pitt Street Sydney NSW 2000 Australia June 13, 2007 United Steelworkers Five Gateway Center Pittsburgh, PA 15222 RE: Acquisition of Blue Ridge by Rank Group Limited. Ladies and Gentlemen: The following will confirm our understanding and agreement as to the terms and conditions of employment that will apply to United Steelworker-represented (“USW”) bargaining unit employees of Blue Ridge Paper Products (“Blue Ridge”) in the event that Blue Ridge is acquired (the “Acquisition”) either directly or indirectly, including through a merger with Packaging Holdings Inc(the “Company”) by Rank Group Limited. The Company and the USW agree that if the Acquisition is consummated, then. 1.  The agreements between Blue Ridge and the USW existing as of the today (the “Current CBAs”) shall remain in effect for their original term, except as expressly set forth herein.  The Notice of Termination sent by the USW, dated May 1, 2007, shall be cancelled and the Right to Terminate letter agreement, dated July 10, 2006, shall be of no further force or effect. 2.  The major pulp and paper making equipment at the Canton facility and the major equipment at the Waynesville facility will be operated without interruption and there shall be no involuntary lay-offs of USW-represented employees as a result of the Acquisition during the term of the Current CBAs provided, however, that (a) layoffs resulting from the failure to operate said machines as a result of shutdowns for maintenance or “Acts of God” will not constitute or result in a violation of this agreement; and (b) layoffs resulting from changes in market conditions which make certain products or operations non-competitive will not constitute a violation of this agreement. 3.  The Company may close no more than one of the USW represented, as of this date, converting facilities during the term of the Current CBAs, unless changes in market conditions make certain products, operations or facilities non-competitive, in which event this paragraph will not apply to such products, operations or facilities.  Any contractual severance obligation will be honored in the event a facility is closed and such provisions will control unless the USW and the Company agree to other terms at or subsequent to the time of the announcement of the closure. 4.  Any bargaining unit headcount reductions made possible through the synergies of the Acquisition will be achieved through attrition. 5.  The disposition of any converting facility, as required by any governmental agency as a requirement for approval of the contemplated Acquisition will not constitute a violation of this agreement. 6.  Profit sharing, as defined in the Current CBAs, will be eliminated as of the effective date of the Acquisition and in lieu thereof the USW represented employees will receive an additional 2% wage increase in the second year of the contract and a 1% wage increase in the third year of the contract. 7.  The Company has been advised by Blue Ridge and the USW that Article 31.B. of the Master Agreement between Blue Ridge and the USW has never been implemented and is of no force or effect; and for this reason, Article 31.B. is deleted from the Master Agreement. 8.  Blue Ridge and the USW will cause the ESOP to be terminated as of immediately following the consummation of the Acquisition, with proceeds to be distributed in accordance with the terms of the ESOP. 9. In the event of a plant closure or layoff from a former Blue Ridge facility represented by the USW, the impacted bargaining unit employee(s) will be offered preferential hire rights to other facilities represented by the USW as provided on Attachment A to this letter of agreement.. 10.  This letter agreement has been duly authorized, executed and delivered by the parties hereto and is the legal, valid and binding obligation of USW and the Company, enforceable in accordance with its terms 11. This letter agreement shall be binding upon and inure solely to the benefit of the parties and their permitted assigns and nothing herein is intended to or shall confer upon any other person or entity, any right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.  USW acknowledges that this agreement shall be enforceable on behalf of the Company by Rank Group Limited or any affiliate of Rank Group Limited and/or Blue Ridge (provided that any enforcement by Blue Ridge prior to the closing of the Acquisition shall require the consent of Rank Group Limited). 12.  This letter is the complete agreement of the parties concerning the subject matter hereof and supersedes any prior agreements concerning such subject matter.   Sincerely,           Packaging Holdings Inc.           By: /s/ GREGORY ALAN COLE     Name: Gregory Alan Cole   Title: Vice President       Agree To and Confirmed on behalf of the United Steelworkers     /s/ STAN JOHNSON   Name: Stan Johnson Title: Authorized Representative of the United Steelworkers   ATTACHMENT A:  Preferential Hiring 1.  Eligibility.  In the event of a plant closure or layoff from a former Blue Ridge facility represented by the USW, the impacted bargaining unit employee(s) will be eligible for preferential hiring opportunities before the Company hires new employees at other Blue Ridge facilities presented by the USW or Evergreen Packaging Inc. hires new employees at its facilities represented by the USW, provided that preferential hiring will not apply to any employee who opted to retire or otherwise voluntarily sever his or her employment relationship with the Company upon layoff or complete plant closure.  Preferential hire positions will not be filled until regular recall is exhausted at the facility requested. 2.  Qualifications.  Preferential hire applicants will not be subjected to interviews, tests, qualifications or other criteria not required of regular laid off employees being recalled to similar jobs within the facility in which preferential hire is desired.  If the preferential hire applicant were qualified in a similar job in their home facility that applicant will be considered as qualified for similar jobs in the new facility. 3.  Preferential Hiring List.  The Company will maintain a master list of preferential hire requests, in order of Company seniority.  Laid-off employees desiring to place their names on the list shall submit a written request to the Company, on forms to be provided by the Company and delivered to an address specified by the Company.  The forms will allow the laid-off employee to identify which other Blue Ridge facility or facilities represented by the USW at which the employee desires to be considered for preferential hiring.  Prior to hiring new employees from the street at any such facility, the Company will  offer those vacant positions  to laid-off employees listed on the Preferential Hiring List, with offers made in sequence on the basis of  Company Seniority. 4.  Duration of Preferential Hiring Rights.  Preferential hire rights will be maintained as long as the individual employee would have retained recall rights under the terms of the Collective Bargaining Agreement in place at the time of layoff or plant closure, unless improvements are made in subsequent collective bargaining agreements. 5.  Retention of Prior Rights.  While awaiting an opportunity for preferential hire, laid-off  bargaining unit employees who place their names on the Preferential Hiring List  will retain all rights and privileges at their original home facility as specified by the applicable  Collective Bargaining Agreement  If preferential hire is offered and accepted at another facility, the employee will continue to  retain recall rights to their home facility, if the home facility remains in operation. 6.  Seniority After Preferential Hiring.  Upon entry in to a different facility as a result of preferential hire the bargaining unit employee will retain total company seniority for purposes of vacation, pension, or other contractual rights specifically allowed within the master contract agreement.  However, the bargaining unit employee exercising preferential hire will not be able to utilize their Company Seniority for purposes of shift preference, job bidding, vacation scheduling or other seniority rights dependent upon seniority normally held within the specific site or unit; plant seniority will control as to such rights. 7.  The specific language incorporating the principles set forth above will be negotiated in good faith by the parties within the current Collective Bargaining Agreement(s) by addendum upon closing of the transaction using Appendix “B” within the current Collective Bargaining Agreement as a template (it being understood that the terms set forth herein shall be binding until such time as such addendum is agreed upon).

Name: Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency) (Text with EEA relevance.) Type: Directive Subject Matter: business organisation; economic policy; civil law; economic geography; European Union law 26.6.2019 EN Official Journal of the European Union L 172/18 DIRECTIVE (EU) 2019/1023 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency) (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 53 and 114 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee (1), Having regard to the opinion of the Committee of the Regions (2), Acting in accordance with the ordinary legislative procedure (3), Whereas: (1) The objective of this Directive is to contribute to the proper functioning of the internal market and remove obstacles to the exercise of fundamental freedoms, such as the free movement of capital and freedom of establishment, which result from differences between national laws and procedures concerning preventive restructuring, insolvency, discharge of debt, and disqualifications. Without affecting workers' fundamental rights and freedoms, this Directive aims to remove such obstacles by ensuring that: viable enterprises and entrepreneurs that are in financial difficulties have access to effective national preventive restructuring frameworks which enable them to continue operating; honest insolvent or over-indebted entrepreneurs can benefit from a full discharge of debt after a reasonable period of time, thereby allowing them a second chance; and that the effectiveness of procedures concerning restructuring, insolvency and discharge of debt is improved, in particular with a view to shortening their length. (2) Restructuring should enable debtors in financial difficulties to continue business, in whole or in part, by changing the composition, conditions or structure of their assets and their liabilities or any other part of their capital structure ” including by sales of assets or parts of the business or, where so provided under national law, the business as a whole ” as well as by carrying out operational changes. Unless otherwise specifically provided for by national law, operational changes, such as the termination or amendment of contracts or the sale or other disposal of assets, should comply with the general requirements that are provided for under national law for such measures, in particular civil law and labour law rules. Any debt-to-equity swaps should also comply with safeguards provided for by national law. Preventive restructuring frameworks should, above all, enable debtors to restructure effectively at an early stage and to avoid insolvency, thus limiting the unnecessary liquidation of viable enterprises. Those frameworks should help to prevent job losses and the loss of know-how and skills, and maximise the total value to creditors ” in comparison to what they would receive in the event of the liquidation of the enterprise's assets or in the event of the next-best-alternative scenario in the absence of a plan ” as well as to owners and the economy as a whole. (3) Preventive restructuring frameworks should also prevent the build-up of non-performing loans. The availability of effective preventive restructuring frameworks would ensure that action is taken before enterprises default on their loans, thereby helping to reduce the risk of loans becoming non-performing in cyclical downturns and mitigating the adverse impact on the financial sector. A significant percentage of businesses and jobs could be saved if preventive frameworks existed in all the Member States in which businesses' places of establishment, assets or creditors are situated. In restructuring frameworks the rights of all parties involved, including workers, should be protected in a balanced manner. At the same time, non-viable businesses with no prospect of survival should be liquidated as quickly as possible. Where a debtor in financial difficulties is not economically viable or cannot be readily restored to economic viability, restructuring efforts could result in the acceleration and accumulation of losses to the detriment of creditors, workers and other stakeholders, as well as the economy as a whole. (4) There are differences between Member States as regards the range of the procedures available to debtors in financial difficulties in order to restructure their business. Some Member States have a limited range of procedures that allow the restructuring of businesses only at a relatively late stage, in the context of insolvency procedures. In other Member States, restructuring is possible at an earlier stage but the procedures available are not as effective as they could be, or they are very formal, in particular because they limit the use of out-of-court arrangements. Preventive solutions are a growing trend in insolvency law. The trend favours approaches that, unlike the traditional approach of liquidating a business in financial difficulties, have the aim of restoring it to a healthy state or, at least, saving those of its units which are still economically viable. That approach, among other benefits to the economy, often helps to maintain jobs or reduce job losses. Moreover, the degree of involvement of judicial or administrative authorities, or the persons appointed by them, varies from no involvement or minimal involvement in some Member States to full involvement in others. Similarly, national rules giving entrepreneurs a second chance, in particular by granting them discharge from the debts they have incurred in the course of their business, vary between Member States in respect of the length of the discharge period and the conditions for granting such a discharge. (5) In many Member States, it takes more than three years for entrepreneurs who are insolvent but honest to be discharged from their debts and make a fresh start. Inefficient discharge of debt and disqualification frameworks result in entrepreneurs having to relocate to other jurisdictions in order to benefit from a fresh start in a reasonable period of time, at considerable additional cost to both their creditors and the entrepreneurs themselves. Long disqualification orders, which often accompany a procedure leading to discharge of debt, create obstacles to the freedom to take up and pursue a self-employed, entrepreneurial activity. (6) The excessive length of procedures concerning restructuring, insolvency and discharge of debt in several Member States is an important factor triggering low recovery rates and deterring investors from carrying out business in jurisdictions where procedures risk taking too long and being unduly costly. (7) Differences between Member States in relation to procedures concerning restructuring, insolvency and discharge of debt translate into additional costs for investors when assessing the risk of debtors getting into financial difficulties in one or more Member States, or of investing in viable businesses in financial difficulties, as well as additional costs of restructuring enterprises that have establishments, creditors or assets in other Member States. This is most notably the case with restructuring international groups of companies. Investors mention uncertainty about insolvency rules or the risk of lengthy or complex insolvency procedures in another Member State as being one of the main reasons for not investing or not entering into a business relationship with a counterpart outside the Member State where they are based. That uncertainty acts as a disincentive which obstructs the freedom of establishment of undertakings and the promotion of entrepreneurship and harms the proper functioning of the internal market. Micro, small and medium-sized enterprises (SMEs) in particular do not, for the most part, have the resources needed to assess risks related to cross-border activities. (8) The differences among Member States in procedures concerning restructuring, insolvency and discharge of debt lead to uneven conditions for access to credit and to uneven recovery rates in the Member States. A higher degree of harmonisation in the field of restructuring, insolvency, discharge of debt and disqualifications is thus indispensable for a well-functioning internal market in general and for a working Capital Markets Union in particular, as well as for the resilience of European economies, including for the preservation and creation of jobs. (9) The additional cost of risk-assessment and of cross-border enforcement of claims for creditors of over-indebted entrepreneurs who relocate to another Member State in order to obtain a discharge of debt in a much shorter period of time should also be reduced. The additional costs for entrepreneurs stemming from the need to relocate to another Member State in order to benefit from a discharge of debt should also be reduced. Furthermore, the obstacles stemming from long disqualification orders linked to an entrepreneur's insolvency or over-indebtedness inhibit entrepreneurship. (10) Any restructuring operation, in particular one of major size which generates a significant impact, should be based on a dialogue with the stakeholders. That dialogue should cover the choice of the measures envisaged in relation to the objectives of the restructuring operation, as well as alternative options, and there should be appropriate involvement of employees' representatives as provided for in Union and national law. (11) The obstacles to the exercise of fundamental freedoms are not limited to purely cross-border situations. An increasingly interconnected internal market, in which goods, services, capital and workers circulate freely, and which has an ever-stronger digital dimension, means that very few enterprises are purely national if all relevant elements are considered, such as their client base, supply chain, scope of activities, investor and capital base. Even purely national insolvencies can have an impact on the functioning of the internal market through the so-called domino effect of insolvencies, whereby a debtor's insolvency may trigger further insolvencies in the supply chain. (12) Regulation (EU) 2015/848 of the European Parliament and of the Council (4) deals with issues of jurisdiction, recognition and enforcement, applicable law and cooperation in cross-border insolvency proceedings as well as with the interconnection of insolvency registers. Its scope covers preventive procedures which promote the rescue of economically viable debtors as well as discharge procedures for entrepreneurs and other natural persons. However, that Regulation does not tackle the disparities between national laws regulating those procedures. Furthermore, an instrument limited only to cross-border insolvencies would not remove all obstacles to free movement, nor would it be feasible for investors to determine in advance the cross-border or domestic nature of the potential financial difficulties of the debtor in the future. There is therefore a need to go beyond matters of judicial cooperation and to establish substantive minimum standards for preventive restructuring procedures as well as for procedures leading to a discharge of debt for entrepreneurs. (13) This Directive should be without prejudice to the scope of Regulation (EU) 2015/848. It aims to be fully compatible with, and complementary to, that Regulation, by requiring Member States to put in place preventive restructuring procedures which comply with certain minimum principles of effectiveness. It does not change the approach taken in that Regulation of allowing Member States to maintain or introduce procedures which do not fulfil the condition of publicity for notification under Annex A to that Regulation. Although this Directive does not require that procedures within its scope fulfil all the conditions for notification under that Annex, it aims to facilitate the cross-border recognition of those procedures and the recognition and enforceability of judgments. (14) The advantage of the application of Regulation (EU) 2015/848 is that it provides for safeguards against abusive relocation of the debtor's centre of main interests during cross-border insolvency proceedings. Certain restrictions should also apply to procedures not covered by that Regulation. (15) It is necessary to lower the costs of restructuring for both debtors and creditors. Therefore, the differences between Member States which hamper the early restructuring of viable debtors in financial difficulties and the possibility of a discharge of debt for honest entrepreneurs should be reduced. Reducing such differences should bring greater transparency, legal certainty and predictability across the Union. It should maximise the returns to all types of creditors and investors and encourage cross-border investment. Greater coherence of restructuring and insolvency procedures should also facilitate the restructuring of groups of companies irrespective of where the members of the group are located in the Union. (16) Removing the barriers to effective preventive restructuring of viable debtors in financial difficulties contributes to minimising job losses and losses of value for creditors in the supply chain, preserves know-how and skills and hence benefits the wider economy. Facilitating a discharge of debt for entrepreneurs would help to avoid their exclusion from the labour market and enable them to restart entrepreneurial activities, drawing lessons from past experience. Moreover, reducing the length of restructuring procedures would result in higher recovery rates for creditors as the passing of time would normally only result in a further loss of value of the debtor or the debtor's business. Finally, efficient preventive restructuring, insolvency and discharge procedures would enable a better assessment of the risks involved in lending and borrowing decisions and facilitate the adjustment for insolvent or over-indebted debtors, minimising the economic and social costs involved in their deleveraging process. This Directive should allow Member States flexibility to apply common principles while respecting national legal systems. Member States should be able to maintain or introduce in their national legal systems preventive restructuring frameworks other than those provided for by this Directive. (17) Enterprises, and in particular SMEs, which represent 99 % of all businesses in the Union, should benefit from a more coherent approach at Union level. SMEs are more likely to be liquidated than restructured, since they have to bear costs that are disproportionately higher than those faced by larger enterprises. SMEs, especially when facing financial difficulties, often do not have the necessary resources to cope with high restructuring costs and to take advantage of the more efficient restructuring procedures available only in some Member States. In order to help such debtors restructure at low cost, comprehensive check-lists for restructuring plans, adapted to the needs and specificities of SMEs, should be developed at national level and made available online. In addition, early warning tools should be put in place to warn debtors of the urgent need to act, taking into account the limited resources of SMEs for hiring experts. (18) When defining SMEs, Member States could give due consideration to Directive 2013/34/EU of the European Parliament and of the Council (5) or the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (6). (19) It is appropriate to exclude from the scope of this Directive debtors which are insurance and re-insurance undertakings as defined in points (1) and (4) of Article 13 of Directive 2009/138/EC of the European Parliament and of the Council (7), credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (8), investment firms and collective investment undertakings as defined in points (2) and (7) of Article 4(1) of Regulation (EU) No 575/2013, central counterparties as defined in point (1) of Article 2 of Regulation (EU) No 648/2012 of the European Parliament and of the Council (9), central securities depositories as defined in point (1) of Article 2(1) of Regulation (EU) No 909/2014 of the European Parliament and of the Council (10) and other financial institutions and entities listed in the first subparagraph of Article 1(1) of Directive 2014/59/EU of the European Parliament and of the Council (11). Such debtors are subject to special arrangements and the national supervisory and resolution authorities have wide-ranging powers of intervention in relation to them. Member States should be able to exclude other financial entities providing financial services which are subject to comparable arrangements and powers of intervention. (20) For similar considerations, it is also appropriate to exclude from the scope of this Directive public bodies under national law. Member States should also be able to limit the access to preventive restructuring frameworks to legal persons, since the financial difficulties of entrepreneurs may be efficiently addressed not only by means of preventive restructuring procedures but also by means of procedures which lead to a discharge of debt or by means of informal restructurings based on contractual agreements. Member States with different legal systems, where the same type of entity has a different legal status in those legal systems, should be able to apply one uniform regime to such entities. A preventive restructuring framework laid down pursuant to this Directive should not affect claims and entitlements against a debtor that arise from occupational pension systems if those claims and entitlements accrued during a period prior to the restructuring. (21) Consumer over-indebtedness is a matter of great economic and social concern and is closely related to the reduction of debt overhang. Furthermore, it is often not possible to draw a clear distinction between the debts incurred by entrepreneurs in the course of their trade, business, craft or profession and those incurred outside those activities. Entrepreneurs would not effectively benefit from a second chance if they had to go through separate procedures, with different access conditions and discharge periods, to discharge their business debts and other debts incurred outside their business. For those reasons, although this Directive does not include binding rules on consumer over-indebtedness, it would be advisable for Member States to apply also to consumers, at the earliest opportunity, the provisions of this Directive concerning discharge of debt. (22) The earlier a debtor can detect its financial difficulties and can take appropriate action, the higher the probability of avoiding an impending insolvency or, in the case of a business the viability of which is permanently impaired, the more orderly and efficient the liquidation process would be. Clear, up-to-date, concise and user-friendly information on the available preventive restructuring procedures as well as one or more early warning tools should therefore be put in place to incentivise debtors that start to experience financial difficulties to take early action. Early warning tools which take the form of alert mechanisms that indicate when the debtor has not made certain types of payments could be triggered by, for example, non-payment of taxes or social security contributions. Such tools could be developed either by Member States or by private entities, provided that the objective is met. Member States should make information about early warning tools available online, for example on a dedicated website or webpage. Member States should be able to adapt the early warning tools depending on the size of the enterprise and to lay down specific provisions on early warning tools for large-sized enterprises and groups that take into account their peculiarities. This Directive should not impose any liability on Member States for potential damage incurred through restructuring procedures which are triggered by such early warning tools. (23) In an effort to increase the support of employees and their representatives, Member States should ensure that employees' representatives are given access to relevant and up-to-date information regarding the availability of early warning tools and it should also be possible for them to provide support to employees' representatives in assessing the economic situation of the debtor. (24) A restructuring framework should be available to debtors, including legal entities and, where so provided under national law, natural persons and groups of companies, to enable them to address their financial difficulties at an early stage, when it appears likely that their insolvency can be prevented and the viability of the business can be ensured. A restructuring framework should be available before a debtor becomes insolvent under national law, namely before the debtor fulfils the conditions under national law for entering collective insolvency proceedings, which normally entail a total divestment of the debtor and the appointment of a liquidator. In order to avoid restructuring frameworks being misused, the financial difficulties of the debtor should indicate a likelihood of insolvency and the restructuring plan should be capable of preventing the insolvency of the debtor and ensuring the viability of the business. (25) Member States should be able to determine whether claims that fall due or that come into existence after an application to open a preventive restructuring procedure has been submitted or after the procedure has been opened are included in the preventive restructuring measures or the stay of individual enforcement actions. Member States should be able to decide whether the stay of individual enforcement actions has an effect on the interest due on claims. (26) Member States should be able to introduce a viability test as a condition for access to the preventive restructuring procedure provided for by this Directive. Such a test should be carried out without detriment to the debtor's assets, which could take the form of, among other things, the granting of an interim stay or the carrying out without undue delay of the test. However, the absence of detriment should not prevent Member States from requiring debtors to prove their viability at their own cost. (27) The fact that Member States can limit access to a restructuring framework with regard to debtors that have been sentenced for serious breaches of accounting or book-keeping obligations should not prevent Member States from also limiting the access of debtors to preventive restructuring frameworks where their books and records are incomplete or deficient to a degree that makes it impossible to ascertain the business and financial situation of the debtors. (28) Member States should be able to extend the scope of preventive restructuring frameworks provided for by this Directive to situations in which debtors face non-financial difficulties, provided that such difficulties give rise to a real and serious threat to a debtor's actual or future ability to pay its debts as they fall due. The time frame relevant for the determination of such threat may extend to a period of several months, or even longer, in order to account for cases in which the debtor is faced with non-financial difficulties threatening the status of its business as a going concern and, in the medium term, its liquidity. This may be the case, for example, where the debtor has lost a contract which is of key importance to it. (29) To promote efficiency and reduce delays and costs, national preventive restructuring frameworks should include flexible procedures. Where this Directive is implemented by means of more than one procedure within a restructuring framework, the debtor should have access to all rights and safeguards provided for by this Directive with the aim of achieving an effective restructuring. Except in the event of mandatory involvement of judicial or administrative authorities as provided for under this Directive, Member States should be able to limit the involvement of such authorities to situations in which it is necessary and proportionate, while taking into consideration, among other things, the aim of safeguarding the rights and interests of debtors and of affected parties, as well as the aim of reducing delays and the cost of the procedures. Where creditors or employees' representatives are allowed to initiate a restructuring procedure under national law and where the debtor is an SME, Member States should require the agreement of the debtor as a precondition for the initiation of the procedure, and should also be able to extend that requirement to debtors which are large enterprises. (30) To avoid unnecessary costs, to reflect the early nature of preventive restructuring and to encourage debtors to apply for preventive restructuring at an early stage of their financial difficulties, they should, in principle, be left in control of their assets and the day-to-day operation of their business. The appointment of a practitioner in the field of restructuring, to supervise the activity of a debtor or to partially take over control of a debtor's daily operations, should not be mandatory in every case, but made on a case-by-case basis depending on the circumstances of the case or on the debtor's specific needs. Nevertheless, Member States should be able to determine that the appointment of a practitioner in the field of restructuring is always necessary in certain circumstances, such as where: the debtor benefits from a general stay of individual enforcement actions; the restructuring plan needs to be confirmed by means of a cross-class cram-down; the restructuring plan includes measures affecting the rights of workers; or the debtor or its management have acted in a criminal, fraudulent, or detrimental manner in business relations. (31) For the purpose of assisting the parties with negotiating and drafting a restructuring plan, Member States should provide for the mandatory appointment of a practitioner in the field of restructuring where: a judicial or administrative authority grants the debtor a general stay of individual enforcement actions, provided that in such case a practitioner is needed to safeguard the interests of the parties; the restructuring plan needs to be confirmed by a judicial or administrative authority by means of a cross-class cram-down; it was requested by the debtor; or it is requested by a majority of creditors provided that the creditors cover the costs and fees of the practitioner. (32) A debtor should be able to benefit from a temporary stay of individual enforcement actions, whether granted by a judicial or administrative authority or by operation of law, with the aim of supporting the negotiations on a restructuring plan, in order to be able to continue operating or at least to preserve the value of its estate during the negotiations. Where so provided by national law, it should also be possible for the stay to apply for the benefit of third-party security providers, including guarantors and collateral givers. However, Member States should be able to provide that judicial or administrative authorities can refuse to grant a stay of individual enforcement actions where such a stay is not necessary or where it would not fulfil the objective of supporting the negotiations. Grounds for refusal might include a lack of support by the required majorities of creditors or, where so provided under national law, the debtor's actual inability to pay debts as they fall due. (33) In order to facilitate and accelerate the course of proceedings, Member States should be able to establish, on a rebuttable basis, presumptions for the presence of grounds for refusal of the stay, where, for example, the debtor shows conduct that is typical of a debtor that is unable to pay debts as they fall due ” such as a substantial default vis-à -vis workers or tax or social security agencies ” or where a financial crime has been committed by the debtor or the current management of an enterprise which gives reason to believe that a majority of creditors would not support the start of the negotiations. (34) A stay of individual enforcement actions could be general, in that it affects all creditors, or it could apply only to some individual creditors or categories of creditors. Member States should be able to exclude certain claims or categories of claims from the scope of the stay, in well-defined circumstances, such as claims which are secured by assets the removal of which would not jeopardise the restructuring of the business or claims of creditors in respect of which a stay would cause unfair prejudice, such as by way of an uncompensated loss or depreciation of collateral. (35) In order to provide for a fair balance between the rights of the debtor and those of creditors, a stay of individual enforcement actions should apply for a maximum period of up to four months. Complex restructurings may, however, require more time. Member States should be able to provide that, in such cases, extensions of the initial period of the stay can be granted by the judicial or administrative authority. Where a judicial or administrative authority does not take a decision on the extension of a stay before it lapses, the stay should cease to have effect upon expiry of the stay period. In the interest of legal certainty, the total period of the stay should be limited to 12 months. Member States should be able to provide for an indefinite stay where the debtor becomes insolvent under national law. Member States should be able to decide whether a short interim stay pending a judicial or administrative authority's decision on access to the preventive restructuring framework is subject to the time limits under this Directive. (36) To ensure that creditors do not suffer unnecessary detriment, Member States should provide that judicial or administrative authorities can lift a stay of individual enforcement actions if it no longer fulfils the objective of supporting negotiations, for example if it becomes apparent that the required majority of creditors does not support the continuation of the negotiations. The stay should also be lifted if creditors are unfairly prejudiced by it, where Member States provide for such a possibility. Member States should be allowed to limit the possibility to lift the stay to situations where creditors have not had the opportunity to be heard before it came into force or before it was extended. Member States should also be allowed to provide for a minimum period during which the stay cannot be lifted. In establishing whether there is unfair prejudice to creditors, judicial or administrative authorities should be able to take into account whether the stay would preserve the overall value of the estate, and whether the debtor acts in bad faith or with the intention of causing prejudice or generally acts against the legitimate expectations of the general body of creditors. (37) This Directive does not cover provisions on compensation or guarantees for creditors of which the collateral is likely to decrease in value during the stay. A single creditor or a class of creditors would be unfairly prejudiced by the stay if, for example, their claims would be made substantially worse-off as a result of the stay than if the stay did not apply, or if the creditor is put more at a disadvantage than other creditors in a similar position. Member States should be able to provide that, whenever unfair prejudice is established in respect of one or more creditors or one or more classes of creditors, the stay can be lifted in respect of those creditors or classes of creditors or in respect of all creditors. Member States should be able to decide who is entitled to request the lifting of the stay. (38) A stay of individual enforcement actions should also result in the suspension of a debtor's obligation to file for, or the opening at a creditor's request of, an insolvency procedure which could end in liquidation of the debtor. Such insolvency procedures should, in addition to those limited by law to having as the only possible outcome the liquidation of the debtor, also include procedures that could lead to a restructuring of the debtor. The suspension of the opening of an insolvency procedure at the request of creditors should apply not only where Member States provide for a general stay of individual enforcement actions covering all creditors, but also where Member States provide for the option of a stay of individual enforcement actions covering only a limited number of creditors. Nevertheless, Member States should be able to provide that insolvency proceedings can be opened at the request of public authorities which are not acting in a creditor capacity, but in the general interest, such as a public prosecutor. (39) This Directive should not prevent debtors from paying, in the ordinary course of business, claims of unaffected creditors, and claims of affected creditors that arise during the stay of individual enforcement actions. To ensure that creditors with claims that came into existence before the opening of a restructuring procedure or a stay of individual enforcement actions do not put pressure on the debtor to pay those claims, which otherwise would be reduced through the implementation of the restructuring plan, Member States should be able to provide for the suspension of the obligation on the debtor with respect to payment of those claims. (40) When a debtor enters an insolvency procedure, some suppliers can have contractual rights, provided for in so-called ipso facto clauses, entitling them to terminate the supply contract solely on account of the insolvency, even if the debtor has duly met its obligations. Ipso facto clauses could also be triggered when a debtor applies for preventive restructuring measures. Where such clauses are invoked when the debtor is merely negotiating a restructuring plan or requesting a stay of individual enforcement actions or invoked in connection with any event connected with the stay, early termination can have a negative impact on the debtor's business and the successful rescue of the business. Therefore, in such cases, it is necessary to provide that creditors are not allowed to invoke ipso facto clauses which make reference to negotiations on a restructuring plan or a stay or any similar event connected to the stay. (41) Early termination can endanger the ability of a business to continue operating during restructuring negotiations, especially when contracts for essential supplies such as gas, electricity, water, telecommunication and card payment services are concerned. Member States should provide that creditors to which a stay of individual enforcement actions applies, and whose claims came into existence prior to the stay and have not been paid by a debtor, are not allowed to withhold performance of, terminate, accelerate or, in any other way, modify essential executory contracts during the stay period, provided that the debtor complies with its obligations under such contracts which fall due during the stay. Executory contracts are, for example, lease and licence agreements, long-term supply contracts and franchise agreements. (42) This Directive lays down minimum standards for the content of a restructuring plan. However, Member States should be able to require additional explanations in the restructuring plan, concerning for example the criteria according to which creditors have been grouped, which may be relevant in cases where a debt is only partially secured. Member States should not be obliged to require an expert opinion regarding the value of assets which need to be indicated in the plan. (43) Creditors affected by a restructuring plan, including workers, and, where allowed under national law, equity-holders, should have a right to vote on the adoption of a restructuring plan. Member States should be able to provide for limited exceptions to this rule. Parties unaffected by the restructuring plan should have no voting rights in relation to the plan, nor should their support be required for the approval of any plan. The concept of affected parties should only include workers in their capacity as creditors. Therefore, if Member States decide to exempt the claims of workers from the preventive restructuring framework, workers should not be considered as affected parties. The vote on the adoption of a restructuring plan could take the form of a formal voting process or of a consultation and agreement with the required majority of affected parties. However, where the vote takes the form of an agreement with the requisite majority, affected parties which were not involved in the agreement could nevertheless be offered the opportunity to join the restructuring plan. (44) To ensure that rights which are substantially similar are treated equitably and that restructuring plans can be adopted without unfairly prejudicing the rights of affected parties, affected parties should be treated in separate classes which correspond to the class formation criteria under national law. Class formation means the grouping of affected parties for the purposes of adopting a plan in such a way as to reflect their rights and the seniority of their claims and interests. As a minimum, secured and unsecured creditors should always be treated in separate classes. Member States should, however, be able to require that more than two classes of creditors are formed, including different classes of unsecured or secured creditors and classes of creditors with subordinated claims. Member States should also be able to treat types of creditors that lack a sufficient commonality of interest, such as tax or social security authorities, in separate classes. It should be possible for Member States to provide that secured claims can be divided into secured and unsecured parts based on collateral valuation. It should also be possible for Member States to lay down specific rules supporting class formation where non-diversified or otherwise especially vulnerable creditors, such as workers or small suppliers, would benefit from such class formation. (45) Member States should be able to provide that debtors that are SMEs, can, on account of their relatively simple capital structure, be exempted from the obligation to treat affected parties in separate classes. In cases where SMEs have opted to create only one voting class and that class votes against the plan, it should be possible for debtors to submit another plan, in line with the general principles of this Directive. (46) Member States should in any case ensure that adequate treatment is given in their national law to matters of particular importance for class formation purposes, such as claims from connected parties, and that their national law contains rules that deal with contingent claims and contested claims. Member States should be allowed to regulate how contested claims are to be handled for the purposes of allocating voting rights. The judicial or administrative authority should examine class formation, including the selection of creditors affected by the plan, when a restructuring plan is submitted for confirmation. However, Member States should be able to provide that such authority can also examine class formation at an earlier stage should the proposer of the plan seek validation or guidance in advance. (47) Requisite majorities should be established by national law to ensure that a minority of affected parties in each class cannot obstruct the adoption of a restructuring plan which does not unfairly reduce their rights and interests. Without a majority rule binding dissenting secured creditors, early restructuring would not be possible in many cases, for example where a financial restructuring is needed but the business is otherwise viable. To ensure that parties have a say on the adoption of restructuring plans proportionate to the stakes they have in the business, the required majority should be based on the amount of the creditors' claims or equity holders' interests in any given class. Member States should, in addition, be able to require a majority in the number of affected parties in each class. Member States should be able to lay down rules in relation to affected parties with a right to vote which do not exercise that right in a correct manner or are not represented, such as rules allowing those affected parties to be taken into account for a participation threshold or for the calculation of a majority. Member States should also be able to provide for a participation threshold for the vote. (48) Confirmation of a restructuring plan by a judicial or administrative authority is necessary to ensure that the reduction of the rights of creditors or interests of equity holders is proportionate to the benefits of the restructuring and that they have access to an effective remedy. Confirmation is particularly necessary where: there are dissenting affected parties; the restructuring plan contains provisions on new financing; or the plan involves a loss of more than 25 % of the work force. Member States should, however, be able to provide that confirmation by a judicial or administrative authority is necessary also in other cases. A confirmation of a plan which involves the loss of more than 25 % of the work force should only be necessary where national law allows preventive restructuring frameworks to provide for measures that have a direct effect on employment contracts. (49) Member States should ensure that a judicial or administrative authority is able to reject a plan where it has been established that it reduces the rights of dissenting creditors or equity holders either to a level below what they could reasonably expect to receive in the event of the liquidation of the debtor's business, whether by piecemeal liquidation or by a sale as a going concern, depending on the particular circumstances of each debtor, or to a level below what they could reasonably expect in the event of the next-best-alternative scenario where the restructuring plan is not confirmed. However, where the plan is confirmed through a cross-class cram-down, reference should be made to the protection mechanism used in such scenario. Where Member States opt to carry out a valuation of the debtor as a going concern, the going-concern value should take into account the debtor's business in the longer term, as opposed to the liquidation value. The going-concern value is, as a rule, higher than the liquidation value because it is based on the assumption that the business continues its activity with the minimum of disruption, has the confidence of financial creditors, shareholders and clients, continues to generate revenues, and limits the impact on workers. (50) While compliance with the best-interests-of-creditors test should be examined by a judicial or administrative authority only if the restructuring plan is challenged on that ground in order to avoid a valuation being made in every case, Member States should be able to provide that other conditions for confirmation can be examined ex officio. Member States should be able to add other conditions which need to be complied with in order to confirm a restructuring plan, such as whether equity holders are adequately protected. Judicial or administrative authorities should be able to refuse to confirm restructuring plans which have no reasonable prospect of preventing the insolvency of the debtor or ensuring the viability of the business. However, Member States should not be required to ensure that such assessment is made ex officio. (51) Notification to all affected parties should be one of the conditions for confirmation of a restructuring plan. Member States should be able to define the form of the notification, to identify the time when it is to be made, as well as to lay down provisions for the treatment of unknown claims as regards notification. They should also be able to provide that non-affected parties have to be informed about the restructuring plan. (52) Satisfying the best-interest-of-creditors test should be considered to mean that no dissenting creditor is worse off under a restructuring plan than it would be either in the case of liquidation, whether piecemeal liquidation or sale of the business as a going concern, or in the event of the next-best-alternative scenario if the restructuring plan were not to be confirmed. Member States should be able to choose one of those thresholds when implementing the best-interest-of-creditors test in national law. That test should be applied in any case where a plan needs to be confirmed in order to be binding for dissenting creditors or, as the case may be, dissenting classes of creditors. As a consequence of the best-interest-of-creditors test, where public institutional creditors have a privileged status under national law, Member States could provide that the plan cannot impose a full or partial cancellation of the claims of those creditors. (53) While a restructuring plan should always be adopted if the required majority in each affected class supports the plan, it should still be possible for a restructuring plan which is not supported by the required majority in each affected class to be confirmed by a judicial or administrative authority, upon the proposal of a debtor or with the debtor's agreement. In the case of a legal person, Member States should be able to decide if, for the purpose of adopting or confirming a restructuring plan, the debtor is to be understood as the legal person's management board or a certain majority of shareholders or equity holders. For the plan to be confirmed in the case of a cross-class cram-down, it should be supported by a majority of voting classes of affected parties. At least one of those classes should be a secured creditor class or senior to the ordinary unsecured creditors class. (54) It should be possible that, where a majority of voting classes does not support the restructuring plan, the plan can nevertheless be confirmed if it is supported by at least one affected or impaired class of creditors which, upon a valuation of the debtor as a going concern, receive payment or keep any interest, or, where so provided under national law, can reasonably be presumed to receive payment or keep any interest, if the normal ranking of liquidation priorities is applied under national law. In such a case, Member States should be able to increase the number of classes which are required to approve the plan, without necessarily requiring that all those classes should, upon a valuation of the debtor as a going concern, receive payment or keep any interest under national law. However, Member States should not require the consent of all classes. Accordingly, where there are only two classes of creditors, the consent of at least one class should be deemed to be sufficient, if the other conditions for the application of a cross-class cram-down are met. The impairment of creditors should be understood to mean that there is a reduction in the value of their claims. (55) In the case of a cross-class cram-down, Member States should ensure that dissenting classes of affected creditors are not unfairly prejudiced under the proposed plan and Member States should provide sufficient protection for such dissenting classes. Member States should be able to protect a dissenting class of affected creditors by ensuring that it is treated at least as favourably as any other class of the same rank and more favourably than any more junior class. Alternatively, Member States could protect a dissenting class of affected creditors by ensuring that such dissenting class is paid in full if a more junior class receives any distribution or keeps any interest under the restructuring plan (the absolute priority rule). Member States should have discretion in implementing the concept of payment in full, including in relation to the timing of the payment, as long as the principal of the claim and, in the case of secured creditors, the value of the collateral are protected. Member States should also be able to decide on the choice of the equivalent means by which the original claim could be satisfied in full. (56) Member States should be able to derogate from the absolute priority rule, for example where it is considered fair that equity holders keep certain interests under the plan despite a more senior class being obliged to accept a reduction of its claims, or that essential suppliers covered by the provision on the stay of individual enforcement actions are paid before more senior classes of creditors. Member States should be able to choose which of the above-mentioned protection mechanisms they put in place. (57) While shareholders' or other equity holders' legitimate interests should be protected, Member States should ensure that they cannot unreasonably prevent the adoption of restructuring plans that would bring the debtor back to viability. Member States should be able to use different means to achieve that goal, for example by not giving equity holders the right to vote on a restructuring plan and by not making the adoption of a restructuring plan conditional on the agreement of equity holders that, upon a valuation of the enterprise, would not receive any payment or other consideration if the normal ranking of liquidation priorities were applied. However, where equity holders have the right to vote on a restructuring plan, a judicial or administrative authority should be able to confirm the plan by applying the rules on cross-class cram down notwithstanding the dissent of one or more classes of equity holders. Member States that exclude equity holders from voting should not be required to apply the absolute priority rule in the relationship between creditors and equity holders. Another possible means of ensuring that equity holders do not unreasonably prevent the adoption of restructuring plans would be to ensure that restructuring measures that directly affect equity holders' rights, and that need to be approved by a general meeting of shareholders under company law, are not subject to unreasonably high majority requirements and that equity holders have no competence in terms of restructuring measures that do not directly affect their rights. (58) Several classes of equity holders can be needed where different classes of shareholdings with different rights exist. Equity holders of SMEs that are not mere investors, but are the owners of the enterprise and contribute to the enterprise in other ways, such as managerial expertise, might not have an incentive to restructure under such conditions. For this reason, the cross-class cram-down should remain optional for debtors that are SMEs. (59) The restructuring plan should, for the purposes of its implementation, make it possible for equity holders of SMEs to provide non-monetary restructuring assistance by drawing on, for example, their experience, reputation or business contacts. (60) Throughout the preventive restructuring procedures, workers should enjoy full labour law protection. In particular, this Directive should be without prejudice to workers' rights guaranteed by Council Directives 98/59/EC (12) and 2001/23/EC (13), and Directives 2002/14/EC (14), 2008/94/EC (15) and 2009/38/EC (16) of the European Parliament and of the Council. The obligations concerning information and consultation of employees under national law transposing those Directives remain fully intact. This includes obligations to inform and consult employees' representatives on the decision to have recourse to a preventive restructuring framework in accordance with Directive 2002/14/EC. (61) Employees and their representatives should be provided with information regarding the proposed restructuring plan in so far as provided for in Union law, in order to allow them to undertake an in-depth assessment of the various scenarios. Furthermore, employees and their representatives should be involved to the extent necessary to fulfil the consultation requirements laid down in Union law. Given the need to ensure an appropriate level of protection of workers, Member States should be required to exempt workers' outstanding claims from any stay of individual enforcement actions, irrespective of the question of whether those claims arise before or after the stay is granted. A stay of enforcement of workers' outstanding claims should be allowed only for the amounts and for the period for which the payment of such claims is effectively guaranteed at a similar level by other means under national law. Where national law provides for limitations on the liability of guarantee institutions, either in terms of the length of the guarantee or the amount paid to workers, workers should be able to enforce any shortfall in their claims against the employer even during the stay period. Alternatively, Member States should be able to exclude workers' claims from the scope of the preventive restructuring frameworks and provide for their protection under national law. (62) Where a restructuring plan entails the transfer of a part of an undertaking or business, workers' rights arising from a contract of employment or from an employment relationship, in particular the right to wages, should be safeguarded in accordance with Articles 3 and 4 of Directive 2001/23/EC, without prejudice to the specific rules applying in the event of insolvency proceedings under Article 5 of that Directive and in particular the possibilities provided for in Article 5(2) of that Directive. This Directive should be without prejudice to the rights to information and consultation, which are guaranteed by Directive 2002/14/EC, including on decisions likely to lead to substantial changes in work organisation or in contractual relations with a view to reaching an agreement on such decisions. Furthermore, under this Directive, workers whose claims are affected by a restructuring plan should have the right to vote on the plan. For the purposes of voting on the restructuring plan, Member States should be able to decide to place workers in a class separate from other classes of creditors. (63) Judicial or administrative authorities should only decide on the valuation of a business ” either in liquidation or in the next-best-alternative scenario, if the restructuring plan was not confirmed ” if a dissenting affected party challenges the restructuring plan. This should not prevent Member States from carrying out valuations in another context under national law. However, it should be possible that such a decision also consists of an approval of a valuation by an expert or of a valuation submitted by the debtor or another party at an earlier stage of the process. Where the decision to carry out a valuation is taken, Member States should be able to provide for special rules, separate from general civil procedural law, for a valuation in restructuring cases, with a view to ensuring that it is carried out in an expedited manner. Nothing in this Directive should affect the rules on burden of proof under national law in the case of a valuation. (64) The binding effects of a restructuring plan should be limited to the affected parties that were involved in the adoption of the plan. Member States should be able to determine what it means for a creditor to be involved, including in the case of unknown creditors or creditors of future claims. For example, Member States should be able to decide how to deal with creditors that have been notified correctly but that did not participate in the procedures. (65) Interested affected parties should be able to appeal a decision on the confirmation of a restructuring plan issued by an administrative authority. Member States should also be able to introduce the option of appealing a decision on the confirmation of a restructuring plan issued by a judicial authority. However, in order to ensure the effectiveness of the plan, to reduce uncertainty and to avoid unjustifiable delays, appeals should, as a rule, not have suspensive effects and therefore not preclude the implementation of a restructuring plan. Member States should be able to determine and limit the grounds for appeal. Where the decision on the confirmation of the plan is appealed, Member States should be able to allow the judicial authority to issue a preliminary or summary decision that protects the execution and implementation of the plan against the consequences of the pending appeal being upheld. Where an appeal is upheld, judicial or administrative authorities should be able to consider, as an alternative to setting aside the plan, an amendment of the plan, where Member States provide for such a possibility, as well as a confirmation of the plan without amendments. It should be possible for any amendments to the plan to be proposed or voted on by the parties, on their own initiative or at the request of the judicial authority. Member States could also provide for compensation for monetary losses for the party whose appeal was upheld. National law should be able to deal with a potential new stay or extension of the stay in event of the judicial authority deciding that the appeal has suspensive effect. (66) The success of a restructuring plan often depends on whether financial assistance is extended to the debtor to support, firstly, the operation of the business during restructuring negotiations and, secondly, the implementation of the restructuring plan after its confirmation. Financial assistance should be understood in a broad sense, including the provision of money or third-party guarantees and the supply of stock, inventory, raw materials and utilities, for example through granting the debtor a longer repayment period. Interim financing and new financing should therefore be exempt from avoidance actions which seek to declare such financing void, voidable or unenforceable as an act detrimental to the general body of creditors in the context of subsequent insolvency procedures. (67) National insolvency laws providing for avoidance actions of interim and new financing or providing that new lenders may incur civil, administrative or criminal sanctions for extending credit to debtors in financial difficulties could jeopardise the availability of financing necessary for the successful negotiation and implementation of a restructuring plan. This Directive should be without prejudice to other grounds for declaring new or interim financing void, voidable or unenforceable, or for triggering civil, criminal or administrative liability for providers of such financing, as laid down in national law. Such other grounds could include, among other things, fraud, bad faith, a certain type of relationship between the parties which could be associated with a conflict of interest, such as in the case of transactions between related parties or between shareholders and the company, and transactions where a party received value or collateral without being entitled to it at the time of the transaction or in the manner performed. (68) When interim financing is extended, the parties do not know whether the restructuring plan will be eventually confirmed or not. Therefore, Member States should not be required to limit the protection of interim finance to cases where the plan is adopted by creditors or confirmed by a judicial or administrative authority. To avoid potential abuses, only financing that is reasonably and immediately necessary for the continued operation or survival of the debtor's business or the preservation or enhancement of the value of that business pending the confirmation of that plan should be protected. Furthermore, this Directive should not prevent Member States from introducing an ex ante control mechanism for interim financing. Member States should be able to limit the protection for new financing to cases where the plan is confirmed by a judicial or administrative authority and for interim financing to cases where it is subject to ex ante control. An ex ante control mechanism for interim financing or other transactions could be exercised by a practitioner in the field of restructuring, by a creditor's committee or by a judicial or administrative authority. Protection from avoidance actions and protection from personal liability are minimum guarantees that should be granted to interim financing and new financing. However, encouraging new lenders to take the enhanced risk of investing in a viable debtor in financial difficulties could require further incentives such as, for example, giving such financing priority at least over unsecured claims in subsequent insolvency procedures. (69) In order to promote a culture that encourages early preventive restructuring, it is desirable that transactions which are reasonable and immediately necessary for the negotiation or implementation of a restructuring plan also be given protection from avoidance actions in subsequent insolvency procedures. Judicial or administrative authorities should be able, when determining the reasonableness and immediate necessity of costs and fees, for instance, to consider projections and estimates submitted to affected parties, a creditor's committee, a practitioner in the field of restructuring or the judicial or administrative authority itself. To this end, Member States should also be able to require debtors to provide and update relevant estimates. Such protection should enhance certainty in respect of transactions with businesses that are known to be in financial difficulties and remove the fear of creditors and investors that all such transactions could be declared void in the event that the restructuring fails. Member States should be able to provide for a point in time prior to the opening of a preventive restructuring procedure and to the granting of the stay of individual enforcement actions, from which fees and costs of negotiating, adopting, confirming or seeking professional advice for the restructuring plan start to benefit from protection against avoidance actions. In the case of other payments and disbursements and the protection of the payment of workers' wages, such a starting point could also be the granting of the stay or the opening of the preventive restructuring procedure. (70) To further promote preventive restructuring, it is important to ensure that directors are not dissuaded from exercising reasonable business judgment or taking reasonable commercial risks, particularly where to do so would improve the chances of a restructuring of potentially viable businesses. Where the company experiences financial difficulties, directors should take steps to minimise losses and to avoid insolvency, such as: seeking professional advice, including on restructuring and insolvency, for instance by making use of early warning tools where applicable; protecting the assets of the company so as to maximise value and avoid loss of key assets; considering the structure and functions of the business to examine viability and reduce expenditure; refraining from committing the company to the types of transaction that might be subject to avoidance unless there is an appropriate business justification; continuing to trade in circumstances where it is appropriate to do so in order to maximise going-concern value; holding negotiations with creditors and entering preventive restructuring procedures. (71) Where the debtor is close to insolvency, it is also important to protect the legitimate interests of creditors from management decisions that may have an impact on the constitution of the debtor's estate, in particular where those decisions could have the effect of further diminishing the value of the estate available for restructuring efforts or for distribution to creditors. It is therefore necessary to ensure that, in such circumstances, directors avoid any deliberate or grossly negligent actions that result in personal gain at the expense of stakeholders, and avoid agreeing to transactions at below market value, or taking actions leading to unfair preference being given to one or more stakeholders. Member States should be able to implement the corresponding provisions of this Directive by ensuring that judicial or administrative authorities, when assessing whether a director is to be held liable for breaches of duty of care, take the rules on duties of directors laid down in this Directive into account. This Directive is not intended to establish any hierarchy among the different parties whose interests need to be given due regard. However, Member States should be able to decide on establishing such a hierarchy. This Directive should be without prejudice to Member States' national rules on the decision-making processes in a company. (72) Entrepreneurs exercising a trade, business, craft or independent, self-employed profession can run the risk of becoming insolvent. The differences between the Member States in terms of opportunities for a fresh start could incentivise over-indebted or insolvent entrepreneurs to relocate to a Member State other than the Member State where they are established, in order to benefit from shorter discharge periods or more attractive conditions for discharge, leading to additional legal uncertainty and costs for the creditors when recovering their claims. Furthermore, the effects of insolvency, in particular the social stigma, the legal consequences, such as disqualifying entrepreneurs from taking up and pursuing entrepreneurial activity, and the continual inability to pay off debts, constitute important disincentives for entrepreneurs seeking to set up a business or have a second chance, even if evidence shows that entrepreneurs who have become insolvent have more chances of being successful the next time. (73) Steps should therefore be taken to reduce the negative effects of over-indebtedness or insolvency on entrepreneurs, in particular by allowing for a full discharge of debt after a certain period of time and by limiting the length of disqualification orders issued in connection with a debtor's over-indebtedness or insolvency. The concept of insolvency should be defined by national law and it could take the form of over-indebtedness. The concept of entrepreneur within the meaning of this Directive should have no bearing on the position of managers or directors of a company, which should be treated in accordance with national law. Member States should be able to decide how to obtain access to discharge, including the possibility of requiring the debtor to request discharge. (74) Member States should be able to provide for the possibility to adjust the repayment obligations of insolvent entrepreneurs when there is a significant change in their financial situation, regardless of whether it improves or deteriorates. This Directive should not require that a repayment plan be supported by a majority of creditors. Member States should be able to provide that entrepreneurs are not prevented from starting a new activity in the same or different field during the implementation of the repayment plan. (75) A discharge of debt should be available in procedures that include a repayment plan, a realisation of assets, or a combination of both. In implementing those rules, Member States should be able to choose freely among those options. If more than one procedure leading to discharge of debt is available under national law, Member States should ensure that at least one of those procedures gives insolvent entrepreneurs the opportunity of having a full discharge of debt within a period that does not exceed three years. In the case of procedures which combine a realisation of assets and a repayment plan, the discharge period should start, at the latest, from the date the repayment plan is confirmed by a court or starts being implemented, for example from the first instalment under the plan, but it could also start earlier, such as when a decision to open the procedure is taken. (76) In procedures that do not include a repayment plan, the discharge period should start, at the latest, from the date when a decision to open the procedure is taken by a judicial or administrative authority, or the date of the establishment of the insolvency estate. For the purposes of calculating the duration of the discharge period under this Directive, Member States should be able to provide that the concept of opening of procedure does not include preliminary measures, such as preservation measures or the appointment of a preliminary insolvency practitioner, unless such measures allow for the realisation of assets, including the disposal and the distribution of assets to creditors. The establishment of the insolvency estate should not necessarily entail a formal decision or confirmation by a judicial or administrative authority, where such decision is not required under national law, and could consist in the submission of the inventory of assets and liabilities. (77) Where the procedural path leading to a discharge of debt entails the realisation of an entrepreneur's assets, Member States should not be prevented from providing that the request for discharge is treated separately from the realisation of assets, provided that such request constitutes an integral part of the procedural path leading to the discharge under this Directive. Member States should be able to decide on the rules on the burden of proof in order for the discharge to operate, which means that it should be possible for entrepreneurs to be required by law to prove compliance with their obligations. (78) A full discharge of debt or the ending of disqualifications after a period no longer than three years is not appropriate in all circumstances, therefore derogations from this rule which are duly justified by reasons laid down in national law might need to be introduced. For instance, such derogations should be introduced in cases where the debtor is dishonest or has acted in bad faith. Where entrepreneurs do not benefit from a presumption of honesty and good faith under national law, the burden of proof concerning their honesty and good faith should not make it unnecessarily difficult or onerous for them to enter the procedure. (79) In establishing whether an entrepreneur was dishonest, judicial or administrative authorities might take into account circumstances such as: the nature and extent of the debt; the time when the debt was incurred; the efforts of the entrepreneur to pay the debt and comply with legal obligations, including public licensing requirements and the need for proper bookkeeping; actions on the entrepreneur's part to frustrate recourse by creditors; the fulfilment of duties in the likelihood of insolvency, which are incumbent on entrepreneurs who are directors of a company; and compliance with Union and national competition and labour law. It should also be possible to introduce derogations where the entrepreneur has not complied with certain legal obligations, including obligations to maximise returns to creditors, which could take the form of a general obligation to generate income or assets. It should furthermore be possible to introduce specific derogations where it is necessary to guarantee the balance between the rights of the debtor and the rights of one or more creditors, such as where the creditor is a natural person who needs more protection than the debtor. (80) A derogation could also be justified where the costs of the procedure leading to a discharge of debt, including the fees of judicial and administrative authorities and of practitioners, are not covered. Member States should be able to provide that the benefits of that discharge can be revoked where, for example, the financial situation of the debtor improves significantly due to unexpected circumstances, such as winning a lottery, or coming in the possession of an inheritance or a donation. Member States should not be prevented from providing additional derogations in well-defined circumstances and when duly justified. (81) Where there is a duly justified reason under national law, it could be appropriate to limit the possibility of discharge for certain categories of debt. It should be possible for Member States to exclude secured debts from eligibility for discharge only up to the value of the collateral as determined by national law, while the rest of the debt should be treated as unsecured debt. Member States should be able to exclude further categories of debt when duly justified. (82) Member States should be able to provide that judicial or administrative authorities can verify, either ex officio or at the request of a person with a legitimate interest, whether entrepreneurs have fulfilled the conditions for obtaining a full discharge of debt. (83) If an entrepreneur's permit or licence to carry on a certain craft, business, trade or profession has been denied or revoked as a result of a disqualification order, this Directive should not prevent Member States from requiring the entrepreneur to submit an application for a new permit or licence after the disqualification has expired. Where a Member State authority adopts a decision concerning a specifically supervised activity, it should be possible to also take into account, even after the expiry of the disqualification period, the fact that the insolvent entrepreneur has obtained a discharge of debt in accordance with this Directive. (84) Personal and professional debts that cannot be reasonably separated, for example where an asset is used in the course of the professional activity of the entrepreneur as well as outside that activity, should be treated in a single procedure. Where Member States provide that such debts are subject to different insolvency procedures, coordination of those procedures is needed. This Directive should be without prejudice to Member States being able to choose to treat all the debts of an entrepreneur in a single procedure. Member States in which entrepreneurs are allowed to continue their business on their own account during insolvency proceedings should not be prevented from providing that such entrepreneurs can be made subject to new insolvency proceedings, where such continued business becomes insolvent. (85) It is necessary to maintain and enhance the transparency and predictability of the procedures in delivering outcomes that are favourable to the preservation of businesses and to allowing entrepreneurs to have a second chance or that permit the efficient liquidation of non-viable enterprises. It is also necessary to reduce the excessive length of insolvency procedures in many Member States, which results in legal uncertainty for creditors and investors and low recovery rates. Finally, given the enhanced cooperation mechanisms between courts and practitioners in cross-border cases, set up under Regulation (EU) 2015/848, the professionalism of all actors involved needs to be brought to comparable high levels across the Union. To achieve those objectives, Member States should ensure that members of the judicial and administrative authorities dealing with procedures concerning preventive restructuring, insolvency and discharge of debt are suitably trained and have the necessary expertise for their responsibilities. Such training and expertise could be acquired also during the exercise of the duties as a member of a judicial or administrative authority or, prior to appointment to such duties, during the exercise of other relevant duties. (86) Such training and expertise should enable decisions with a potentially significant economic and social impact to be taken in an efficient manner, and should not be understood to mean that members of a judicial authority have to deal exclusively with matters concerning restructuring, insolvency and discharge of debt. Member States should ensure that procedures concerning restructuring, insolvency and discharge of debt can be carried out in an efficient and expeditious manner. The creation of specialised courts or chambers, or the appointment of specialised judges in accordance with national law, as well as concentrating jurisdiction in a limited number of judicial or administrative authorities would be efficient ways of achieving the objectives of legal certainty and effectiveness of procedures. Member States should not be obliged to require that procedures concerning restructuring, insolvency and discharge of debt be prioritised over other procedures. (87) Member States should also ensure that practitioners in the field of restructuring, insolvency, and discharge of debt that are appointed by judicial or administrative authorities (practitioners) are: suitably trained; appointed in a transparent manner with due regard to the need to ensure efficient procedures; supervised when carrying out their tasks; and perform their tasks with integrity. It is important that practitioners adhere to standards for such tasks, such as obtaining insurance for professional liability. Suitable training, qualifications and expertise for practitioners could also be acquired while practising their profession. Member States should not be obliged to provide the necessary training themselves, but this could be provided by, for example, professional associations or other bodies. Insolvency practitioners as defined in Regulation (EU) 2015/848 should be included in the scope of this Directive. (88) This Directive should not prevent Member States from providing that practitioners are chosen by a debtor, by creditors or by a creditors' committee from a list or a pool that is pre-approved by a judicial or administrative authority. In choosing a practitioner, the debtor, the creditors or the creditors' committee could be granted a margin of appreciation as to the practitioner's expertise and experience in general and the demands of the particular case. Debtors who are natural persons could be exempted from such a duty altogether. In cases with cross-border elements, the appointment of the practitioner should take into account, among other things, the practitioner's ability to comply with the obligations, under Regulation (EU) 2015/848, to communicate and cooperate with insolvency practitioners and judicial and administrative authorities from other Member States, as well as their human and administrative resources to deal with potentially complex cases. Member States should not be prevented from providing for a practitioner to be selected by other methods, such as random selection by a software programme, provided that it is ensured that in using those methods due consideration is given to the practitioner's experience and expertise. Member States should be able to decide on the means for objecting to the selection or appointment of a practitioner or for requesting the replacement of the practitioner, for example through a creditors' committee. (89) Practitioners should be subject to oversight and regulatory mechanisms which should include effective measures regarding the accountability of practitioners who have failed in their duties, such as: a reduction in a practitioner's fee; the exclusion from the list or pool of practitioners who can be appointed in insolvency cases; and, where appropriate, disciplinary, administrative or criminal sanctions. Such oversight and regulatory mechanisms should be without prejudice to provisions under national law on civil liability for damages for breach of contractual or non-contractual obligations. Member States should not be required to set up specific authorities or bodies. Member States should ensure that information about the authorities or bodies exercising oversight over practitioners is publicly available. For instance, a mere reference to the judicial or administrative authority should be sufficient as information. It should be possible, in principle, to attain such standards without the need to create new professions or qualifications under national law. Member States should be able to extend the provisions on the training and supervision of practitioners to other practitioners not covered by this Directive. Member States should not be obliged to provide that disputes over remuneration of practitioners are to be prioritised over other procedures. (90) To further reduce the length of procedures, to facilitate better participation of creditors in procedures concerning restructuring, insolvency and discharge of debt and to ensure similar conditions among creditors irrespective of where they are located in the Union, Member States should put in place provisions enabling debtors, creditors, practitioners and judicial and administrative authorities to use electronic means of communication. Therefore, it should be possible that procedural steps such as the filing of claims by creditors, the notification of creditors, or the lodging of challenges and appeals, can be carried out by electronic means of communication. Member States should be able to provide that notifications of a creditor can only be performed electronically if the creditor concerned has previously consented to electronic communication. (91) Parties to procedures concerning restructuring, insolvency and discharge of debt should not be obliged to use electronic means of communication if such use is not mandatory under national law, without prejudice to Member States being able to establish a mandatory system of electronic filing and service of documents in procedures concerning restructuring, insolvency and discharge of debt. Member States should be able to choose the means of electronic communications. Examples of such means could include a purpose-built system for the electronic transmission of such documents or the use of email, without preventing Member States from being able to put in place features to ensure the security of electronic transmissions, such as electronic signature, or trust services, such as electronic registered delivery services, in accordance with Regulation (EU) No 910/2014 of the European Parliament and of the Council (17). (92) It is important to gather reliable and comparable data on the performance of procedures concerning restructuring, insolvency and discharge of debt in order to monitor the implementation and application of this Directive. Therefore, Member States should collect and aggregate data that are sufficiently granular to enable an accurate assessment of how the Directive is working in practice and should communicate those data to the Commission. The communication form for the transmission of such data to the Commission should be established by the Commission assisted by a Committee within the meaning of Regulation (EU) No 182/2011 of the European Parliament and of the Council (18). The form should provide a shortlist of the main outcomes of procedures that are common to all Member States. For example, in the case of a restructuring procedure, those main outcomes could be the following: the plan being confirmed by a court; the plan not being confirmed by a court; the restructuring procedures being converted to liquidation procedures or closed because of the opening of liquidation procedures before the plan was confirmed by a court. Member States should not be required to provide a break-down by types of outcome in respect of the procedures which end before any relevant measures are taken, but could instead provide a common number for all procedures which are declared inadmissible, rejected or withdrawn before being opened. (93) The communication form should provide a list of options which could be taken into account by the Member States when determining the size of a debtor, by reference to one or more of the elements of the definition of SMEs and large enterprises common to all Member States. The list should include the option of determining the size of a debtor based on the number of workers only. The form should: define the elements of average cost and average recovery rates for which Member States should be able to collect data voluntarily; provide guidance on elements which could be taken into account when Member States make use of a sampling technique, for example on sample sizes to ensure representativeness in terms of geographical distribution, size of debtors and industry; and include the opportunity for Member States to provide any additional information available, for example on the total amount of assets and liabilities of debtors. (94) The stability of financial markets relies heavily on financial collateral arrangements, in particular, when collateral security is provided in connection with the participation in designated systems or in central bank operations and when margins are provided to central counterparties. As the value of financial instruments given as collateral security may be very volatile, it is crucial to realise their value quickly before it goes down. Therefore, the provisions of Directives 98/26/EC (19) and 2002/47/EC (20) of the European Parliament and of the Council and Regulation (EU) No 648/2012 should apply notwithstanding the provisions of this Directive. Member States should be allowed to exempt netting arrangements, including close-out netting, from the effects of the stay of individual enforcement actions even in circumstances where they are not covered by Directives 98/26/EC, 2002/47/EC and Regulation (EU) No 648/2012, if such arrangements are enforceable under the laws of the relevant Member State even if insolvency proceedings are opened. This could be the case for a significant number of master agreements widely used in the financial, energy and commodity markets, both by non-financial and financial counterparties. Such arrangements reduce systemic risks especially in derivatives markets. Such arrangements might therefore be exempt from restrictions that insolvency laws impose on executory contracts. Accordingly, Member States should also be allowed to exempt from the effects of the stay of individual enforcement actions statutory netting arrangements, including close-out netting arrangements, which operate upon the opening of insolvency procedures. The amount resulting from the operation of netting arrangements, including close-out netting arrangements should, however, be subject to the stay of individual enforcement actions. (95) Member States that are parties to the Convention on international interests in mobile equipment, signed at Cape Town on 16 November 2001, and its Protocols should be able to continue to comply with their existing international obligations. The provisions of this Directive regarding preventive restructuring frameworks should apply with the derogations necessary to ensure an application of those provisions without prejudice to the application of that Convention and its Protocols. (96) The effectiveness of the process of adoption and implementation of the restructuring plan should not be jeopardised by company law. Therefore, Member States should be able to derogate from the requirements laid down in Directive (EU) 2017/1132 of the European Parliament and of the Council (21) concerning the obligations to convene a general meeting and to offer on a pre-emptive basis shares to existing shareholders, to the extent and for the period necessary to ensure that shareholders do not frustrate restructuring efforts by abusing their rights under that Directive. For example, Member States might need to derogate from the obligation to convene a general meeting of shareholders or from the normal time periods, for cases where urgent action is to be taken by the management to safeguard the assets of the company, for instance through requesting a stay of individual enforcement actions and when there is a serious and sudden loss of subscribed capital and a likelihood of insolvency. Derogations from company law might also be required when the restructuring plan provides for the emission of new shares which could be offered with priority to creditors as debt-to-equity swaps, or for the reduction of the amount of subscribed capital in the event of a transfer of parts of the undertaking. Such derogations should be limited in time to the extent that Member States consider such derogations necessary for the establishment of a preventive restructuring framework. Member States should not be obliged to derogate from company law, wholly or partially, for an indefinite or for a limited period of time, if they ensure that their company law requirements do not jeopardise the effectiveness of the restructuring process or if Member States have other, equally effective tools in place to ensure that shareholders do not unreasonably prevent the adoption or implementation of a restructuring plan which would restore the viability of the business. In this context, Member States should attach particular importance to the effectiveness of provisions relating to a stay of individual enforcement actions and confirmation of the restructuring plan which should not be unduly impaired by calls for, or the results of, general meetings of shareholders. Directive (EU) 2017/1132 should therefore be amended accordingly. Member States should enjoy a margin of appreciation in assessing which derogations are needed in the context of national company law in order to effectively implement this Directive, and should also be able to provide for similar exemptions from Directive (EU) 2017/1132 in the case of insolvency proceedings not covered by this Directive but which allow for restructuring measures to be taken. (97) In respect of the establishment of, and subsequent changes to, the data communication form, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011. (98) A study should be carried out by the Commission in order to evaluate the necessity of submitting legislative proposals to deal with the insolvency of persons not exercising a trade, business, craft or profession, who, as consumers, in good faith, are temporarily or permanently unable to pay debts as they fall due. Such study should investigate whether access to basic goods and services needs to be safeguarded for those persons to ensure that they benefit from decent living conditions. (99) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents (22), Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified. (100) Since the objectives of this Directive cannot be sufficiently achieved by the Member States because differences between national restructuring and insolvency frameworks would continue to raise obstacles to the free movement of capital and the freedom of establishment, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives. (101) On 7 June 2017, the European Central Bank delivered an opinion (23), HAVE ADOPTED THIS DIRECTIVE: TITLE I GENERAL PROVISIONS Article 1 Subject matter and scope 1. This Directive lays down rules on: (a) preventive restructuring frameworks available for debtors in financial difficulties when there is a likelihood of insolvency, with a view to preventing the insolvency and ensuring the viability of the debtor; (b) procedures leading to a discharge of debt incurred by insolvent entrepreneurs; and (c) measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt. 2. This Directive does not apply to procedures referred to in paragraph 1 of this Article that concern debtors that are: (a) insurance undertakings or reinsurance undertakings as defined in points (1) and (4) of Article 13 of Directive 2009/138/EC; (b) credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013; (c) investment firms or collective investment undertakings as defined in points (2) and (7) of Article 4(1) of Regulation (EU) No 575/2013; (d) central counter parties as defined in point (1) of Article 2 of Regulation (EU) No 648/2012; (e) central securities depositories as defined in point (1) of Article 2(1) of Regulation (EU) No 909/2014; (f) other financial institutions and entities listed in the first subparagraph of Article 1(1) of Directive 2014/59/EU; (g) public bodies under national law; and (h) natural persons who are not entrepreneurs. 3. Member States may exclude from the scope of this Directive procedures referred to in paragraph 1 that concern debtors which are financial entities, other than those referred to in paragraph 2, providing financial services which are subject to special arrangements under which the national supervisory or resolution authorities have wide-ranging powers of intervention comparable to those laid down in Union and national law in relation to the financial entities referred to in paragraph 2. Member States shall communicate those special arrangements to the Commission. 4. Member States may extend the application of the procedures referred to in point (b) of paragraph 1 to insolvent natural persons who are not entrepreneurs. Member States may restrict the application of point (a) of paragraph 1 to legal persons. 5. Member States may provide that the following claims are excluded from, or are not affected by, preventive restructuring frameworks referred to in point (a) of paragraph 1: (a) existing and future claims of existing or former workers; (b) maintenance claims arising from a family relationship, parentage, marriage or affinity; or (c) claims that arise from tortious liability of the debtor. 6. Member States shall ensure that preventive restructuring frameworks have no impact on accrued occupational pension entitlements. Article 2 Definitions 1. For the purposes of this Directive, the following definitions apply: (1) restructuring means measures aimed at restructuring the debtor's business that include changing the composition, conditions or structure of a debtor's assets and liabilities or any other part of the debtor's capital structure, such as sales of assets or parts of the business and, where so provided under national law, the sale of the business as a going concern, as well as any necessary operational changes, or a combination of those elements; (2) affected parties means creditors, including, where applicable under national law, workers, or classes of creditors and, where applicable, under national law, equity holders, whose claims or interests, respectively, are directly affected by a restructuring plan; (3) equity holder means a person that has an ownership interest in a debtor or a debtor's business, including a shareholder, in so far as that person is not a creditor; (4) stay of individual enforcement actions means a temporary suspension, granted by a judicial or administrative authority or applied by operation of law, of the right of a creditor to enforce a claim against a debtor and, where so provided for by national law, against a third-party security provider, in the context of a judicial, administrative or other procedure, or of the right to seize or realise out of court the assets or business of the debtor; (5) executory contract means a contract between a debtor and one or more creditors under which the parties still have obligations to perform at the time the stay of individual enforcement actions is granted or applied; (6) best-interest-of-creditors test means a test that is satisfied if no dissenting creditor would be worse off under a restructuring plan than such a creditor would be if the normal ranking of liquidation priorities under national law were applied, either in the event of liquidation, whether piecemeal or by sale as a going concern, or in the event of the next-best-alternative scenario if the restructuring plan were not confirmed; (7) new financing means any new financial assistance provided by an existing or a new creditor in order to implement a restructuring plan and that is included in that restructuring plan; (8) interim financing means any new financial assistance, provided by an existing or a new creditor, that includes, as a minimum, financial assistance during the stay of individual enforcement actions, and that is reasonable and immediately necessary for the debtor's business to continue operating, or to preserve or enhance the value of that business; (9) entrepreneur means a natural person exercising a trade, business, craft or profession; (10) full discharge of debt means that enforcement against entrepreneurs of their outstanding dischargeable debts is precluded or that outstanding dischargeable debts as such are cancelled, as part of a procedure which could include a realisation of assets or a repayment plan or both; (11) repayment plan means a programme of payments of specified amounts on specified dates by an insolvent entrepreneur to creditors, or a periodic transfer to creditors of a certain part of entrepreneur's disposable income during the discharge period; (12) practitioner in the field of restructuring means any person or body appointed by a judicial or administrative authority to carry out, in particular, one or more of the following tasks: (a) assisting the debtor or the creditors in drafting or negotiating a restructuring plan; (b) supervising the activity of the debtor during the negotiations on a restructuring plan, and reporting to a judicial or administrative authority; (c) taking partial control over the assets or affairs of the debtor during negotiations. 2. For the purposes of this Directive, the following concepts are to be understood as defined by national law: (a) insolvency; (b) likelihood of insolvency; (c) micro, small and medium-sized enterprises (SMEs). Article 3 Early warning and access to information 1. Member States shall ensure that debtors have access to one or more clear and transparent early warning tools which can detect circumstances that could give rise to a likelihood of insolvency and can signal to them the need to act without delay. For the purposes of the first subparagraph, Member States may make use of up-to-date IT technologies for notifications and for communication. 2. Early warning tools may include the following: (a) alert mechanisms when the debtor has not made certain types of payments; (b) advisory services provided by public or private organisations. (c) incentives under national law for third parties with relevant information about the debtor, such as accountants, tax and social security authorities, to flag to the debtor a negative development. 3. Member States shall ensure that debtors and employees' representatives have access to relevant and up-to-date information about the availability of early warning tools as well as of the procedures and measures concerning restructuring and discharge of debt. 4. Member States shall ensure that information on access to early warning tools is publicly available online and that, in particular for SMEs, it is easily accessible and presented in a user-friendly manner. 5. Member States may provide support to employees' representatives for the assessment of the economic situation of the debtor. TITLE II PREVENTIVE RESTRUCTURING FRAMEWORKS CHAPTER 1 Availability of preventive restructuring frameworks Article 4 Availability of preventive restructuring frameworks 1. Member States shall ensure that, where there is a likelihood of insolvency, debtors have access to a preventive restructuring framework that enables them to restructure, with a view to preventing insolvency and ensuring their viability, without prejudice to other solutions for avoiding insolvency, thereby protecting jobs and maintaining business activity. 2. Member States may provide that debtors that have been sentenced for serious breaches of accounting or bookkeeping obligations under national law are allowed to access a preventive restructuring framework only after those debtors have taken adequate measures to remedy the issues that gave rise to the sentence, with a view to providing creditors with the necessary information to enable them to take a decision during restructuring negotiations. 3. Member States may maintain or introduce a viability test under national law, provided that such a test has the purpose of excluding debtors that do not have a prospect of viability, and that it can be carried out without detriment to the debtors' assets. 4. Member States may limit the number of times within a certain period a debtor can access a preventive restructuring framework as provided for under this Directive. 5. The preventive restructuring framework provided for under this Directive may consist of one or more procedures, measures or provisions, some of which may take place out of court, without prejudice to any other restructuring frameworks under national law. Member States shall ensure that such restructuring framework affords debtors and affected parties the rights and safeguards provided for in this Title in a coherent manner. 6. Member States may put in place provisions limiting the involvement of a judicial or administrative authority in a preventive restructuring framework to where it is necessary and proportionate while ensuring that rights of any affected parties and relevant stakeholders are safeguarded. 7. Preventive restructuring frameworks provided for under this Directive shall be available on application by debtors. 8. Member States may also provide that preventive restructuring frameworks provided for under this Directive are available at the request of creditors and employees' representatives, subject to the agreement of the debtor. Member States may limit that requirement to obtain the debtor's agreement to cases where debtors are SMEs. CHAPTER 2 Facilitating negotiations on preventive restructuring plans Article 5 Debtor in possession 1. Member States shall ensure that debtors accessing preventive restructuring procedures remain totally, or at least partially, in control of their assets and the day-to-day operation of their business. 2. Where necessary, the appointment by a judicial or administrative authority of a practitioner in the field of restructuring shall be decided on a case-by-case basis, except in certain circumstances where Member States may require the mandatory appointment of such a practitioner in every case. 3. Member States shall provide for the appointment of a practitioner in the field of restructuring, to assist the debtor and creditors in negotiating and drafting the plan, at least in the following cases: (a) where a general stay of individual enforcement actions, in accordance with Article 6(3), is granted by a judicial or administrative authority, and the judicial or administrative authority decides that such a practitioner is necessary to safeguard the interest of the parties; (b) where the restructuring plan needs to be confirmed by a judicial or administrative authority by means of a cross-class cram-down, in accordance with Article 11; or (c) where it is requested by the debtor or by a majority of the creditors, provided that, in the latter case, the cost of the practitioner is borne by the creditors. Article 6 Stay of individual enforcement actions 1. Member States shall ensure that debtors can benefit from a stay of individual enforcement actions to support the negotiations of a restructuring plan in a preventive restructuring framework. Member States may provide that judicial or administrative authorities can refuse to grant a stay of individual enforcement actions where such a stay is not necessary or where it would not achieve the objective set out in the first subparagraph. 2. Without prejudice to paragraphs 4 and 5, Member States shall ensure that a stay of individual enforcement actions can cover all types of claims, including secured claims and preferential claims. 3. Member States may provide that a stay of individual enforcement actions can be general, covering all creditors, or can be limited, covering one or more individual creditors or categories of creditors. Where a stay is limited, the stay shall only apply to creditors that have been informed, in accordance with national law, of negotiations as referred to in paragraph 1 on the restructuring plan or of the stay. 4. Member States may exclude certain claims or categories of claims from the scope of the stay of individual enforcement actions, in well-defined circumstances, where such an exclusion is duly justified and where: (a) enforcement is not likely to jeopardise the restructuring of the business; or (b) the stay would unfairly prejudice the creditors of those claims. 5. Paragraph 2 shall not apply to workers' claims. By way of derogation from the first subparagraph, Member States may apply paragraph 2 to workers' claims if, and to the extent that, Member States ensure that the payment of such claims is guaranteed in preventive restructuring frameworks at a similar level of protection. 6. The initial duration of a stay of individual enforcement actions shall be limited to a maximum period of no more than four months. 7. Notwithstanding paragraph 6, Member States may enable judicial or administrative authorities to extend the duration of a stay of individual enforcement actions or to grant a new stay of individual enforcement actions, at the request of the debtor, a creditor or, where applicable, a practitioner in the field of restructuring. Such extension or new stay of individual enforcement actions shall be granted only if well-defined circumstances show that such extension or new stay is duly justified, such as: (a) relevant progress has been made in the negotiations on the restructuring plan; (b) the continuation of the stay of individual enforcement actions does not unfairly prejudice the rights or interests of any affected parties; or (c) insolvency proceedings which could end in the liquidation of the debtor under national law have not yet been opened in respect of the debtor. 8. The total duration of the stay of individual enforcement actions, including extensions and renewals, shall not exceed 12 months. Where Member States choose to implement this Directive by means of one or more procedures or measures which do not fulfil the conditions for notification under Annex A to Regulation (EU) 2015/848, the total duration of the stay under such procedures shall be limited to no more than four months if the centre of main interests of the debtor has been transferred from another Member State within a three-month period prior to the filing of a request for the opening of preventive restructuring proceedings. 9. Member States shall ensure that judicial or administrative authorities can lift a stay of individual enforcement actions in the following cases: (a) the stay no longer fulfils the objective of supporting the negotiations on the restructuring plan, for example if it becomes apparent that a proportion of creditors which, under national law, could prevent the adoption of the restructuring plan do not support the continuation of the negotiations; (b) at the request of the debtor or the practitioner in the field of restructuring; (c) where so provided for in national law, if one or more creditors or one or more classes of creditors are, or would be, unfairly prejudiced by a stay of individual enforcement actions; or (d) where so provided for in national law, if the stay gives rise to the insolvency of a creditor. Member States may limit the power, under the first subparagraph, to lift the stay of individual enforcement actions to situations where creditors had not had the opportunity to be heard before the stay came into force or before an extension of the period was granted by a judicial or administrative authority. Member States may provide for a minimum period, which does not exceed the period referred to in paragraph 6, during which a stay of individual enforcement actions cannot be lifted. Article 7 Consequences of the stay of individual enforcement actions 1. Where an obligation on a debtor, provided for under national law, to file for the opening of insolvency proceedings which could end in the liquidation of the debtor, arises during a stay of individual enforcement actions, that obligation shall be suspended for the duration of that stay. 2. A stay of individual enforcement actions in accordance with Article 6 shall suspend, for the duration of the stay, the opening, at the request of one or more creditors, of insolvency proceedings which could end in the liquidation of the debtor. 3. Member States may derogate from paragraphs 1 and 2 in situations where a debtor is unable to pay its debts as they fall due. In such cases, Member States shall ensure that a judicial or administrative authority can decide to keep in place the benefit of the stay of individual enforcement actions, if, taking into account the circumstances of the case, the opening of insolvency proceedings which could end in the liquidation of the debtor would not be in the general interest of creditors. 4. Member States shall provide for rules preventing creditors to which the stay applies from withholding performance or terminating, accelerating or, in any other way, modifying essential executory contracts to the detriment of the debtor, for debts that came into existence prior to the stay, solely by virtue of the fact that they were not paid by the debtor. Essential executory contracts shall be understood to mean executory contracts which are necessary for the continuation of the day-to-day operations of the business, including contracts concerning supplies, the suspension of which would lead to the debtor's activities coming to a standstill. The first subparagraph shall not preclude Member States from affording such creditors appropriate safeguards with a view to preventing unfair prejudice being caused to such creditors as a result of that subparagraph. Member States may provide that this paragraph also applies to non-essential executory contracts. 5. Member States shall ensure that creditors are not allowed to withhold performance or terminate, accelerate or, in any other way, modify executory contracts to the detriment of the debtor by virtue of a contractual clause providing for such measures, solely by reason of: (a) a request for the opening of preventive restructuring proceedings; (b) a request for a stay of individual enforcement actions; (c) the opening of preventive restructuring proceedings; or (d) the granting of a stay of individual enforcement actions as such. 6. Member States may provide that a stay of individual enforcement actions does not apply to netting arrangements, including close-out netting arrangements, on financial markets, energy markets and commodity markets, even in circumstances where Article 31(1) does not apply, if such arrangements are enforceable under national insolvency law. The stay shall, however, apply to the enforcement by a creditor of a claim against a debtor arising as a result of the operation of a netting arrangement. The first subparagraph shall not apply to contracts for the supply of goods, services or energy necessary for the operation of the debtor's business, unless such contracts take the form of a position traded on an exchange or other market, such that it can be substituted at any time at current market value. 7. Member States shall ensure that the expiry of a stay of individual enforcement actions without the adoption of a restructuring plan does not, of itself, give rise to the opening of an insolvency procedure which could end in the liquidation of the debtor, unless the other conditions for such opening laid down by national law are fulfilled. CHAPTER 3 Restructuring plans Article 8 Content of restructuring plans 1. Member States shall require that restructuring plans submitted for adoption in accordance with Article 9, or for confirmation by a judicial or administrative authority in accordance with Article 10, contain at least the following information: (a) the identity of the debtor; (b) the debtor's assets and liabilities at the time of submission of the restructuring plan, including a value for the assets, a description of the economic situation of the debtor and the position of workers, and a description of the causes and the extent of the difficulties of the debtor; (c) the affected parties, whether named individually or described by categories of debt in accordance with national law, as well as their claims or interests covered by the restructuring plan; (d) where applicable, the classes into which the affected parties have been grouped, for the purpose of adopting the restructuring plan, and the respective values of claims and interests in each class; (e) where applicable, the parties, whether named individually or described by categories of debt in accordance with national law, which are not affected by the restructuring plan, together with a description of the reasons why it is proposed not to affect them; (f) where applicable, the identity of the practitioner in the field of restructuring; (g) the terms of the restructuring plan, including, in particular: (i) any proposed restructuring measures as referred to in point (1) of Article 2(1); (ii) where applicable, the proposed duration of any proposed restructuring measures; (iii) the arrangements with regard to informing and consulting the employees' representatives in accordance with Union and national law; (iv) where applicable, overall consequences as regards employment such as dismissals, short-time working arrangements or similar; (v) the estimated financial flows of the debtor, if provided for by national law; and (vi) any new financing anticipated as part of the restructuring plan, and the reasons why the new financing is necessary to implement that plan; (h) a statement of reasons which explains why the restructuring plan has a reasonable prospect of preventing the insolvency of the debtor and ensuring the viability of the business, including the necessary pre-conditions for the success of the plan. Member States may require that that statement of reasons be made or validated either by an external expert or by the practitioner in the field of restructuring if such a practitioner is appointed. 2. Member States shall make available online a comprehensive check-list for restructuring plans, adapted to the needs of SMEs. The check-list shall include practical guidelines on how the restructuring plan has to be drafted under national law. The check-list shall be made available in the official language or languages of the Member State. Member States shall consider making the check-list available in at least one other language, in particular in a language used in international business. Article 9 Adoption of restructuring plans 1. Member States shall ensure that, irrespective of who applies for a preventive restructuring procedure in accordance with Article 4, debtors have the right to submit restructuring plans for adoption by the affected parties. Member States may also provide that creditors and practitioners in the field of restructuring have the right to submit restructuring plans, and provide for conditions under which they may do so. 2. Member States shall ensure that affected parties have a right to vote on the adoption of a restructuring plan. Parties that are not affected by a restructuring plan shall not have voting rights in the adoption of that plan. 3. Notwithstanding paragraph 2, Member States may exclude from the right to vote the following: (a) equity holders; (b) creditors whose claims rank below the claims of ordinary unsecured creditors in the normal ranking of liquidation priorities; or (c) any related party of the debtor or the debtor's business, with a conflict of interest under national law. 4. Member States shall ensure that affected parties are treated in separate classes which reflect sufficient commonality of interest based on verifiable criteria, in accordance with national law. As a minimum, creditors of secured and unsecured claims shall be treated in separate classes for the purposes of adopting a restructuring plan. Member States may also provide that workers' claims are treated in a separate class of their own. Member States may provide that debtors that are SMEs can opt not to treat affected parties in separate classes. Member States shall put in place appropriate measures to ensure that class formation is done with a particular view to protecting vulnerable creditors such as small suppliers. 5. Voting rights and the formation of classes shall be examined by a judicial or administrative authority when a request for confirmation of the restructuring plan is submitted. Member States may require a judicial or administrative authority to examine and confirm the voting rights and formation of classes at an earlier stage than that referred to in the first subparagraph. 6. A restructuring plan shall be adopted by affected parties, provided that a majority in the amount of their claims or interests is obtained in each class. Member States may, in addition, require that a majority in the number of affected parties is obtained in each class. Member States shall lay down the majorities required for the adoption of a restructuring plan. Those majorities shall not be higher than 75 % of the amount of claims or interests in each class or, where applicable, of the number of affected parties in each class. 7. Notwithstanding paragraphs 2 to 6, Member States may provide that a formal vote on the adoption of a restructuring plan can be replaced by an agreement with the requisite majority. Article 10 Confirmation of restructuring plans 1. Member States shall ensure that at least the following restructuring plans are binding on the parties only if they are confirmed by a judicial or administrative authority: (a) restructuring plans which affect the claims or interests of dissenting affected parties; (b) restructuring plans which provide for new financing; (c) restructuring plans which involve the loss of more than 25 % of the workforce, if such loss is permitted under national law. 2. Member States shall ensure that the conditions under which a restructuring plan can be confirmed by a judicial or administrative authority are clearly specified and include at least the following: (a) the restructuring plan has been adopted in accordance with Article 9; (b) creditors with sufficient commonality of interest in the same class are treated equally, and in a manner proportionate to their claim; (c) notification of the restructuring plan has been given in accordance with national law to all affected parties; (d) where there are dissenting creditors, the restructuring plan satisfies the best-interest-of-creditors test; (e) where applicable, any new financing is necessary to implement the restructuring plan and does not unfairly prejudice the interests of creditors. Compliance with point (d) of the first subparagraph shall be examined by a judicial or administrative authority only if the restructuring plan is challenged on that ground. 3. Member States shall ensure that judicial or administrative authorities are able to refuse to confirm a restructuring plan where that plan would not have a reasonable prospect of preventing the insolvency of the debtor or ensuring the viability of the business. 4. Member States shall ensure that where a judicial or administrative authority is required to confirm a restructuring plan in order for it to become binding, the decision is taken in an efficient manner with a view to expeditious treatment of the matter. Article 11 Cross-class cram-down 1. Member States shall ensure that a restructuring plan which is not approved by affected parties, as provided for in Article 9(6), in every voting class, may be confirmed by a judicial or administrative authority upon the proposal of a debtor or with the debtor's agreement, and become binding upon dissenting voting classes where the restructuring plan fulfils at least the following conditions: (a) it complies with Article 10(2) and (3); (b) it has been approved by: (i) a majority of the voting classes of affected parties, provided that at least one of those classes is a secured creditors class or is senior to the ordinary unsecured creditors class; or, failing that, (ii) at least one of the voting classes of affected parties or where so provided under national law, impaired parties, other than an equity-holders class or any other class which, upon a valuation of the debtor as a going concern, would not receive any payment or keep any interest, or, where so provided under national law, which could be reasonably presumed not to receive any payment or keep any interest, if the normal ranking of liquidation priorities were applied under national law; (c) it ensures that dissenting voting classes of affected creditors are treated at least as favourably as any other class of the same rank and more favourably than any junior class; and (d) no class of affected parties can, under the restructuring plan, receive or keep more than the full amount of its claims or interests. By way of derogation from the first subparagraph, Member States may limit the requirement to obtain the debtor's agreement to cases where debtors are SMEs. Member States may increase the minimum number of classes of affected parties or, where so provided under national law, impaired parties, required to approve the plan as laid down in point (b)(ii) of the first subparagraph. 2. By way of derogation from point (c) of paragraph 1, Member States may provide that the claims of affected creditors in a dissenting voting class are satisfied in full by the same or equivalent means where a more junior class is to receive any payment or keep any interest under the restructuring plan. Member States may maintain or introduce provisions derogating from the first subparagraph where they are necessary in order to achieve the aims of the restructuring plan and where the restructuring plan does not unfairly prejudice the rights or interests of any affected parties. Article 12 Equity holders 1. Where Member States exclude equity holders from the application of Articles 9 to 11, they shall ensure by other means that those equity holders are not allowed to unreasonably prevent or create obstacles to the adoption and confirmation of a restructuring plan. 2. Member States shall also ensure that equity holders are not allowed to unreasonably prevent or create obstacles to the implementation of a restructuring plan. 3. Member States may adapt what it means to unreasonably prevent or create obstacles under this Article to take into account, inter alia: whether the debtor is an SME or a large enterprise; the proposed restructuring measures touching upon the rights of equity holders; the type of equity holder; whether the debtor is a legal or a natural person; or whether partners in a company have limited or unlimited liability. Article 13 Workers 1. Members States shall ensure that individual and collective workers' rights, under Union and national labour law, such as the following, are not affected by the preventive restructuring framework: (a) the right to collective bargaining and industrial action; and (b) the right to information and consultation in accordance with Directive 2002/14/EC and Directive 2009/38/EC, in particular: (i) information to employees' representatives about the recent and probable development of the undertaking's or the establishment's activities and economic situation, enabling them to communicate to the debtor concerns about the situation of the business and as regards the need to consider restructuring mechanisms; (ii) information to employees' representatives about any preventive restructuring procedure which could have an impact on employment, such as on the ability of workers to recover their wages and any future payments, including occupational pensions; (iii) information to and consultation of employees' representatives about restructuring plans before they are submitted for adoption in accordance with Article 9, or for confirmation by a judicial or administrative authority in accordance with Article 10; (c) the rights guaranteed by Directives 98/59/EC, 2001/23/EC and 2008/94/EC. 2. Where the restructuring plan includes measures leading to changes in the work organisation or in contractual relations with workers, those measures shall be approved by those workers, if national law or collective agreements provide for such approval in such cases. Article 14 Valuation by the judicial or administrative authority 1. The judicial or administrative authority shall take a decision on the valuation of the debtor's business only where a restructuring plan is challenged by a dissenting affected party on the grounds of either: (a) an alleged failure to satisfy the best-interest-of-creditors test under point (6) of Article 2(1); or (b) an alleged breach of the conditions for a cross-class cram-down under point (ii) of Article 11(1)(b). 2. Member States shall ensure that, for the purpose of taking a decision on a valuation in accordance with paragraph 1, judicial or administrative authorities may appoint or hear properly qualified experts. 3. For the purposes of paragraph 1, Member States shall ensure that a dissenting affected party may lodge a challenge with the judicial or administrative authority called upon to confirm the restructuring plan. Member States may provide that such a challenge can be lodged in the context of an appeal against a decision on the confirmation of a restructuring plan. Article 15 Effects of restructuring plans 1. Member States shall ensure that restructuring plans that are confirmed by a judicial or administrative authority are binding upon all affected parties named or described in accordance with point (c) of Article 8(1). 2. Member States shall ensure that creditors that are not involved in the adoption of a restructuring plan under national law are not affected by the plan. Article 16 Appeals 1. Member States shall ensure that any appeal provided for under national law against a decision to confirm or reject a restructuring plan taken by a judicial authority is brought before a higher judicial authority. Member States shall ensure that an appeal against a decision to confirm or reject a restructuring plan taken by an administrative authority is brought before a judicial authority. 2. Appeals shall be resolved in an efficient manner with a view to expeditious treatment. 3. An appeal against a decision confirming a restructuring plan shall have no suspensive effects on the execution of that plan. By way of derogation from the first subparagraph, Member States may provide that judicial authorities can suspend the execution of the restructuring plan or parts thereof where necessary and appropriate to safeguard the interests of a party. 4. Member States shall ensure that, where an appeal pursuant to paragraph 3 is upheld, the judicial authority may either: (a) set aside the restructuring plan; or (b) confirm the restructuring plan, either with amendments, where so provided under national law, or without amendments. Member States may provide that, where a plan is confirmed under point (b) of the first subparagraph, compensation is granted to any party that incurred monetary losses and whose appeal is upheld. CHAPTER 4 Protection for new financing, interim financing and other restructuring related transactions Article 17 Protection for new financing and interim financing 1. Member States shall ensure that new financing and interim financing are adequately protected. As a minimum, in the case of any subsequent insolvency of the debtor: (a) new financing and interim financing shall not be declared void, voidable or unenforceable; and (b) the grantors of such financing shall not incur civil, administrative or criminal liability, on the ground that such financing is detrimental to the general body of creditors, unless other additional grounds laid down by national law are present. 2. Member States may provide that paragraph 1 shall only apply to new financing if the restructuring plan has been confirmed by a judicial or administrative authority, and to interim financing which has been subject to ex ante control. 3. Member States may exclude from the application of paragraph 1 interim financing which is granted after the debtor has become unable to pay its debts as they fall due. 4. Member States may provide that grantors of new or interim financing are entitled to receive payment with priority in the context of subsequent insolvency procedures in relation to other creditors that would otherwise have superior or equal claims. Article 18 Protection for other restructuring related transactions 1. Without prejudice to Article 17, Member States shall ensure that, in the event of any subsequent insolvency of a debtor, transactions that are reasonable and immediately necessary for the negotiation of a restructuring plan are not declared void, voidable or unenforceable on the ground that such transactions are detrimental to the general body of creditors, unless other additional grounds laid down by national law are present. 2. Member States may provide that paragraph 1 only applies where the plan is confirmed by a judicial or administrative authority or where such transactions were subject to ex ante control. 3. Member States may exclude from the application of paragraph 1 transactions that are carried out after the debtor has become unable to pay its debts as they fall due. 4. Transactions referred to in paragraph 1 shall include, as a minimum: (a) the payment of fees for and costs of negotiating, adopting or confirming a restructuring plan; (b) the payment of fees for and costs of seeking professional advice closely connected with the restructuring; (c) the payment of workers' wages for work already carried out without prejudice to other protection provided in Union or national law; (d) any payments and disbursements made in the ordinary course of business other than those referred to in points (a) to (c). 5. Without prejudice to Article 17, Member States shall ensure that, in the event of any subsequent insolvency of the debtor, transactions that are reasonable and immediately necessary for the implementation of a restructuring plan, and that are carried out in accordance with the restructuring plan confirmed by a judicial or administrative authority, are not declared void, voidable or unenforceable on the ground that such transactions are detrimental to the general body of creditors, unless other additional grounds laid down by national law are present. CHAPTER 5 Duties of directors Article 19 Duties of directors where there is a likelihood of insolvency Member States shall ensure that, where there is a likelihood of insolvency, directors, have due regard, as a minimum, to the following: (a) the interests of creditors, equity holders and other stakeholders; (b) the need to take steps to avoid insolvency; and (c) the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business. TITLE III DISCHARGE OF DEBT AND DISQUALIFICATIONS Article 20 Access to discharge 1. Member States shall ensure that insolvent entrepreneurs have access to at least one procedure that can lead to a full discharge of debt in accordance with this Directive. Member States may require that the trade, business, craft or profession to which an insolvent entrepreneur's debts are related has ceased. 2. Member States in which a full discharge of debt is conditional on a partial repayment of debt by the entrepreneur shall ensure that the related repayment obligation is based on the individual situation of the entrepreneur and, in particular, is proportionate to the entrepreneur's seizable or disposable income and assets during the discharge period, and takes into account the equitable interest of creditors. 3. Member States shall ensure that entrepreneurs who have been discharged from their debts may benefit from existing national frameworks providing for business support for entrepreneurs, including access to relevant and up-to-date information about these frameworks. Article 21 Discharge period 1. Member States shall ensure that the period after which insolvent entrepreneurs are able to be fully discharged from their debts is no longer than three years starting at the latest from the date of either: (a) in the case of a procedure which includes a repayment plan, the decision by a judicial or administrative authority to confirm the plan or the start of the implementation of the plan; or (b) in the case of any other procedure, the decision by the judicial or administrative authority to open the procedure, or the establishment of the entrepreneur's insolvency estate. 2. Member States shall ensure that insolvent entrepreneurs who have complied with their obligations, where such obligations exist under national law, are discharged of their debt on expiry of the discharge period without the need to apply to a judicial or administrative authority to open a procedure additional to those referred to in paragraph 1. Without prejudice to the first subparagraph, Member States may maintain or introduce provisions allowing the judicial or administrative authority to verify whether the entrepreneurs have fulfilled the obligations for obtaining a discharge of debt. 3. Member States may provide that a full discharge of debt does not hinder the continuation of an insolvency procedure that entails the realisation and distribution of assets of an entrepreneur that formed part of the insolvency estate of that entrepreneur as at the date of expiry of the discharge period. Article 22 Disqualification period 1. Member States shall ensure that, where an insolvent entrepreneur obtains a discharge of debt in accordance with this Directive, any disqualifications from taking up or pursuing a trade, business, craft or profession on the sole ground that the entrepreneur is insolvent, shall cease to have effect, at the latest, at the end of the discharge period. 2. Member States shall ensure that, on expiry of the discharge period, the disqualifications referred to in paragraph 1 of this Article cease to have effect without the need to apply to a judicial or administrative authority to open a procedure additional to those referred to in Article 21(1). Article 23 Derogations 1. By way of derogation from Articles 20 to 22, Member States shall maintain or introduce provisions denying or restricting access to discharge of debt, revoking the benefit of such discharge or providing for longer periods for obtaining a full discharge of debt or longer disqualification periods, where the insolvent entrepreneur acted dishonestly or in bad faith under national law towards creditors or other stakeholders when becoming indebted, during the insolvency proceedings or during the payment of the debt, without prejudice to national rules on burden of proof. 2. By way of derogation from Articles 20 to 22, Member States may maintain or introduce provisions denying or restricting access to discharge of debt, revoking the benefit of discharge or providing for longer periods for obtaining a full discharge of debt or longer disqualification periods in certain well-defined circumstances and where such derogations are duly justified, such as where: (a) the insolvent entrepreneur has substantially violated obligations under a repayment plan or any other legal obligation aimed at safeguarding the interests of creditors, including the obligation to maximise returns to creditors; (b) the insolvent entrepreneur has failed to comply with information or cooperation obligations under Union and national law; (c) there are abusive applications for a discharge of debt; (d) there is a further application for a discharge within a certain period after the insolvent entrepreneur was granted a full discharge of debt or was denied a full discharge of debt due to a serious violation of information or cooperation obligations; (e) the cost of the procedure leading to the discharge of debt is not covered; or (f) a derogation is necessary to guarantee the balance between the rights of the debtor and the rights of one or more creditors. 3. By way of derogation from Article 21, Member States may provide for longer discharge periods in cases where: (a) protective measures are approved or ordered by a judicial or administrative authority in order to safeguard the main residence of the insolvent entrepreneur and, where applicable, of the entrepreneur's family, or the essential assets for the continuation of the entrepreneur's trade, business, craft or profession; or (b) the main residence of the insolvent entrepreneur and, where applicable, of the entrepreneur's family, is not realised. 4. Member States may exclude specific categories of debt from discharge of debt, or restrict access to discharge of debt or lay down a longer discharge period where such exclusions, restrictions or longer periods are duly justified, such as in the case of: (a) secured debts; (b) debts arising from or in connection with criminal penalties; (c) debts arising from tortious liability; (d) debts regarding maintenance obligations arising from a family relationship, parentage, marriage or affinity; (e) debts incurred after the application for or opening of the procedure leading to a discharge of debt; and (f) debts arising from the obligation to pay the cost of the procedure leading to a discharge of debt. 5. By way of derogation from Article 22, Member States may provide for longer or indefinite disqualification periods where the insolvent entrepreneur is a member of a profession: (a) to which specific ethical rules or specific rules on reputation or expertise apply, and the entrepreneur has infringed those rules; or (b) dealing with the management of the property of others. The first subparagraph shall also apply where an insolvent entrepreneur requests access to a profession as referred to in point (a) or (b) of that subparagraph. 6. This Directive is without prejudice to national rules regarding disqualifications ordered by a judicial or administrative authority other than those referred to in Article 22. Article 24 Consolidation of proceedings regarding professional and personal debts 1. Member States shall ensure that, where insolvent entrepreneurs have professional debts incurred in the course of their trade, business, craft or profession as well as personal debts incurred outside those activities, which cannot be reasonably separated, such debts, if dischargeable, shall be treated in a single procedure for the purposes of obtaining a full discharge of debt. 2. Member States may provide that, where professional debts and personal debts can be separated, those debts are to be treated, for the purposes of obtaining a full discharge of debt, either in separate but coordinated procedures or in the same procedure. TITLE IV MEASURES TO INCREASE THE EFFICIENCY OF PROCEDURES CONCERNING RESTRUCTURING, INSOLVENCY AND DISCHARGE OF DEBT Article 25 Judicial and administrative authorities Without prejudice to judicial independence and to any differences in the organisation of the judiciary across the Union, Member States shall ensure that: (a) members of the judicial and administrative authorities dealing with procedures concerning restructuring, insolvency and discharge of debt receive suitable training and have the necessary expertise for their responsibilities; and (b) procedures concerning restructuring, insolvency and discharge of debt are dealt with in an efficient manner, with a view to the expeditious treatment of procedures. Article 26 Practitioners in procedures concerning restructuring, insolvency and discharge of debt 1. Member States shall ensure that: (a) practitioners appointed by a judicial or administrative authority in procedures concerning restructuring, insolvency and discharge of debt (practitioners) receive suitable training and have the necessary expertise for their responsibilities; (b) the conditions for eligibility, as well as the process for the appointment, removal and resignation of practitioners are clear, transparent and fair; (c) in appointing a practitioner for a particular case, including cases with cross-border elements, due consideration is given to the practitioner's experience and expertise, and to the specific features of the case; and (d) in order to avoid any conflict of interest, debtors and creditors have the opportunity to either object to the selection or appointment of a practitioner or request the replacement of the practitioner. 2. The Commission shall facilitate the sharing of best practices between Member States with a view to improving the quality of training across the Union, including by means of the exchange of experiences and capacity building tools. Article 27 Supervision and remuneration of practitioners 1. Member States shall put in place appropriate oversight and regulatory mechanisms to ensure that the work of practitioners is effectively supervised, with a view to ensuring that their services are provided in an effective and competent way, and, in relation to the parties involved, are provided impartially and independently. Those mechanisms shall also include measures for the accountability of practitioners who have failed in their duties. 2. Member States shall ensure that information about the authorities or bodies exercising oversight over practitioners is publicly available. 3. Member States may encourage the development of and adherence to codes of conduct by practitioners. 4. Member States shall ensure that the remuneration of practitioners is governed by rules that are consistent with the objective of an efficient resolution of procedures. Member States shall ensure that appropriate procedures are in place to resolve any disputes over remuneration. Article 28 Use of electronic means of communication Member States shall ensure that, in procedures concerning restructuring, insolvency and discharge of debt, the parties to the procedure, the practitioner and the judicial or administrative authority are able to perform by use of electronic means of communication, including in cross-border situations, at least the following actions: (a) filing of claims; (b) submission of restructuring or repayment plans; (c) notifications to creditors; (d) lodging of challenges and appeals. TITLE V MONITORING OF PROCEDURES CONCERNING RESTRUCTURING, INSOLVENCY AND DISCHARGE OF DEBT Article 29 Data collection 1. Member States shall collect and aggregate, on an annual basis, at national level, data on procedures concerning restructuring, insolvency and discharge of debt, broken down by each type of procedure, and covering at least the following elements: (a) the number of procedures that were applied for or opened, where such opening is provided for under national law, and of procedures that are pending or were closed; (b) the average length of procedures from the submission of the application, or from the opening thereof, where such opening is provided for under national law, to their closure; (c) the number of procedures other than those required under point (d), broken down by types of outcome; (d) the number of applications for restructuring procedures that were declared inadmissible, were rejected or were withdrawn before being opened. 2. Member States shall collect and aggregate, on an annual basis, at national level, data on the number of debtors which were subject to restructuring procedures or insolvency procedures and which, within the three years prior to the submission of the application or the opening of such procedures, where such opening is provided for under national law, had a restructuring plan confirmed under a previous restructuring procedure implementing Title II. 3. Member States may collect and aggregate, on an annual basis, at national level, data on: (a) the average cost of each type of procedure; (b) the average recovery rates for secured and unsecured creditors and, where applicable, other types of creditors, separately; (c) the number of entrepreneurs who, after having undergone a procedure under point (b) of Article 1(1), launch a new business; (d) the number of job losses linked to restructuring and insolvency procedures. 4. Member States shall break down the data referred to in points (a) to (c) of paragraph 1 and, where applicable and available, the data referred to in paragraph 3 by: (a) the size of the debtors that are not natural persons; (b) whether debtors subject to procedures concerning restructuring or insolvency are natural or legal persons; and (c) whether the procedures leading to a discharge of debt concern only entrepreneurs or all natural persons. 5. Member States may collect and aggregate the data referred to in paragraphs 1 to 4 through a sample technique that ensures that the samples are representative in terms of size and diversity. 6. Member States shall collect and aggregate the data referred to in paragraphs 1, 2, 4 and, where applicable, paragraph 3, for full calendar years ending on 31 December of each year, starting with the first full calendar year following the date of application of implementing acts referred to in paragraph 7. The data shall be communicated annually to the Commission, on the basis of a standard data communication form, by 31 December of the calendar year following the year for which data are collected. 7. The Commission shall establish the communication form referred to in paragraph 6 of this Article by way of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 30(2). 8. The Commission shall publish on its website the data communicated in accordance with paragraph 6 in an accessible and user-friendly manner. Article 30 Committee procedure 1. The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011. 2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply. Where the committee delivers no opinion, the Commission shall not adopt the draft implementing act and the third subparagraph of Article 5(4) of Regulation (EU) No 182/2011 shall apply. TITLE VI FINAL PROVISIONS Article 31 Relationship with other acts and international instruments 1. The following acts shall apply notwithstanding this Directive: (a) Directive 98/26/EC; (b) Directive 2002/47/EC; and (c) Regulation (EU) No 648/2012. 2. This Directive shall be without prejudice to the safeguarding requirements of funds for payment institutions laid down under Directive (EU) 2015/2366 of the European Parliament and of the Council (24) and for electronic money institutions laid down under Directive 2009/110/EC of the European Parliament and of the Council (25). 3. This Directive shall be without prejudice to the application of the Convention on international interests in mobile equipment and its Protocol on matters specific to aircraft equipment, signed at Cape Town on 16 November 2001, to which some Member States are party at the time of the adoption of this Directive. Article 32 Amendment of Directive (EU) 2017/1132 In Article 84 of Directive (EU) 2017/1132, the following paragraph is added: 4. Member States shall derogate from Article 58(1), Article 68, Articles 72, 73, and 74, point (b) of Article 79(1), Article 80(1) and Article 81 to the extent and for the period that such derogations are necessary for the establishment of the preventive restructuring frameworks provided for in Directive (EU) 2019/1023 of the European Parliament and of the Council (*1). The first subparagraph shall be without prejudice to the principle of equal treatment of shareholders. Article 33 Review clause No later than 17 July 2026 and every five years thereafter, the Commission shall present to the European Parliament, the Council and the European Economic and Social Committee a report on the application and impact of this Directive, including on the application of the class formation and voting rules in respect of vulnerable creditors, such as workers. On the basis of that assessment, the Commission shall submit, if appropriate, a legislative proposal, considering additional measures to consolidate and harmonise the legal framework on restructuring, insolvency and discharge of debt. Article 34 Transposition 1. Member States shall adopt and publish, by 17 July 2021, the laws, regulations and administrative provisions necessary to comply with this Directive, with the exception of the provisions necessary to comply with points (a), (b) and (c) of Article 28 which shall be adopted and published by 17 July 2024 and the provisions necessary to comply with point (d) of Article 28 which shall be adopted and published by 17 July 2026. They shall immediately communicate the text of those provisions to the Commission. They shall apply the laws, regulations and administrative provisions necessary to comply with this Directive from 17 July 2021, with the exception of the provisions necessary to comply with points (a), (b) and (c) of Article 28, which shall apply from 17 July 2024 and of the provisions necessary to comply with point (d) of Article 28, which shall apply from 17 July 2026. 2. By way of derogation from paragraph 1, Member States that encounter particular difficulties in implementing this Directive shall be able to benefit from an extension of a maximum of one year of the implementation period provided for in paragraph 1. Member States shall notify to the Commission the need to make use of this option to extend the implementation period by 17 January 2021. 3. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive. Article 35 Entry into force This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Article 36 This Directive is addressed to the Member States. Done at Brussels, 20 June 2019. For the European Parliament The President A. TAJANI For the Council The President G. CIAMBA (1) OJ C 209, 30.6.2017, p. 21. (2) OJ C 342, 12.10.2017, p. 43. (3) Position of the European Parliament of 28 March 2019 (not yet published in the Official Journal) and decision of the Council of 6 June 2019. (4) Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (OJ L 141, 5.6.2015, p. 19). (5) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19). (6) Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36). (7) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1). (8) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). (9) Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1). (10) Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1). (11) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). (12) Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (OJ L 225, 12.8.1998, p. 16). (13) Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (OJ L 82, 22.3.2001, p. 16). (14) Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community (OJ L 80, 23.3.2002, p. 29). (15) Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (OJ L 283, 28.10.2008, p. 36). (16) Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works council or a procedure in Community-scale undertakings and community-scale groups of undertakings for the purpose of informing and consulting employees (OJ L 122, 16.5.2009, p. 28). (17) Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (OJ L 257, 28.8.2014, p. 73). (18) Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13). (19) Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). (20) Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements (OJ L 168, 27.6.2002, p. 43). (21) Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (OJ L 169, 30.6.2017, p. 46). (22) OJ C 369, 17.12.2011, p. 14. (23) OJ C 236, 21.7.2017, p. 2. (24) Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35). (25) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7).

Filed pursuant to Rule 424(b)(3) Registration Statement No. 333-142472 PROSPECTUS SUPPLEMENT NO. 2 (to prospectus dated April 30, 2007) 3,927,120 Shares First Industrial Realty Trust, Inc. Common Stock This prospectus supplement supplements the prospectus dated April 30, 2007, as previously supplemented, relating to the potential offer and sale from time to time of up to 3,927,120 shares of common stock of First Industrial Realty Trust, Inc. (the “Company”). The table below reflects the following transactions: Name Number of Shares and Units Owned Before the Offering Number of Shares Offered Hereby Arctos Partners Inc. (13) 697,063 697,063* This prospectus supplement is not complete without, and may not be delivered or used except in connection with, the prospectus dated April 30, 2007, including any supplements or amendments to such prospectus.The date of this prospectus supplement is June 15, 2007. Filed pursuant to Rule 424(b)(3) Registration Statement No. 333-142472 PROSPECTUS SUPPLEMENT NO. 1 (to prospectus dated April 30, 2007) 3,927,120 Shares First Industrial Realty Trust, Inc. Common Stock This prospectus supplement supplements the prospectus dated April 30, 2007 (the “Prospectus”) relating to the potential offer and sale from time to time of up to 3,927,120 shares of common stock of First Industrial Realty Trust, Inc. (the “Company”).A current report filed by the Company on Form 8-K dated May 18, 2007, modifies the language in the Prospectus in the Section titled “Selling Stockholders”. This prospectus supplement is not complete without, and may not be delivered or used except in connection with, the Prospectus dated April 30, 2007, including any supplements or amendments to such prospectus.The date of this prospectus supplement is May 18, 2007. Filed pursuant to Rule 424(b)(3) Registration Statement No. 333-142472 PROSPECTUS FIRST INDUSTRIAL REALTY TRUST, INC. 3,927,120 Shares Common Stock This prospectus relates to the offer and sale from time to time of up to 3,927,120 shares (the “Registered Shares”) of common stock, par value $.01 per share (the “Common Stock”), of First Industrial Realty Trust, Inc. (the “Company”) by persons who receive such shares in exchange for the 4.625% Exchangeable Senior Notes due 2011 (the “notes”) issued and sold by First Industrial, L.P. (the “Operating Partnership”) in a private transaction on September 25, 2006. The notes are fully guaranteed by us. Under certain circumstances, we may issue shares of Common Stock upon the exchange or redemption of the notes. In such circumstances, the recipients of such Common Stock, whom we refer to collectively herein as the “Selling Stockholders”, may use this prospectus to resell from time to time the shares of Common Stock that we may issue to them upon the exchange or redemption of the notes. Additional Selling Stockholders may be named in a prospectus supplement, in a post-effective amendment, or in filings we make with the Securities and Exchange Commission (the “SEC” or the “Commission”) under the Securities and Exchange Act of 1934, as amended, (the “Exchange Act”), which are incorporated by reference in this prospectus. See “Selling Stockholders.” The registration of the Common Stock to which this prospectus relates does not necessarily mean that any of the Selling Stockholders will exchange their notes for Common Stock, that upon any exchange or redemption of the notes we will elect, in our sole and absolute discretion, to exchange or redeem some or all of the notes for shares of Common Stock rather than cash, or that any shares of Common Stock received upon exchange or redemption of the notes will be sold by the Selling Stockholders. The Common Stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “FR.” In order to maintain our qualification as a real estate investment trust (“REIT”), ownership by any person of the Company’s capital stock is limited, with certain exceptions, to an aggregate of 9.9% in value of the outstanding capital stock of the Company. Investing in the Common Stock involves risks that are described in the“Risk Factors” section of our Annual Report on Form 10-K for the year endedDecember 31, 2006, Current Report on Form 8-K dated April 30, 2007 and otherreports that we may file from time to time with the Securities and ExchangeCommission. The Selling Stockholders from time to time may offer and sell Registered Shares held by them directly or through agents or broker-dealers on terms to be determined at the time of sale. To the extent required, the names of any agent or broker-dealer and applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in a prospectus supplement. See “Plan of Distribution.” Each of the Selling Stockholders reserves the right to accept or reject, in whole or in part, any proposed purchase of Registered Shares to be made directly or through agents. The Selling Stockholders and any agents or broker-dealers that participate with the Selling Stockholders in the distribution of Registered Shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and any commissions received by them and any profit on the sale of Registered Shares may be deemed to be underwriting commissions or discounts under the Securities Act. Neither the Securities and Exchange Commission nor any state securitiescommission has approved or disapproved of these securities or passed upon theadequacy or accuracy of this prospectus. Any representation to the contrary isa criminal offense. The date of this prospectus is April 30, 2007. TABLE OF CONTENTS Page ABOUT THIS PROSPECTUS 3 THE COMPANY 4 USE OF PROCEEDS 4 DESCRIPTION OF COMMON STOCK 4 CERTAIN PROVISIONS OF MARYLAND LAW AND THE COMPANY’S ARTICLES OF INCORPORATION AND BYLAWS 6 RESTRICTIONS ON TRANSFER OF CAPITAL STOCK 8 SELLING STOCKHOLDERS 9 PLAN OF DISTRIBUTION 13 CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS 13 FORWARD-LOOKING STATEMENTS 20 WHERE YOU CAN FIND MORE INFORMATION 20 DOCUMENTS INCORPORATED BY REFERENCE 21 EXPERTS 21 LEGAL MATTERS 21 The Company has not authorized any dealer, salesperson or other person to give you written information other than this prospectus or any prospectus supplement or to make representations as to matters not stated in this prospectus or any prospectus supplement. You must not rely on unauthorized information. This prospectus and any prospectus supplement are not an offer to sell these securities or our solicitation of your offer to buy the securities in any jurisdiction where that would not be permitted or legal. The delivery of this prospectus or any prospectus supplement at any time does not create an implication that the information contained herein or therein is correct as of any time subsequent to their respective dates. 2 ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that the Company has filed with the SEC, utilizing the “shelf” registration process, relating to the Common Stock described in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the headings “Where You Can Find More Information” and “Documents Incorporated by Reference.” As used in this prospectus, “we,” “us” and “our” refer to the Company and its subsidiaries, including the Operating Partnership, unless the context otherwise requires. 3 THE COMPANY The Company is a real estate investment trust, or REIT, subject to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company and its consolidated partnerships, corporations and limited liability companies are a self-administered and fully integrated real estate company which owns, manages, acquires, sells and develops industrial real estate. As of December 31, 2006, we owned 931 industrial properties (inclusive of developments in progress) located in 28 states in the United States and one province in Canada, containing an aggregate of approximately 76.9 million square feet of gross leasable area. Our interests in our properties and land parcels are held through partnerships, corporations and limited liability companies controlled by the Company, including the Operating Partnership, of which the Company is the sole general partner. As of December 31, 2006, the Company held approximately 87.3% of the outstanding limited partnership units of the Operating Partnership. At that date, approximately 12.7% of the outstanding limited partnership units were held by outside investors, including certain members of the management of the Company. Each limited partnership unit, other than those held by the Company, may be exchanged for cash or, at the Company’s option, one share of First Industrial Common Stock, subject to adjustments. Upon each exchange, the number of limited partnership units held by the Company, and its ownership percentage of the Operating Partnership, increase. As of December 31, 2006, the Company also owned preferred general partnership interests in the Operating Partnership with an aggregate liquidation priority of $325,000,000 We utilize an operating approach that combines the effectiveness of decentralized, locally based property, management, acquisition, sales and development functions with the cost efficiencies of centralized acquisition, sales and development support, capital markets expertise, asset management and fiscal control systems. We have grown and will seek to continue to grow through the acquisition and development of industrial properties. The Company, a Maryland corporation organized on August 10, 1993, completed its initial public offering in June 1994. The Operating Partnership is a Delaware limited partnership organized in November 1993. Our principal executive offices are located at 311 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606, telephone number (312) 344-4300. Our web site is www.firstindustrial.com. The information on or linked to our web site is not a part of, and is not incorporated by reference into, this prospectus. USE OF PROCEEDS The Company will not receive any proceeds from the sale of any Registered Shares by the Selling Stockholders. The Company will bear certain expenses of the registration of the Registered Shares under federal and state securities laws. To the extent that the Company issues shares, the Partnership issues partnership units to the Company. DESCRIPTION OF COMMON STOCK The following is a summary of the material terms of our Common Stock. You should read our articles of incorporation and bylaws, which are incorporated by reference to the registration statement of which this prospectus is a part. General Under our articles of incorporation, the Company has authority to issue 100 million shares of its Common Stock, par value $.01 per share. Under Maryland law, stockholders generally are not responsible for the corporation’s debts or obligations. At March 20, 2007, we had outstanding 45,378,060 shares of Common Stock. Terms Subject to the preferential rights of any other shares or series of stock, including preferred stock outstanding from time to time, and to the provisions of our articles of incorporation regarding excess stock, common stockholders will be entitled to receive dividends on shares of Common Stock if, as and when authorized and declared by our board of directors out of assets legally available for that purpose. Subject to the preferential rights of any other shares or series of stock, including preferred stock outstanding from time to time, and to the provisions of our articles of incorporation regarding excess stock, common stockholders will share ratably in the assets of the Company legally available for distribution to its stockholders in the event of its liquidation, dissolution or winding up after payment of, or adequate provision for, all known debts and liabilities of the Company. For a discussion of excess stock, please see “Restrictions on Transfer of Capital Stock.” 4 Subject to the provisions of our articles of incorporation regarding excess stock, each outstanding share of Common Stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as otherwise required by law or except as provided with respect to any other class or series of stock, common stockholders will possess the exclusive voting power. There is no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of Common Stock can elect all of the directors then standing for election, and the holders of the remaining shares of Common Stock will not be able to elect any directors. Common stockholders have no conversion, sinking fund or redemption rights, or preemptive rights to subscribe for any securities of the Company. Subject to the provisions of our articles of incorporation regarding excess stock, all shares of Common Stock will have equal dividend, distribution, liquidation and other rights, and will have no preference, appraisal or exchange rights. Under Maryland General Corporate Law (the “MGCL”), a corporation generally cannot, subject to certain exceptions, dissolve, amend its articles of incorporation, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business unless approved by the affirmative vote of stockholders holding at least two-thirds of the shares entitled to vote on the matter unless the corporation’s articles of incorporation set forth a lesser percentage, which percentage shall not be less than a majority of all of the votes to be cast on the matter. Our articles of incorporation do not provide for a lesser percentage in such situations. Restrictions on Ownership For the Company to qualify as a REIT under the Code, not more than 50% in value of its outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals, as defined in the Code to include certain entities, during the last half of a taxable year. To assist us in meeting this requirement, we may take certain actions to limit the beneficial ownership, directly or indirectly, by individuals of our outstanding equity securities. See “Restrictions on Transfer of Capital Stock.” Transfer Agent The transfer agent and registrar for the Common Stock is Computershare Trust Company, N.A. Shareholder Rights Plan On September 4, 1997, the board of directors of the Company adopted a shareholder rights plan. Under the shareholder rights plan, one right attached to each outstanding share of Common Stock at the close of business on October 19, 1997, and one right will attach to each share of Common Stock thereafter issued. Each right entitles the holder to purchase, under certain conditions, one one-hundredth of a share of our junior participating preferred stock for $125.00. The rights may also, under certain conditions, entitle the holders to receive Common Stock, or Common Stock of an entity acquiring the Company, or other consideration, each having a value equal to twice the exercise price of each right ($250.00). We have designated 1,000,000 shares as junior participating preferred stock and have reserved such shares for issuance under the shareholder rights plan. In the event of any merger, consolidation, combination or other transaction in which shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or other property, each share of junior participating preferred stock will be entitled to receive 100 times the aggregate amount of stock, securities, cash and/or other property into which or for which each share of Common Stock is changed or exchanged, subject to certain adjustments. The rights will expire on October 19, 2007, unless redeemed earlier by the holders at $.001 per right or exchanged by the holder at an exchange ratio of one share of Common Stock per right. The description and terms of the rights are set forth in a shareholder rights agreement between us and Computershare Trust Company, N.A. (formerly First Chicago Trust Company of New York). 5 CERTAIN PROVISIONS OF MARYLAND LAW AND THE COMPANY’S ARTICLES OF INCORPORATION AND BYLAWS The following summary of certain provisions of Maryland law is not complete and is qualified by reference to Maryland law and our articles of incorporation and bylaws, which are incorporated by reference to the registration statement of which this prospectus is a part. Business Combinations Under the MGCL, certain “business combinations” (as defined in the MGCL) between a Maryland corporation and an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder became an interested stockholder. Under the MGCL, an “interested stockholder” includes a person who is • the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of the outstanding voting stock of the corporation; or • an affiliate or associate of the corporation and was the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of the then outstanding stock of the corporation at any time within the two-year period immediately prior to the date in question. Business combinations for the purposes of the preceding paragraph are defined by the MGCL to include certain mergers, consolidations, share exchanges and asset transfers, some issuances and reclassifications of equity securities, the adoption of a plan of liquidation or dissolution or the receipt by an interested stockholder or its affiliate of any loan advance, guarantee, pledge or other financial assistance or tax advantage provided by the Company. After the five-year moratorium period, any such business combination must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least • 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation voting together as a single group and • two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than voting stock held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or by any affiliate or associate of the interested stockholder voting together as a single voting group. The super-majority vote requirements will not apply if, among other things, the corporation’s stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the most recent time that the interested stockholder becomes an interested stockholder. Our articles of incorporation exempt from these provisions of the MGCL any business combination in which there is no interested stockholder other than Jay H. Shidler, the Chairman of our board of directors, or any entity controlled by Mr. Shidler unless Mr. Shidler is an interested stockholder without taking into account his ownership of shares of Common Stock and the right to acquire shares of Common Stock in an aggregate amount that does not exceed the number of shares of Common Stock that he owned and had the right to acquire, including through the exchange of limited partnership units of the Operating Partnership, at the time of the consummation of our initial public offering. Control Share Acquisitions The MGCL provides that “control shares” (as defined in the MGCL) of a Maryland corporation acquired in a “control share acquisition” (as defined in the MGCL) have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock owned by the acquiror or by officers or directors who are also employees of the corporation. “Control shares” are voting shares of stock that, if aggregated with all other shares of stock previously acquired by that person, would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: • one-tenth or more but less than one-third, • one-third or more but less than a majority, or • a majority or more of all voting power. 6 Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of ownership of or power to direct the voting power of issued and outstanding control shares, subject to certain exceptions. A person who has made or proposes to make a control share acquisition may compel the board of directors, upon satisfaction of certain conditions, including an undertaking to pay certain expenses, to call a special meeting of stockholders to be held within 50 days after receiving a demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any meeting of stockholders. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the MGCL, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares, except those for which voting rights have previously been approved. The corporation’s redemption of the control shares will be for fair value determined, without regard to the absence of voting rights, as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights of the control shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of the appraisal rights may not be less than the highest price per share paid in the control share acquisition. Certain limitations and restrictions otherwise applicable to the exercise of dissenters’ rights do not apply in the context of a control share acquisition. The control share acquisition statute does not apply to • shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or • acquisitions approved or exempted by our articles of incorporation or bylaws. Our bylaws contain a provision exempting any and all acquisitions of its shares of capital stock from the control share provisions of the MGCL. There can be no assurance that this bylaw provision will not be amended or eliminated in the future. Amendment of Articles of Incorporation Our articles of incorporation, including the provisions on classification of the board of directors discussed below, may be amended only by the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter. Meetings of Stockholders Our bylaws provide for annual meetings of stockholders to be held on the third Wednesday in April or on any other day as may be established from time to time by our board of directors. Special meetings of stockholders may be called by • our Chairman of the board or our President, • a majority of the board of directors or • stockholders holding at least a majority of our outstanding capital stock entitled to vote at the meeting. Our bylaws provide that any stockholder of record wishing to nominate a director or have a stockholder proposal considered at an annual meeting must provide written notice and certain supporting documentation to the Company relating to the nomination or proposal not less than 75 days nor more than 180 days prior to the anniversary date of the prior year’s annual meeting or special meeting in lieu thereof (the “Anniversary Date”). In the event that the annual meeting is called for a date more than seven calendar days before the Anniversary Date, stockholders generally must provide written notice within 20 calendar days after the date on which notice of the meeting is mailed to stockholders or the date of the meeting is publicly disclosed. The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees or the advisability of the other proposed business and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders and make recommendations about the qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals for action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if the proper procedures are not followed and of discouraging or deterring a third party from 7 conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal. Our bylaws may have those effects without regard to whether consideration of the nominees or proposal might be harmful or beneficial to us and our stockholders. Classification of the Board of Directors Our bylaws provide that the number of directors may be established by the board of directors but may not be fewer than the minimum number required by Maryland law nor more than twelve. Any vacancy will be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the remaining directors, except that a vacancy resulting from an increase in the number of directors will be filled by a majority of the entire board of directors. Under the terms of our articles of incorporation, the directors are divided into three classes holding office for terms expiring at the annual meetings of stockholders to be held in 2007, 2008 and 2009. As the term of each class expires, directors in that class will be elected for a term of three years and until their successors are duly elected and qualified. We believe that classification of our board of directors will help to assure the continuity and stability of our business strategies and policies as determined by our board of directors. The classified board provision could have the effect of making the removal of incumbent directors more time consuming and difficult, which could discourage a third party from making a tender offer or otherwise attempting to obtain control of the Company, even though such an attempt might be beneficial to us and our stockholders. At least two annual meetings of stockholders, instead of one, will generally be required to effect a change in a majority of our board of directors. Thus, the classified board provision could increase the likelihood that incumbent directors will retain their positions. Holders of shares of Common Stock will have no right to cumulative voting for the election of directors. Consequently, at each annual meeting of stockholders, the holders of a majority of the shares of Common Stock will be able to elect all of the successors of the class of directors whose term expires at that meeting. RESTRICTIONS ON TRANSFER OF CAPITAL STOCK For the Company to qualify as a REIT under the Code, among other things, not more than 50% in value of its outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year. Our capital stock must also be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter tax year. See “Certain U.S. Federal Income Tax Considerations.” To ensure that we remain a qualified REIT, our articles of incorporation, subject to certain exceptions, provide that no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than an aggregate of 9.9% in value of our capital stock. Any transfer of capital stock or any security convertible into capital stock that would create a direct or indirect ownership of capital stock in excess of the ownership limit or that would result in our disqualification as a REIT, including any transfer that results in the capital stock being owned by fewer than 100 persons or results in us being “closely held” within the meaning of Section 856(h) of the Code, shall be null and void, and the intended transferee will acquire no rights to the capital stock. Capital stock owned, or deemed to be owned, or transferred to a stockholder in excess of the ownership limit will automatically be exchanged for shares of “excess stock,” as defined in our articles of incorporation, that will be transferred, by operation of law, to us as trustee of a trust for the exclusive benefit of the transferees to whom such capital stock may be ultimately transferred without violating the ownership limit. While the excess stock is held in trust, it will not be entitled to vote, it will not be considered for purposes of any stockholder vote or the determination of a quorum for such vote, and it will not be entitled to participate in the accumulation or payment of dividends or other distributions. A transferee of excess stock may, at any time such excess stock is held by us in trust, designate as beneficiary of the transferee stockholder’s interest in the trust representing the excess stock any individual whose ownership of the capital stock exchanged into such excess stock would be permitted under the ownership limit, and may transfer that interest to the beneficiary at a price not in excess of the price paid by the original transferee-stockholder for the capital stock that was exchanged into excess stock. Immediately upon the transfer to the permitted beneficiary, the excess stock will automatically be exchanged for capital stock of the class from which it was converted. In addition, we will have the right, for a period of 90 days during the time any excess stock is held by us in trust, and, with respect to excess stock resulting from the attempted transfer of our preferred stock, at any time when any outstanding shares of preferred stock of the series are being redeemed, to purchase all or any portion of the excess stock from the original transferee-stockholder at the lesser of the price paid for the capital stock by the original transferee-stockholder and the market price, as determined in the manner set forth in our articles of incorporation, of the capital stock on the date we exercise our option to purchase or, in the case of a purchase of excess stock attributed to preferred stock which has been called for redemption, at its stated value, plus all accumulated and unpaid dividends to the date of redemption. The 90-day period begins on the date of the violative transfer if the original transferee-stockholder gives notice to us of the transfer or, if no such notice is given, the date the board of directors determines that a violative transfer has been made. 8 SELLING STOCKHOLDERS The notes were originally issued by the Operating Partnership and sold by the initial purchasers of the notes in transactions exempt from the registration requirements of the Securities Act to persons reasonably believed by the initial purchasers to be qualified institutional buyers as defined by Rule 144A under the Securities Act. Under certain circumstances, we may issue shares of Common Stock upon the exchange or redemption of the notes. In such circumstances, the recipients of shares of Common Stock, including their transferees, pledges or donors or their successors, whom we refer to as the Selling Stockholders, may use this prospectus to resell from time to time the shares of Common Stock that we may issue to them upon the exchange or redemption of the notes. Information about Selling Stockholders is set forth herein and information about additional Selling Stockholders may be set forth in a prospectus supplement, in a post-effective amendment, or in filings we make with the SEC under the Exchange Act which are incorporated by reference in this prospectus. The table below provides, as of March 13, 2007, the names of each Selling Stockholder and the number of shares of Common Stock offered by each Selling Stockholder. As we are not obligated to issue Common Stock upon exchange or redemption of the notes and the Selling Stockholders may sell all, some or none of their shares of Common Stock, no estimate can be made of the aggregate number of shares of Common Stock that are to be offered hereby, or the aggregate number of shares of Common Stock that will be owned by each Selling Stockholder upon completion of the offering to which this prospectus relates. The number of shares in the column “Number of shares offered hereby” includes the number of shares of Common Stock the Selling Stockholder may receive in exchange for the notes, except as noted. Amounts shown in the column “Number of shares owned before the offering” represent the number of securities shown in the column “Number of shares offered hereby” plus shares of Common Stock owned by the Selling Stockholders that are not covered by the registration statement of which this prospectus forms a part. The number of shares of Common Stock issuable upon the exchange or redemption of the notes shown in the table below assumes exchange of the full amount of notes held by each Selling Stockholder at the maximum exchange rate of 19.6356 shares of Common Stock per $1,000 principal amount of notes and a cash payment in lieu of any fractional share. This exchange rate is subject to adjustment in certain events. Accordingly, the number of shares of Common Stock issued upon the exchange or redemption of the notes may increase or decrease from time to time. With respect to the information presented concerning the Selling Stockholders listed in the table below, we have not conducted any independent inquiry or investigation to ascertain that information and have relied on written questionnaires furnished to us by the Selling Stockholders for the express purpose of including that information in this prospectus. Based upon information provided by the Selling Stockholders, none of the Selling Stockholders has, or within the past three years has had, any position, office or other material relationship with us or any of our affiliates. The shares of Common Stock offered by this prospectus may be offered from time to time by the Selling Stockholders named below: Name** Number of shares owned before the offering Number of shares offered hereby (1) Number of shares owned after the offering (2) Percentage of shares owned after the offering (2)(3) Vicis Capital Master Fund(4) 3,000,000 3,000,000 0 + KBC Financial Products USA Inc.(5) 5,000,000 5,000,000 * + JMG Capital Partners, L.P.(6) 7,500,000 7,500,000 0 + JMG Triton Offshore Fund, Ltd(7) 7,500,000 7,500,000 0 + Argent Classic Convertible Arbitrage Fund, L.P.(8) 530,000 530,000 0 + Xavex Convertible Arbitrage 10 Fund(9) 210,000 210,000 0 + Credit Agricole Structured Asset Management(10) 100,000 100,000 0 + Argent Classic Convertible Arbitrage Fund II, L.P.(11) 120,000 120,000 0 + CNH CA Master Account L.P.(12) 7,500,000 7,500,000 0 + Arctos Partners Inc.(13) 20,500,000 20,500,000 * 0 + Old Lane US Master Fund L.P.(14) 7,874,000 7,874,000 0 + Old Lane HMA Master Fund L.P.(15) 5,180,000 5,180,000 0 + Old Lane Cayman Master Fund L.P.(16) 21,946,000 21,946,000 0 + Merced Partners Limited Partnership(17) 3,500,000 3,500,000 0 + Tamarack International, Ltd(18) 1,500,000 1,500,000 0 + DBAG London(19) 23,000,000 23,000,000 * + Marathon Global Convertible Master Fund, Ltd.(20) 20,000,000 20,000,000 0 + CQS Convertible and Quantitative Strategies Master Fund Limited(21) 10,000,000 10,000,000 0 + PNC Equity Securities LLC(22) 1,500,000 1,500,000 * 0 + TQA Master Fund, Ltd.(23) 2,707,000 2,707,000 0 + 9 Name** Number of shares owned before the offering Number of shares offered hereby (1) Number of shares owned after the offering (2) Percentage of shares owned after the offering (2)(3) TQA Master Plus Fund, Ltd.(24) 1,255,000 1,255,0000 0 + Zurich Institutional Benchmarks Master Fund Ltd.(25) 640,000 640,000 0 + MSS Convertible Arbitrage I Fund (26) 45,000 45,000 0 + LDG Limited(27) 353,000 353,000 0 + ADI Alternative Investments c/o Axix Pan(28) 1,000,000 1,000,000 0 + ADI Alternative Investments c/o Kallista Master Fund Limited(29) 8,000,000 8,000,000 0 + ADI Alternative Investments(30) 7,000,000 7,000,000 0 + ADI Alternative Investments c/o Casam ADI CB Arbitrage(31) 4,000,000 4,000,000 0 + Plexus Fund Limited(32) 23,000,000 23,000,000 0 + Royal Bank of Canada(33) 3,000,000 3,000,000 * 0 + + Less than 1%. * The Selling Stockholders identified with this symbol have identified that they are, or are affiliates of, registered broker-dealers. These Selling Stockholders have represented that they acquired their securities in the ordinary course of business and in the open market, and, at the time of the acquisition of the securities, had no agreements or understandings, directly or indirectly, with any person to distribute the securities. To the extent that we become aware that any such Selling Stockholder did not acquire its securities in the ordinary course of business or did have such an agreement or understanding, we will file a post-effective amendment to the registration statement of which this prospectus is a part to designate such person as an “underwriter” within the meaning of the Securities Act of 1933. (1) Represents the maximum number of common shares issuable in exchange for all of the Selling Stockholder’s notes, based on the initial conversion rate of 19.6356 of our common shares per $1,000 principal amount at maturity of the notes.This conversion rate is, however, subject to adjustment. As a result, the number of our common shares issuable upon conversion of the notes may increase or decrease in the future. (2) Assumes the Selling Stockholder sells all of its shares of Common Stock offered pursuant to this prospectus. (3) Based on a total of 45,378,060 shares of Common Stock outstanding as of March 20, 2007. (4) Vicis Capital LLC is the investment manager of Vicis Capital Master Fund. Shad Stastney, Sky Lucas and John Succo control Vicis Capital LLC but disclaim beneficial ownership of the shares owned by Vicis Capital Master Fund. (5) The Registered Securities are under the total control of KBC Financial Products USA Inc. KBC Financial Products USA Inc. is a direct wholly-owned subsidiary of KBC Financial Holdings, Inc., which in turn is a direct wholly-owned subsidiary of KBC Bank N,V., which in turn is a direct wholly-owned subsidiary of KBC Group, N.V., a publicly held entity. (6) JMG Capital Partners, L.P. is a California limited partnership. Its general partner is JMG Capital Management, LLC, a Delaware limited liability company and an investment advisor that has voting and dispositive power over JMG Capital Partners, L.P.’s investments, including the Registered Securities. The equity interests of JMG Capital Management, LLC are owned by JMG Capital Management, Inc., a California corporation and Asset Alliance Holding Corp., a Delaware corporation. Jonathon M. Glaser is the Executive Officer and Director of JMG Capital Management, Inc. and has sole investment discretion over JMG Capital Partners, L.P.’s portfolio holdings. (7) JMG Triton Offshore Fund, Ltd. is an international business company organized under the laws of the British Virgin Islands. JMG Triton Offshore Fund, Ltd.’s investment manager is Pacific Assets Management, LLC, a Delaware limited liability company that has voting and dispositive power over JMG Triton Offshore Fund, Ltd.’s investments, including the Registered Securities. The equity interests of Pacific Assets Management, LLC are owned by Pacific Capital Management, Inc., a California corporation and Asset Alliance Holding Corp., a Delaware corporation. The equity interests of Pacifica Capital Management, Inc. are owned by Messrs. Roger Richter, Jonathon M. Glaser and Daniel A. David. Messrs. Glaser and Richter have sole investment discretion over JMG Triton Offshore Fund, Ltd.’s portfolio holdings. (8) Nathanial Brown and Robert Richardson are the controlling persons of Argent Classic Convertible Arbitrage Fund, L.P. (9) Nathanial Brown and Robert Richardson are the controlling persons of Xavex Convertible Arbitrage 10 Fund. (10) Nathanial Brown and Robert Richardson are the controlling persons of Credit Agricole Structured Asset Management. (11) Nathanial Brown and Robert Richardson are the controlling persons of Argent Classic Convertible Arbitrage Fund II, L.P. 10 (12) CNH Partners, LLC is investment advisor of CNH CA Master Account L.P. and has sole voting and dispositive power over the Registered Securities. Investment principals for CNH Partners, LLC are Robert Krail, Mark Mitchell and Todd Pulvino. (13) The Bear Stearns Companies Inc., a publicly held entity, owns Arctos Partners Inc. and Bear, Stearns & Co. Inc., a broker/dealer. (14) The controlling person for Old Lane US Master Fund L.P. is Jonathan Barton. (15) The controlling person for Old Lane HMA Master Fund L.P. is Jonathon Barton. (16) The controlling person for Old Lane Cayman Master Fund L.P. is Jonathon Barton. (17) Global Capital Management, Inc. is a general partner of Merced Partners Limited Partnership. John Brandenborg and Michael Frey are Directors of Global Capital Management, Inc. Mr. Brandenburg and Mr. Frey each disclaim beneficial ownership of the Registered Securities. (18) Global Capital Management, Inc. is the general partner of EBF & Associates, L.P. which is the general partner of Hunter Capital Management, L.P., which is the investment manager of Tamarack International, Ltd. John Brandenborg and Michael Frey are Directors of Global Capital Management, Inc. Mr. Brandenburg and Mr. Frey each disclaim beneficial ownership of the Registered Securities. (19) DBAG London is an affiliate of Deutsche Bank Securities Inc, a publicly held entity. Patrick Corrigan has dispositive power over the DBAG London shares. (20) Marathon Asset Management, LLC, the investment advisor for Marathon Global Convertible Master Fund, Ltd., exercises voting power and investment control over any Registered Securities. Bruce Richards and Louis Hanover are the Managing Members of Marathon Asset Management, LLC. (21) Alan Smith, Blair Gauld, Dennis Hunter, Karla Bolden and Jim Rogers are the Directors of CQS Convertible and Quantitative Strategies Master Fund Limited. (22) PNC Equity Securities LLC is a subsidiary of The PNC Financial Services Group, Inc., a publicly held entity. (23) TQA Investors, LLC, an SEC registered investment adviser for TQA Master Fund, Ltd., has sole investment power and shared voting power over any Registered Securities. The principals are Robert Butman, John Idone, Paul Bucci, George Esser, Bartholomew Tesoriero, DJ Langis and Andrew Anderson. (24) TQA Investors, LLC, an SEC registered investment adviser for TQA Master Plus Fund Ltd., has sole investment power and shared voting power over any Registered Securities. The principals are Robert Butman, John Idone, Paul Bucci, George Esser, Bartholomew Tesoriero, DJ Langis and Andrew Anderson. (25) TQA Investors, LLC, an SEC registered investment adviser for Zurich Institutional Benchmarks Master Fund Ltd. c/o TQA Investors, LLC, has sole investment power and shared voting power over any Registered Securities. The principals are Robert Butman, John Idone, Paul Bucci, George Esser, Bartholomew Tesoriero, DJ Langis and Andrew Anderson. (26) TQA Investors, LLC, an SEC registered investment adviser for MSS Convertible Arbitrage 1 Fund c/o TQA Investors, LLC, has sole investment power and shared voting power over any Registered Securities. The principals are Robert Butman, John Idone, Paul Bucci, George Esser, Bartholomew Tesoriero, DJ Langis and Andrew Anderson. (27) TQA Investors, LLC, the investment adviser for LDG Limited, has sole investment power and shared voting power over any Registered Securities. The principals are Paul Bucci, Steven Potamis, Darren Langis & Andrew Anderson. (28) Patrick Hobin, Makrem Boumlouka, Erich Bonnet, Alain Reinhold and Christopher Lepistle are the controlling persons of ADI Alternative Investments c/o Axix Pan. 11 (29) Patrick Hobin, Makrem Boumlouka, Erich Bonnet, Alain Reinhold and Christopher Lepistle are the controlling persons of ADI Alternative Investments c/o Kallista Master Fund Limited. (30) Patrick Hobin, Makrem Boumlouka, Erich Bonnet, Alain Reinhold and Christopher Lepistle are the controlling persons of ADI Alternative Investments. (31) Patrick Hobin, Makrem Boumlouka, Erich Bonnet, Alain Reinhold and Christopher Lepistle are the controlling persons of ADI Alternative Investments c/o Casam ADI CB Arbitrage. (32) Dermot Keane is the controlling person of Plexus Fund Limited. (33) Royal Bank of Canada is a subsidiary of RBC Capital Markets Corp., a publicly held entity. ** Additional Selling Stockholders not named in this prospectus will be not be able to use this prospectus for resales until they are named in the Selling Stockholder table by prospectus supplement, post-effective amendment or other filing. Transferees, successors and donees of identified Selling Stockholders will not be able to use this prospectus for resales until they are named in the Selling Stockholders table by prospectus supplement, post-effective amendment or other filing. 12 PLAN OF DISTRIBUTION This prospectus relates to the offer and sale from time to time of Registered Shares by the holders thereof. The Company is registering the Registered Shares for sale to provide the holders thereof with freely tradable securities, but the registration of such shares does not necessarily mean that any of such shares will be issued by the Company or offered or sold by the Selling Stockholders. The Selling Stockholders may, from time to time, offer the Registered Shares in one or more transactions (which may involve crosses or block transactions) on the NYSE or otherwise, in secondary distributions pursuant to and in accordance with the rules of the NYSE, in the over-the-counter market, in negotiated transactions, through the writing of options on the Registered Shares (whether such options are listed on an options exchange or otherwise), or a combination of such methods of sale, at fixed prices, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In addition, any Registered Shares that qualify for sale under Rule 144 under the Securities Act may be sold under that rule rather than pursuant to this prospectus. The Selling Stockholders may effect such transactions by selling Registered Shares to or through broker-dealers or through other agents, and such broker-dealers or agents may receive compensation in the form of commissions from the Selling Stockholders and/or the purchasers of Registered Shares for whom they may act as agent. The Selling Stockholders and any agents or broker-dealers that participate in the distribution of Registered Shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commissions received by them and any profit on the sale of Registered Shares may be deemed to be underwriting commissions or discounts under the Securities Act. In the event of a “distribution” of the Registered Shares, Selling Stockholders, any selling broker-dealer or agent and any “affiliated purchasers” may be subject to Regulation M under the Exchange Act, which would prohibit, with certain exceptions, each such person from bidding for or purchasing any security which is the subject of such distribution until his participation in that distribution is completed. In addition, Regulation M under the Exchange Act prohibits certain “stabilizing bids” or “stabilizing purchases” for the purpose of pegging, fixing or stabilizing the price of Common Stock in connection with this offering. At a time a particular offer of Registered Shares is made, a prospectus supplement, if required, will be distributed that will set forth the name or names of any dealers or agents and any commissions and other terms constituting compensation from the Selling Stockholders and any other required information. The Registered Shares may be sold from time to time at varying prices determined at the time of sale or at negotiated prices. In order to comply with the securities laws of certain states, if applicable, the Registered Shares, may be sold only through registered or licensed brokers or dealers or, if required, an exemption from issuer-dealer registration is perfected. Pursuant to the registration rights agreement for the benefit of the Selling Stockholders, the Company has agreed to pay all expenses of effecting the registration of the Registered Shares offered hereby (in each case, other than underwriting discounts and commissions, fees and disbursements of accountants representing the holder and certain transfer taxes, if any) and has agreed to indemnify each holder of such Registered Shares and its officers and directors and any person who controls any holder against certain losses, claims, damages and expenses arising under the securities laws. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain material U.S. federal income tax consequences of the ownership and disposition of our common stock and of our qualification and taxation as a REIT. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations and administrative and judicial interpretations thereof, all as in effect as of the date of this prospectus, and all of which are subject to change, possibly with retroactive effect. This discussion does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to investors subject to special treatment under the U.S. federal income tax laws, such as dealers in securities, insurance companies, tax-exempt entities (except as described herein), expatriates, persons subject to the alternative minimum tax, financial institutions and partnerships or other pass-through entities. This section applies only to purchasers of common stock who hold such stock as capital assets within the meaning of Section 1221 of the Code. Prospective stockholders should consult their tax advisors with respect to the U.S. federal income tax consequences of holding and disposing of our common stock in light of their particular situations and any consequences to them arising under other federal tax laws (such as estate and gift tax laws) and the laws of any state, local or non-U.S. jurisdiction. 13 As used herein, the term “U.S. stockholder” means a holder of common stock that for U.S. federal income tax purposes is: • an individual citizen or resident of the United States, • a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof, • an estate whose income is subject to U.S. federal income taxation regardless of its source, or • a trust if a U.S. court is able to exercise primary supervision over the administration of that trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or it has a valid election in place to be treated as a U.S. person. As used herein, the term “non-U.S. stockholder” means a holder of our common stock that for U.S. federal income tax purposes is either a nonresident individual alien or a corporation, estate or trust that is not a U.S. stockholder. The U.S. federal income tax treatment of a partner in a partnership holding common stock will depend on the activities of the partnership and the status of the partner. A partner in such partnership should consult its own tax advisor regarding the federal income treatment to the partner of such partnership holding our common stock. Taxable U.S. Stockholders Distributions. Except as discussed below, so long as we qualify for taxation as a REIT, distributions with respect to our common stock made out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be includible by a U.S. stockholder as ordinary income. None of these distributions will be eligible for the dividends received deduction for a corporate stockholder. Distributions in excess of current and accumulated earnings and profits will not be taxable to a U.S. stockholder to the extent that they do not exceed the adjusted tax basis of the holder’s common stock (as determined on a share by share basis), but rather will be treated as a return of capital and reduce the adjusted tax basis of such common stock. To the extent that such distributions exceed the adjusted tax basis of a U.S. stockholder’s common stock, they will be included in income as long-term capital gain if the stockholder has held its shares for more than one year and otherwise as short-term capital gain. Any dividend declared by us in October, November or December of any year payable to a stockholder of record on a specified date in any such month shall be treated as both paid by us and received by the stockholder on December 31 of such year, provided that the dividend is actually paid by us during January of the following calendar year. Dividends paid to a U.S. stockholder generally will not qualify for the 15% tax rate applicable to “qualified dividend income.” Qualified dividend income generally includes dividends paid by domestic C corporations and certain qualified foreign corporations to most noncorporate U.S. stockholders. Because we are not generally subject to U.S. federal income tax on the portion of our REIT taxable income that we distribute to our stockholders, our dividends generally will not be eligible for the 15% tax rate (for years through 2010) on qualified dividend income. As a result, our ordinary REIT dividends will continue to be taxed at the higher tax rate applicable to ordinary income. Currently, the highest marginal individual income tax rate on ordinary income is 35%. However, the 15% tax rate for qualified dividend income will apply to our ordinary REIT dividends, if any, that are (i) attributable to dividends received by us from non-REIT corporations, such as our taxable REIT subsidiaries, or (ii) attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income, a U.S. stockholder must hold our stock (with risk of loss) for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our stock becomes ex-dividend and must satisfy certain other conditions. Distributions that are designated as capital gain dividends will generally be taxed as long-term capital gains (to the extent they do not exceed our actual net capital gain for the taxable year) without regard to the period for which the holder has held our common stock. However, corporate holders may be required to treat up to 20% of certain capital gain dividends as ordinary income. We may elect to retain and pay income tax on our net capital gain received during the taxable year. If we so elect for a taxable year, our U.S. stockholders would include in income as long-term capital gains their proportionate share of such portion of our undistributed net capital gains for the taxable year as we may designate. A U.S. stockholder would be deemed to have paid its share of the tax paid by us on such undistributed net capital gain, which would be credited or refunded to the stockholder. The U.S. stockholder’s basis in our common stock would be increased by the amount of undistributed net capital gain included in such U.S. stockholder’s income, less the capital gains tax paid by us. 14 Except as noted below, the maximum tax rate on long-term capital gain applicable to non-corporate taxpayers is 15% for sales and exchanges of assets held for more than one year occurring in tax years beginning on or before December 31, 2010. The maximum tax rate on long-term capital gain from the sale or exchange of “section 1250 property,” or depreciable real property, is 25% to the extent that such gain would have been treated as ordinary income if the property were “section 1245 property” (i.e., to the extent of depreciation recapture). With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is taxable to our non-corporate U.S. stockholders at a 15% or 25% tax rate. Thus, the tax rate differential between capital gain and ordinary income for non-corporate taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount of $3,000. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years. Stockholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, such losses would be carried over by us for potential offset against our future income (subject to certain limitations). Taxable distributions from us and gain from the disposition of common stock will not be treated as passive activity income and, therefore, stockholders generally will not be able to apply any “passive activity losses” (such as losses from certain types of limited partnerships in which the stockholder is a limited partner) against such income. In addition, taxable distributions from us generally will be treated as investment income for purposes of the investment interest limitations. Capital gains from the disposition of common stock (or distributions treated as such) will be treated as investment income only if the stockholder so elects, in which case such capital gains will be taxed at ordinary income rates. We will notify stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute each of (i) distributions taxable at ordinary income tax rates, (ii) capital gains dividends, (iii) qualified dividend income, if any, and (iv) returns of capital. Sale or Exchange of Common Stock. Upon the sale, exchange or other taxable disposition of common stock to or with a person other than us, a stockholder generally will recognize gain or loss equal to the difference between (i) the amount of cash and the fair market value of any property received (less any portion thereof attributable to accumulated and declared but unpaid dividends, which will be taxable as a dividend to the extent of our current and accumulated earnings and profits attributable thereto) and (ii) the stockholder’s adjusted tax basis in such stock. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such stock has been held for more than one year. In general, any loss upon a sale or exchange of common stock by a holder who has held such stock for six months or less (after applying certain holding period rules) will be treated by such holder as long-term capital loss to the extent of distributions from us required to be treated by such stockholder as long-term capital gain. All or a portion of any loss realized upon a taxable disposition of common stock may be disallowed if substantially identical stock is purchased within 30 days before or after the disposition. Information Reporting and Backup Withholding. Information reporting (to the IRS) will apply to dividends paid on our common stock (and the amount of tax withheld, if any) and to the proceeds received from the sale or other disposition of our common stock. Under the back-up withholding rules, a stockholder may be subject to backup withholding tax at a current rate of 28% (subject to increase to 31% after 2010) with respect to dividends paid and with respect to any proceeds for the sale or other disposition of common stock unless such stockholder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact or (b) provides a taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules. A stockholder that does not provide us with its correct taxpayer identification number may also be subject to penalties imposed by the Service. Any amount paid as backup withholding will be creditable against such stockholder’s U.S. federal income tax liability, and may entitle such stockholder to a refund, provided the stockholder timely furnishes the required information to the Internal Revenue Service. Tax-Exempt U.S. Stockholders Distributions by us to a tax-exempt U.S. stockholder generally should not constitute unrelated business taxable income (“UBTI”) provided that (i) the U.S. stockholder has not financed the acquisition of its common stock with “acquisition indebtedness” within the meaning of the Code and (ii) our common stock is not otherwise used in an unrelated trade or business of such tax-exempt U.S. stockholder. 15 Notwithstanding the preceding paragraph, under certain circumstances, qualified trusts that hold more than 10% (by value) of our shares of stock may be required to treat a certain percentage of dividends as UBTI. This requirement will only apply if we are treated as a “pension-held REIT.” The restrictions on ownership of shares of stock in our Articles of Incorporation should prevent us from being treated as a pension-held REIT, although there can be no assurance that this will be the case. Non-U.S. Stockholders The following discussion addresses the rules governing the U.S. federal income taxation of the ownership and disposition of common stock by non-U.S. stockholders. These rules are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S. federal income taxation and does not address U.S. estate and gift tax consequences or state, local or foreign tax consequences that may be relevant to a non-U.S. stockholder in light of its particular circumstances. Distributions. Distributions to a non-U.S. Stockholder that are neither attributable to gain from sales or exchanges by us of “U.S. real property interests” nor designated as capital gains dividends will be treated as dividends of ordinary income to the extent that they are made out of current or accumulated earnings and profits. These distributions ordinarily will be subject to withholding of U.S. federal income tax on a gross basis at a rate of 30%, or a lower rate as permitted under an applicable income tax treaty, unless the dividends are treated as effectively connected with the conduct by the non-U.S. stockholder of a U.S. trade or business. Under some treaties, however, lower withholding rates generally applicable to dividends do not apply to dividends from REITs. Applicable certification and disclosure requirements must be satisfied to be exempt from withholding under the effectively connected income exemption. Dividends that are effectively connected with a trade or business generally will be subject to tax on a net basis, that is, after allowance for deductions, at graduated rates, in the same manner as U.S. stockholders are taxed with respect to these dividends, and are generally not subject to withholding. Any dividends received by a corporate non-U.S. stockholder that is engaged in a U.S. trade or business also may be subject to an additional branch profits tax at a 30% rate, or lower applicable treaty rate. Distributions in excess of current and accumulated earnings and profits that exceed the non-U.S. Stockholder’s adjusted tax basis in its common stock (as determined on a share by share basis) will be taxable to a non-U.S. stockholder as gain from the sale of common stock, which is discussed below. Distributions in excess of current or accumulated earnings and profits that do not exceed the adjusted tax basis of the non-U.S. stockholder in its common stock will reduce the non-U.S. stockholder’s adjusted tax basis in its common stock and will not be subject to U.S. federal income tax, but will be subject to U.S. withholding tax as described below. We expect to withhold U.S. income tax at the rate of 30% on any ordinary dividend distributions (including distributions that later may be determined to have been in excess of current and accumulated earnings and profits) made to a non-U.S. stockholder unless: (i) a lower treaty rate applies and the non-U.S. stockholder files an IRS Form W-8BEN evidencing eligibility for that reduced treaty rate; or (ii) the non-U.S. stockholder files an IRS Form W-8ECI claiming that the distribution is income effectively connected with the non-U.S. stockholder’s trade or business. We may be required to withhold at least 10% of any distribution in excess of our current and accumulated earnings and profits, even if a lower treaty rate applies and the non-U.S. stockholder is not liable for tax on the receipt of that distribution. Moreover, because of the uncertainty in estimating earnings and profits, we may chose to withhold 30% on all distributions. However, a non-U.S. stockholder may seek a refund of these amounts from the IRS if the non-U.S. stockholder’s U.S. tax liability with respect to the distribution is less than the amount withheld. Distributions to a non-U.S. stockholder that are designated at the time of the distribution as capital gain dividends, other than those arising from the disposition of a U.S. real property interest, generally should not be subject to U.S. federal income taxation unless: (i) the investment in our stock is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder generally will be subject to the same treatment as U.S. stockholders with respect to any gain, except that a stockholder that is a foreign corporation also may be subject to the 30% branch profits tax, as discussed above, or (ii) the non-U.S. stockholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual’s capital gains. Except as hereinafter discussed, under FIRPTA, distributions to a non-U.S. stockholder that are attributable to gain from sales or exchanges by us of U.S. real property interests, whether or not designated as a capital gain dividend, will cause the non-U.S. stockholder to be treated as recognizing gain that is income effectively connected with a U.S. trade or business. Non-U.S. stockholders generally will be taxed on this gain at the same rates applicable to U.S. stockholders, subject to a special alternative minimum tax in the case of nonresident alien individuals. Also, this gain may be subject to a 30% branch profits tax in the hands of a non-U.S. stockholder that is a corporation. However, even if a distribution is attributable to a sale or exchange of U.S. real property interests, the distribution will not be treated as gain recognized from the sale or exchange of U.S. real property interests, but as an ordinary dividend subject to the general withholding regime discussed above, if 16 (i) the distribution is made with respect to a class of stock that is considered regularly traded under applicable Treasury Regulations on an established securities market located in the United States, such as the New York Stock Exchange; and (ii) the stockholder owns 5% or less of that class of stock at all times during the one-year period ending on the date of the distribution. We will be required to withhold and remit to the IRS 35% of any distributions to non-U.S. stockholders that are, or, if greater, could have been, designated as capital gain dividends and are attributable to gain recognized from the sale or exchange of U.S. real property interests. Distributions can be designated as capital gains to the extent of our net capital gain for the taxable year of the distribution. The amount withheld, which for individual non-U.S. stockholders may substantially exceed the actual tax liability, is creditable against the non-U.S. stockholder’s U.S. federal income tax liability and is refundable to the extent such amount exceeds the non-U.S. stockholder’s actual U.S. federal income tax liability, and the non-U.S. stockholder timely files an appropriate claim for refund. Retention of Net Capital Gains. Although the law is not clear on the matter, it appears that amounts designated as undistributed capital gains in respect of the common stock held by U.S. stockholders generally should be treated with respect to non-U.S. stockholders in the same manner as actual distributions by the Company of capital gain dividends. Under that approach, the non-U.S. stockholders would be able to offset as a credit against their U.S. federal income tax liability resulting therefrom an amount equal to their proportionate share of the tax paid by us on the undistributed capital gains, and to receive from the IRS a refund to the extent their proportionate share of this tax paid were to exceed their actual U.S. federal income tax liability, and the non-U.S. stockholder timely files an appropriate claim for refund. Sale of Common Stock. Gain recognized by a non-U.S. stockholder upon the sale, exchange or other taxable disposition of our common stock generally will not be subject to or implicate U.S. taxation unless: (i) the investment in our common stock is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder generally will be subject to the same treatment as domestic stockholders with respect to any gain and a non-U.S. stockholder that is a corporation may be subject to a 30% branch profits tax; (ii) the non-U.S. stockholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a tax home in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual’s net capital gains for the taxable year; (iii) our common stock constitutes a U.S. real property interest within the meaning of FIRPTA, as described below; or (iv) our common stock is disposed of in a “wash sale” by a person owning more than 5% of the common stock. Whether Common Stock Is a U.S. Real Property Interest. Our common stock will not constitute a U.S. real property interest if we are a domestically controlled REIT. We will be a domestically controlled REIT if, at all times during a specified testing period, less than 50% in value of our stock is held directly or indirectly by non-U.S. stockholders. We believe that, currently, we are a domestically controlled REIT and, therefore, that the sale of our common stock would not be subject to taxation under FIRPTA. Because the FIRT common stock is publicly traded, however, FIRT cannot guarantee that it is or will continue to be a domestically controlled REIT. Even if FIRT does not qualify as a domestically controlled REIT at the time a non-U.S. stockholder sells our common stock, gain arising from the sale still would not be subject to FIRPTA tax if: (i) our common is considered regularly traded under applicable Treasury regulations on an established securities market, such as the New York Stock Exchange; and (ii) the selling non-U.S. stockholder owned, actually or constructively, 5% or less in value of our common stock throughout the five-year period ending on the date of the sale or exchange. If gain on the sale or exchange of our common stock were subject to taxation under FIRPTA, the non-U.S. stockholder would be subject to regular U.S. income tax with respect to any gain in the same manner as a taxable U.S. stockholder, subject to any applicable alternative minimum tax and special alternative minimum tax in the case of nonresident alien individuals. Wash Sales. In general, a wash sale of common stock occurs if a stockholder owning more than 5% of the shares of a domestically controlled REIT (at any time during the one-year period preceding the taxable distribution discussed in this paragraph) avoids a taxable distribution of gain recognized from the sale or exchange of U.S. real property interests by selling common stock before the ex-dividend date of the distribution and then, within a designated period, acquires or enters into an option or contract to acquire common stock. If a wash sale occurs, then the seller/repurchaser will be treated as having gain recognized from the sale or exchange of U.S. real property interests in the same amount as if the avoided distribution had actually been received. 17 Information Reporting and Backup Withholding. Information reporting (to the Internal Revenue Service) will apply to dividends paid on our common stock (and the amount of tax withheld, if any) and to the proceeds of a sale or other disposition of our common stock. Backup withholding tax, at a current rate of 28% (subject to increase to 31% after 2010) generally will not apply to payments of dividends made by us or our paying agents to a non-U.S. stockholder or to the proceeds of a sale or other disposition of our common stock if the holder has provided the required certification that it is not a U.S. person (generally a properly-executed IRS Form W-8BEN). Taxation of the Company as a REIT This section is a summary of the material U.S. federal income tax matters of general application pertaining to REITs under the Code. This discussion is based upon current law, which is subject to change, possibly on a retroactive basis. The provisions of the Code pertaining to REITs are highly technical and complex and sometimes involve mixed questions of fact and law. This section does not discuss U.S. federal estate or gift taxation or state, local or foreign taxation. In the opinion of Cahill Gordon & Reindel LLP: • commencing with our taxable year ended December 31, 1994, we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and • our current and proposed method of operation (as represented by us to Cahill Gordon & Reindel LLP in a written certificate) will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code. Cahill Gordon & Reindel LLP’s opinion is based on various assumptions and is conditioned upon certain representations made by us as to factual matters with respect to us and certain partnerships, limited liability companies and corporations through which we hold substantially all of our assets, including an assumption that, if we ultimately were found not to have satisfied the gross income requirements of the REIT provisions as a result of certain development agreements entered into by us between 2000 and 2003, or as a result of certain joint venture fee income derived in 2006, such failure was due to reasonable cause and not due to willful neglect. Moreover, our qualification and taxation as a REIT depends upon our ability to meet, as a matter of fact, through actual annual operating results, distribution levels, diversity of stock ownership and various other qualification tests imposed under the Code discussed below, the results of which will not be reviewed by Cahill Gordon & Reindel LLP. No assurance can be given that the actual results of our operations for any particular taxable year will satisfy those requirements. To qualify as a REIT under the Code for a taxable year, we must meet certain organizational and operational requirements, which generally require us to be a passive investor in real estate and to avoid excessive concentration of ownership of our capital stock. Generally, at least 75% of the value of our total assets at the end of each calendar quarter must consist of real estate assets, cash or governmental securities. We generally may not own securities possessing more than 10% of the total voting power, or representing more than 10% of the total value, of the outstanding securities of any issuer, and the value of any one issuer’s securities may not exceed 5% of the value of our assets. Shares of qualified REITs, qualified temporary investments and shares of certain wholly owned subsidiary corporations known as “qualified REIT subsidiaries” and “taxable REIT subsidiaries” are exempt from these prohibitions. We hold assets through certain qualified REIT subsidiaries and taxable REIT subsidiaries. In the opinion of Cahill Gordon & Reindel LLP, based on certain factual representations, these holdings do not violate the prohibitions in the REIT provisions on ownership of securities. The 10% and 5% limitations described above will not apply to the ownership of securities of a taxable REIT subsidiary. A REIT may own up to 100% of the securities of a taxable REIT subsidiary subject only to the limitations that the aggregate value of the securities of all taxable REIT subsidiaries owned by the REIT does not exceed 20% of the value of the assets of the REIT, and the aggregate value of all securities owned by the REIT (including the securities of all taxable REIT subsidiaries, but excluding governmental securities) does not exceed 25% of the value of the assets of the REIT. A taxable REIT subsidiary generally is any corporation (other than another REIT and corporations involved in certain lodging, healthcare, franchising and licensing activities) owned by a REIT with respect to which the REIT and such corporation jointly elect that such corporation shall be treated as a taxable REIT subsidiary. For each taxable year, at least 75% of a REIT’s gross income must be derived from specified real estate sources and 95% must be derived from such real estate sources plus certain other permitted sources. Real estate income for purposes of these requirements includes • gain from the sale of real property not held primarily for sale to customers in the ordinary course of business, • dividends on REIT shares, • interest on loans secured by mortgages on real property, • certain rents from real property and • certain income from foreclosure property. 18 For rents to qualify, they may not be based on the income or profits of any person, except that they may be based on a percentage or percentages of gross receipts. Also, subject to certain limited exceptions, the REIT may not manage the property or furnish services to tenants except through an independent contractor which is paid an arm’s-length fee and from which the REIT derives no income. However, a REIT may render a de minimis amount of otherwise impermissible services to tenants, or in connection with the management of property, without causing any income from the property (other than the portion of the income attributable to the impermissible services) to fail to qualify as rents from real property. In addition, a taxable REIT subsidiary may provide certain services to tenants of the REIT, which services could not otherwise be provided by the REIT or the REIT’s other subsidiaries. Substantially all of our assets are held through certain partnerships. In general, in the case of a REIT that is a partner in a partnership, applicable regulations treat the REIT as holding directly its proportionate share of the assets of the partnership and as being entitled to the income of the partnership attributable to such share based on the REIT’s proportionate share of such partnership capital. We must satisfy certain ownership restrictions that limit the concentration of ownership of our capital stock and the ownership by us of our tenants. Our outstanding capital stock must be held by at least 100 stockholders during at least 335 days of a taxable year or during a proportionate part of a taxable year of less than 12 months. No more than 50% in value of our outstanding capital stock, including in some circumstances capital stock into which outstanding securities might be converted, may be owned actually or constructively by five or fewer individuals or certain entities at any time during the last half of any taxable year. Accordingly, our articles of incorporation contain certain restrictions regarding the transfer of our common stock, preferred stock and any other outstanding securities convertible into stock when necessary to maintain our qualification as a REIT under the Code. However, because the Code imposes broad attribution rules in determining constructive ownership, no assurance can be given that the restrictions contained in our articles of incorporation will be effective in maintaining our REIT qualification. See “Restrictions on Transfer of Capital Stock” above. So long as we qualify for taxation as a REIT, distribute at least 90% of our REIT taxable income, computed without regard to net capital gain or the dividends paid deduction, for each taxable year to our stockholders annually and satisfy certain other distribution requirements, we will not be subject to U.S. federal income tax on that portion of such income distributed to stockholders. We will be taxed at regular corporate rates on all income not distributed to stockholders. Our policy is to distribute at least 90% of our taxable income annually. We may elect to pass through to our stockholders on a pro rata basis any taxes paid by us on our undistributed net capital gain income for the relevant tax year. REITs also may incur taxes for certain other activities or to the extent distributions do not satisfy certain other requirements. Our failure to qualify during any taxable year as a REIT could have a material adverse effect upon our stockholders. If disqualified for taxation as a REIT for a taxable year, we also would be unable to elect to be taxed as a REIT for the next four taxable years, unless certain relief provisions were available. We would be subject to U.S. federal income tax at corporate rates on all of our taxable income and would not be able to deduct any dividends paid, which could have a material adverse effect on our business and could result in a discontinuation of or substantial reduction in dividends to stockholders. Should the failure to qualify as a REIT be determined to have occurred retroactively in one of our earlier tax years, the imposition of a substantial U.S. federal income tax liability on us attributable to any nonqualifying tax years could have a material adverse effect on our business and could result in a discontinuation of or substantial reduction in dividends to stockholders. In the event that we fail to meet certain gross income tests applicable to REITs, we may retain our qualification as a REIT if we pay a penalty tax equal to the amount by which 95% (or 90% for taxable years prior to 2005) or 75% of our gross income exceeds our gross income qualifying under the 95% or 75% gross income test, respectively (whichever amount is greater), multiplied by a fraction intended to reflect our profitability, so long as such failure was considered to be due to reasonable cause and not willful neglect and certain other conditions are satisfied. For taxable years after 2004, if we fail to meet the 5% or 10% asset tests applicable to REITs at the end of any quarter and do not cure such failure within 30 days thereafter, we may nonetheless retain our qualification as a REIT provided that the failure was due to assets the value of which did not exceed a specific statutory de minimis amount and certain other conditions are satisfied. For violations of any of the REIT asset tests not described in the preceding sentence, we may nonetheless retain our qualification as a REIT if we pay a tax equal to the greater of $50,000 or 35% of the net income generated by the non-qualifying assets, so long as any such failure was considered to be due to reasonable cause and not willful neglect and certain other conditions are satisfied. In addition, if we fail to satisfy certain requirements of the REIT provisions (other than the failures described above in the preceding sentences), we may nonetheless retain our qualification as a REIT if we pay a penalty of $50,000 for each such failure, so long as each such failure was considered to be due to reasonable cause and not willful neglect. Any such taxes or penalty amounts could have a material adverse effect on our business and could result in a discontinuation of or substantial reduction in dividends to stockholders. 19 FORWARD-LOOKING STATEMENTS This prospectus contains certain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for the purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects of the Company include, but are not limited to: • changes in economic conditions generally and the real estate market specifically, • legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), • availability of financing, • interest rate levels, • competition, • supply and demand for industrial properties in our current and proposed market areas, • potential environmental liabilities, • slippage in development or lease-up schedules, • tenant credit risks, • higher than expected costs, and • changes in general accounting principles, policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning us and our business, including additional factors that could materially affect our financial results, is included elsewhere in this prospectus and in the documents we incorporate by reference, including the Annual Report on Form 10-K of the Company for the year ended December 31, 2006. WHERE YOU CAN FIND MORE INFORMATION The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith, files reports and other information with the SEC. You may read and copy any of the Company’s reports and other materials filed with the SEC at the Public Reference Room of the SEC at treet, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. In addition, the SEC maintains a website that contains reports and other information regarding registrants that file electronically with the SEC at http://www.sec.gov. The Company’s common stock is listed on the NYSE and its filings with the SEC can also be inspected and copied at the offices of the NYSE at 20 Broad Street, New York, New York 10005. Whenever a reference is in made in this prospectus to any of our agreements or other documents, please be aware that the reference herein is only a summary and that you should refer to the exhibits that are part of the registration statement filed with the SEC on Form S-3 for a copy of such agreement or other document. 20 DOCUMENTS INCORPORATED BY REFERENCE We incorporate by reference information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus and more recent information automatically updates and supersedes more dated information contained or incorporated by reference in this prospectus. The Company (file no. 1-13102) filed the following documents with the SEC and incorporates them by reference into this prospectus: • Annual Report on Form 10-K for the year ended December 31, 2006, filed March 1, 2007. • Current Report on Form 8-K filed January 29, 2007. • Current Report on Form 8-K filed April 30, 2007. All documents filed by the Company under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this prospectus and made a part hereof from the date of the filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein (in the case of a previously filed document incorporated or deemed to be incorporated by reference herein) or in any other document subsequently filed with the SEC which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We will provide, without charge, to each person to whom this prospectus is delivered a copy of these filings upon written or oral request to First Industrial Realty Trust, Inc., 311 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606, Attention: Investor Relations, telephone number (312) 344-4300. EXPERTS The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K of First Industrial Realty Trust, Inc. for the year ended December 31, 2006 and the financial statements incorporated in this prospectus by reference to the First Industrial Realty Trust, Inc. Current Report on Form 8-K dated April 30, 2007, have been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Cahill Gordon & Reindel LLP, New York, New York. Cahill Gordon & Reindel LLP will rely as to all matters of Maryland law on the opinion of McGuireWoods LLP, Baltimore, Maryland. If counsel for any underwriter, dealer or agent passes on legal matters in connection with an offering made by this prospectus, we will name that counsel in the prospectus supplement relating to the offering. 21

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) September 15, 2011 Progenics Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 000-23143 13-3379479 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 777 Old Saw Mill River Road, Tarrytown, New York (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (914) 789-2800 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 8.01.Other Events. Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) today announced a series of strategic and operational changes centered around a strategic focus on oncology.The Company plans to increase financial and personnel resources for its existing PSMA ADC program, where it is conducting a phase 1 clinical trial of a proprietary fully human monoclonal antibody-drug conjugate (ADC) directed against prostate-specific membrane antigen (PSMA) for the treatment of prostate cancer, and its pre-clinical development work on novel multiplex phosphoinositide 3-kinase (PI3K) inhibitors for the treatment of cancer.Progenics will also seek to in-license complementary opportunities in the oncology space. The Company’s new strategic focus entails discontinuation and out-licensing of virology and infectious diseases programs, closure of its cGMP manufacturing facility, headcount reduction of approximately 26%, and an approximately $7.5million annual expense reduction.Progenics will continue to support as requested the efforts of its licensees, Salix Pharmaceuticals and Ono Pharmaceutical, to advance the global franchise for its first commercial product, RELISTOR® (methylnaltrexone bromide) subcutaneous injection, a first-in-class therapy for opioid-induced constipation. A copy of Progenics’ press release is included in this Report as Exhibit 99.1 and the information contained therein is incorporated into this Item 8.01 by this reference. Item 9.01.Financial Statements and Exhibits. (d) Exhibits Exhibit No.Description Press Release issued September 15, 2011. 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. PROGENICS PHARMACEUTICALS, INC. By:/s/ ROBERT A.

Nationwide Life Insurance Company: ·Nationwide Variable Account - II ·Nationwide Variable Account - 4 ·Nationwide Variable Account - 7 ·Nationwide Variable Account - 8 ·Nationwide Variable Account - 9 ·Nationwide Variable Account - 10 ·Nationwide Variable Account - 14 ·Nationwide VLI Separate Account - 2 ·Nationwide VLI Separate Account - 4 ·Nationwide VLI Separate Account - 6 ·Nationwide VLI Separate Account - 7 Nationwide Life and Annuity Insurance Company: ·Nationwide VL Separate Account - C ·Nationwide VL Separate Account - D ·Nationwide VL Separate Account – G ·Nationwide VA Separate Account – B Nationwide Life Insurance Company of America: ·Nationwide Provident VLI Separate Account 1 Nationwide Life and Annuity Insurance Company of America: ·Nationwide Provident VLI Separate Account A Prospectus supplement dated October 1, 2008 to Prospectus dated May 1, 2008 This supplement updates certain information contained in your prospectus.Please read it and keep it with your prospectus for future reference. Effective October 1, 2008, “Appendix A:Underlying Mutual Funds” is amended by adding OppenheimerFunds, Inc. as an additional Sub-adviser for the Nationwide Variable Insurance Trust - NVIT Multi-Manager Small Cap Growth Fund.

As filed with the Securities and Exchange Commission on August 28, 2009 File Nos. 333-92935 and 811-09729 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x Post-Effective Amendment No. 278 x and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x Amendment No. 278 x (Check appropriate box or boxes) iShares Trust (Exact Name of Registrant as Specified in Charter) c/o State Street Bankand Trust Company 200 Clarendon Street

EX-99.d.2 INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT, made by and between Academy Funds Trust, a Delaware statutory trust (the “Trust”), on behalf of the Innovator IBD 50® Fund (the “Fund”), and Innovator Management LLC, a Delaware limited liability company (the “Advisor”). W I T N E S S E T H: WHEREAS, the Trust has been organized and operates as an investment company registered under the Investment Company Act of 1940, as amended(the “1940 Act”) and engages in the business of investing and reinvesting its assets in securities and other investments; and WHEREAS, the Advisor is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engages in the business of providing investment management services; and WHEREAS, the Trust’s Board of Trustees (the “Board”) has selected the Advisor to serve as the investment adviser for the Fund; and WHEREAS, it is anticipated that there will be a change-in-control in the ownership structure of the Advisor (the “Transaction”) that will result in the automatic termination of the Advisor’s existing investment advisory agreement with the Trust, on behalf of the Fund, which agreement is dated as of January 2, 2015 (the “Existing Advisory Agreement”); and WHEREAS, in order to ensure the continuity of investment advisory services, the following agreement has been entered into between the Trust, on behalf of the Fund, and the Advisor. 1 NOW, THEREFORE, in consideration of the mutual covenants herein contained, the sufficiency of which is hereby acknowledged, and each of the parties hereto intending to be legally bound, it is agreed as follows: 1.The Trust, on behalf of the Fund, hereby employs the Advisor to manage the investment and reinvestment ofthe Fund’s assets, subject to the direction of the Board and the officers of the Trust, for the period and on the terms hereinafter set forth.The Advisor hereby accepts such employment and agrees during such period to render the services and assume the obligations herein set forth for the compensation herein provided.The Advisor shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise expressly provided and authorized, have no authority to act for or to represent the Trust or the Fund in any way, or in any way be deemed an agent of the Trust or the Fund.The Advisor shall regularly make decisions as to what securities to purchase and sell on behalf of the Fund and shall record and implement such decisions and shall furnish the Board with such information and reports regarding the Fund’s investments as the Advisor deems appropriate or as the Board may reasonably request.Subject to compliance with the requirements of the 1940 Act, the Advisor may retain as a sub-adviser to the Fund, at the Advisor’s own expense, any investment adviser registered under the Advisers Act. 2.The Trust, on behalf of the Fund, shall conduct its own business and affairs and shall bear the expenses and salaries necessary and incidental thereto including, but not in limitation of the foregoing, the costs incurred in: the maintenance of its corporate existence; the maintenance of its registration statement under applicable federal securities laws; preparation, filing and printing of its prospectus(es), statement of additional information and sales literature; 2 the maintenance of its compliance program; the compensation of its compliance officer(s); the maintenance of its own books, records and procedures; dealing with its own shareholders; the payment of dividends; transfer of stock, including issuance, redemption and repurchase of shares; preparation of share certificates; reports and notices to shareholders; calling and holding of shareholders’ meetings; miscellaneous office expenses; brokerage commissions; custodian fees; legal and accounting fees; and taxes.Members and employees of the Advisor may be trustees, officers or employees of the Trust.In the conduct of the respective businesses of the parties hereto and in the performance of this Agreement, the Trust may obtain office space and facilities from the Advisor and will reimburse the Advisor for its rent or other expenses thereby incurred. 3.(a)The Advisor shall place and execute Fund orders for the purchase and sale of portfolio securities with broker-dealers.Subject to the obtaining the best price and execution reasonably available, the Advisor is authorized to place orders for the purchase and sale of portfolio securities for the Fund with such broker-dealers as it may select from time to time.Subject to subparagraph (b) below, the Advisor is also authorized to place transactions with brokers who provide research or statistical information or analyses to the Fund, to the Advisor, or to any other client for which the Advisor provides investment advisory services.The Advisor also agrees that it will cooperate with the Trust to allocate brokerage transactions to brokers or dealers who provide benefits directly to the Fund; provided, however, that such allocation comports with applicable law including, without limitation, Rule 12b-1(h) under the 1940 Act. 3 (b)Notwithstanding the provisions of subparagraph (a) above and subject to such policies and procedures as may be adopted by the Board and officers of the Trust, the Advisor is authorized to cause the Fund to pay a member of an exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of an exchange, broker or dealer would have charged for effecting that transaction, in such instances where the Advisor has determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such member, broker or dealer, viewed in terms of either that particular transaction or the Advisor’s overall responsibilities with respect to the Fund and to other funds or clients for which the Advisor exercises investment discretion. (c)The Advisor is authorized to direct portfolio transactions to a broker that is an affiliated person of the Advisor or the Fund in accordance with such standards and procedures as may be approved by the Board in accordance with Rule 17e-1 under the 1940 Act, or other rules promulgated by the U.S. Securities and Exchange Commission (“SEC”).Any transaction placed with an affiliated broker must (i) be placed at best execution, and (ii) may not be a principal transaction. (d)The Advisor is authorized to aggregate or “bunch” purchase or sale orders for a Fund with orders for various other clients when it believes that such action is in the best interests of the Fund and all other such clients.In such an event, allocation of the securities purchased or sold will be made by the Advisor in accordance with the Advisor’s written policy. 4.(a)As compensation for the services to be rendered to the Fund by the Advisor under the provisions of this Agreement, the Trust on behalf of the Fund shall pay to the 4 Advisor from the Fund’s assets an annual fee (based on a percentage of average daily net assets) of 0.70%, payable on a monthly basis in arrears. (b)If this Agreement is terminated prior to the end of any calendar month, the management fee shall be prorated for the portion of any month in which this Agreement is in effect according to the proportion which the number of calendar days, during which the Agreement is in effect, bears to the number of calendar days in the month, and shall be payable within 10 days after the date of termination. (c)The Advisor shall look exclusively to the assets of the Fund for payment of the applicable advisory fee. 5.The services to be rendered by the Advisor to the Trust on behalf of the Fund under the provisions of this Agreement are not to be deemed to be exclusive, and the Advisor shall be free to render similar or different services to others so long as its ability to render the services provided for in this Agreement shall not be impaired thereby. 6.The Advisor, its members, employees and agents may engage in other businesses, may render investment advisory services to other investment companies, or to any other corporation, association, firm, entity or individual, and may render underwriting services to the Trust on behalf of the Fund or to any other investment company, corporation, association, firm, entity or individual.In accordance with the Advisers Act, if there is a change in the membership of the Advisor, which is a limited liability company, the Advisor shall, within a reasonable time after such change, notify the Trust and the Board of the change. 7.In the absence of willful misfeasance, bad faith, gross negligence orreckless disregard in the performance of its duties to the Fund, the Advisor shall not be liable to the Trust, 5 the Fund or to any Trustee or shareholder of the Trust or the Fund for any loss or damage arising from any action or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any investment or security, or otherwise. 8.(a)This Agreement shall become effective immediately upon the automatic termination of the Existing Advisory Agreement as a result of the closing of the Transaction.It shall continue in effect for a period of two years and may be renewed thereafter only so long as such renewal and continuance is specifically approved as required by the 1940 Act (currently, at least annually by the Board or by vote of a majority of the outstanding voting securities of the Fund and only if the terms and the renewal hereof have been approved by the vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval). (b)No amendment to this Agreement shall be effective unless the terms thereof have been approved as required by the 1940 Act (currently, by the vote of a majority of the outstanding voting securities of the Fund unless such shareholder approval would not be required under applicable interpretations by the staff of the SEC, and by the vote of a majority of Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval). (c)In connection with such renewal or amendment, it shall be the duty of the Board to request and evaluate, and the duty of the Advisor to furnish, such information as may be reasonably necessary to evaluate the terms of this Agreement and any amendment thereto. 6 (d)Notwithstanding the foregoing, this Agreement may be terminated by the Trust at any time, without the payment of a penalty, on sixty days’ written notice to the Advisor of the Trust’s intention to do so, pursuant to action by the Board or pursuant to a vote of a majority of the outstanding voting securities of the Fund.The Advisor may terminate this Agreement at any time, without the payment of penalty on sixty days’ written notice to the Trust of its intention to do so.Upon termination of this Agreement, the obligations of all the parties hereunder shall cease and terminate as of the date of such termination, except for any obligation to respond for a breach of this Agreement committed prior to such termination, and except for the obligation of the Trust to pay to the Advisor the fee provided in Paragraph 4 hereof.This Agreement shall automatically terminate in the event of its assignment unless the parties hereto, by agreement, obtain an exemption from the SEC from the provisions of the 1940 Act pertaining to the subject matter of this paragraph. 9.This Agreement shall extend to and bind the heirs, executors, administrators and successors of the parties hereto. 10.For the purposes of this Agreement, the terms “vote of a majority of the outstanding voting securities”; “interested persons”; and “assignment” shall have the meaning defined in the 1940 Act and the rules and interpretations thereunder. 11.(a)The Trust expressly agrees and acknowledges that the name "Innovator" is the sole property of the Advisor, and, with respect to such name, that similar names may from time to time be used by other funds in the investment business that are affiliated with the Advisor.The Advisor has consented to the use by the Trust of the identifying word "INNOVATOR" and has granted to the Trust a nonexclusive license to use the name "Innovator" 7 as part of the name of the Fund.Additionally, the “IBD®” mark has been licensed to the Advisor by Investor’s Business Daily® for use in connection with the Fund under certain circumstances.The Adviser, in turn, has sublicensed to the Fund its rights to use the mark pursuant to a Sublicense Agreement.The Trust expressly agrees and acknowledges that the licenses granted herein may be terminated by the Advisor if the Trust ceases to use the Advisor, an affiliate of the Advisor or their successors as investment adviser.In such event, the licenses granted herein may be revoked by the Advisorand the Trust shall cease using the name "Innovator" and “IBD®” as part of its Fund, unless otherwise consented to by the Advisor or any successor to its respective interests in such name. (b)The Trust further understands and agrees that so long as the Advisor and/or its affiliates shall continue to serve as the Trust's investment adviser, other mutual funds or other investment products that may be sponsored or advised by the Advisor and/or its affiliates shall have the right permanently to adopt and to use the words "Innovator" in their name and in the name of any series or class of shares of such funds or other investment products. 8 IN WITNESS WHEREOF, the parties hereto have this Agreement to be executed by their duly authorized officers as of this 7th day of April 2015. ACADEMY FUNDS TRUST By /s/ David Jacovini Name: David Jacovini Title: President INNOVATOR Management, LLC By: /s/ David Jacovini Name: David Jacovini Title: President 9

September 18, 2012 VIA FEDERAL EXPRESS United States Securities and Exchange Commission treet, NE Washington, D.C. 20549 Attention: Larry Spirgel Director of Divisions of Corporate Finance Re: Dolphin Digital Media, Inc.: Form 10-K for Fiscal year ending December 31, 2012 filed March 30, 2012.File Number: 0-50621/ Dear Mr. Spirgel: On behalf of Dolphin Digital Media, Inc. (the “Company”) in response to the letter of the Staff of the Securities and Exchange Commission dated September 4, 2012 we hereby advise you that we will able to respond to comments by September 28, 2012.Should you have any further questions do not hesitate to contact the undersigned.

  ASSET PURCHASE AGREEMENT   This ASSET PURCHASE AGREEMENT is made as of this 8th day of November, 2018 (this “Agreement”) by and among Vilacto Bio, Inc., a Nevada corporation (“Parent”), and Vilacto BioIP, LLC, a Nevada limited liability company and wholly owned subsidiary of Parent (together, “Purchaser”), on the one hand, and 9 Heroes APS, a Denmark corporation on behalf of itself and its Affiliates (as that term is defined below) (the “Seller”), on the other hand. Purchaser and Seller are “Parties.”   RECITALS   desires to sell to the Purchaser all of Seller’s rights, title and interest in and to the Assets (as hereinafter defined), all upon the terms and conditions     ARTICLE I CERTAIN DEFINITIONS   1.1 CERTAIN DEFINITIONS.   (a) The following terms, when used in this Agreement, shall have the respective   “ACTION” means any claim, action, suit, inquiry, hearing, investigation or other proceeding.   “AFFILIATE” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is controlled by or is “CONTROL” (including, with correlative meanings, the terms “Controlled by” and Contract or credit arrangement or otherwise.   “AGREEMENT” has the meaning set forth in the preamble hereto.   “ANCILLARY AGREEMENTS” means the Bill of Sale, the IP Assignment and the Lock-Up Agreement.   “ASSETS” has the meaning set forth in Section 2.1.   “BUSINESS DAY” means any day other than Saturday, Sunday or any day on which banks in Las Vegas, Nevada are required or authorized to be closed.   “CLOSING” has the meaning set forth in Section 3.1.   “CLOSING DATE” has the meaning set forth in Section 3.1.    1      “COMPETITIVE PRODUCT” means any product that competes directly with the use, potential use, or expected use of the Assets, or any part thereof, or with any product currently sold by Purchaser.   “CONTRACT” means any agreement, lease, debenture, note, bond, evidence of Indebtedness, mortgage, indenture, security agreement, option or other contract or commitment (whether written or oral).   “EXCLUDED ASSETS” has the meaning set forth in Section 2.3.   from time to time, consistently applied throughout the specified period and all prior comparable periods.   “GOVERNMENTAL ENTITY” means any government or political subdivision thereof, whether foreign or domestic, federal, state, provincial, county, local, municipal or regional, or any other governmental entity, any agency, authority, department, division or instrumentality of any such government, political subdivision or other governmental entity, any court, arbitral tribunal or arbitrator, and any nongovernmental regulating body, to the extent that the rules, regulations or orders of such body have the force of Law.   “INDEBTEDNESS” means, as to any Person: (i) all obligations, whether or not of such Person evidenced by notes, bonds, debentures, capitalized leases or similar instruments, (iii) all obligations of such Person representing the balance of deferred purchase price of property or services, (iv) all interest periodically or upon the happening of a contingency, (v) all indebtedness created or arising under any conditional sale or other title retention Contract remedies of the seller or lender under such Contract in the event of default are limited to repossession or sale of such property), (vi) all indebtedness secured or is non-recourse to the credit of such Person, and (vii) all indebtedness referred to in clauses (i) through (vi) above of any other Person that is guaranteed, directly or indirectly, by such Person.           “INTELLECTUAL PROPERTY” means: all (i) discoveries and inventions improvements thereto, and all United States, international, and foreign patents, patent applications (either filed or in preparation for filing), patent disclosures and statutory invention registrations, including all reissuances, divisions, continuations, continuations in part, extensions and reexaminations thereof, all rights therein provided by international treaties or conventions, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, and other source identifiers (whether or not registered) including all common law rights, all registrations and applications for registration (either filed or in preparation for filing) thereof, all rights therein provided by international treaties or conventions, and all renewals of any of the foregoing, (iii) all copyrightable works and copyrights (whether or not registered), all provided by international treaties or conventions, and all data and documentation relating thereto, (iv) confidential and proprietary information, trade secrets, know-how (whether patentable or nonpatentable and whether or not reduced to practice), processes and techniques, research and development information including patent and/or copyright searches conducted by Seller and/or any third party, ideas, technical data, designs, drawings and specifications, (v) Software, (vi) coded values, formats, data and historical or current databases, whether or not copyrightable, (vii) domain names, Internet websites or identities used or held for use by the Seller, (viii) other proprietary rights relating to any of the foregoing (including without limitation any and all associated goodwill and remedies against infringements jurisdictions), and (ix) copies and tangible embodiments of any of the foregoing.    2      “IP ASSIGNMENT” has the meaning set forth in Section 3.2(b).   “KNOWLEDGE” means the actual or constructive knowledge after due inquiry of any current officer or manager of the Seller.   “LAWS” means all laws, statutes, rules, regulations, ordinances and other subdivision or of any Governmental Entity.   “LIABILITY” means all Indebtedness, obligations and other Liabilities of a Person, whether absolute, accrued, contingent, fixed or otherwise, and whether due or to become due (including for Taxes).   “LIEN” means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, whether voluntary or involuntary (including any conditional sale Contract, title retention Contract or Contract committing to grant any of the foregoing).   “LOSS” means any and all damages, fines, fees, penalties, deficiencies, losses and expenses (including, without limitation, all interest, court costs, fees and   “MATERIAL ADVERSE EFFECT” means any material adverse effect on the condition, operations, business, prospects or results of sales of the Seller; PROVIDED, HOWEVER, that any adverse effect arising out of or resulting from the entering into of this Agreement or the consummation of the transactions contemplated hereby, shall be excluded in determining whether a Material Adverse Effect has occurred.   “ORDER” means any writ, judgment, decree, injunction or similar order of any Governmental Entity (in each case whether preliminary or final).   corporation, association, joint stock company, trust, estate, joint venture, unincorporated organization, Governmental Entity or any other entity of any kind.   “PURCHASE PRICE” has the meaning set forth in Section 2.1.   “PURCHASER” has the meaning set forth in the preamble hereto.   “REPRESENTATIVES” means, with respect to any Person, the directors, officers, managers, employees, counsel, accountants and other authorized representatives of such Person.   “SELLER” has the meaning set forth in the preamble hereto.   “SOFTWARE” means all computer software, including source code, object code, machine-readable code, HTML or other markup language, program listings, comments, user interfaces, menus, buttons and icons, web applications and all files, data, manuals, design notes, research and development documents, and other items and documentation related thereto or associated therewith.    3      “SOLVENT” means, with respect to the Seller, that (a) the Seller is able to pay its Liabilities, as they mature in the normal course of business, and (b) the fair value of the assets of the Seller is greater than the total amount of Liabilities of the Seller.   “TAX RETURNS” means all returns and reports (including elections, claims, declarations, disclosures, schedules, estimates, computations and information returns) required to be supplied to a tax authority in any jurisdiction relating to Taxes.   “TAXES” means all federal, state, local and foreign income, profits, franchise, license, social security, transfer, registration, estimated, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, nature whatsoever together with all interest, penalties, fines and additions to tax imposed with respect to such amounts and any interest in respect of such   “THIRD-PARTY CLAIM” has the meaning set forth in Section 7.2(a).   “TRANSFER TAXES” means all sales, use, value added, excise, registration, documentary, stamps, transfer, real property transfer, recording, gains, stock transfer and other similar Taxes and fees.   herein or unless the context otherwise requires: (i) words using the singular or references herein to “Articles,” “Sections,” “subsections” and other subdivisions without reference to a document are to the specified Articles, Sections, subsections and other subdivisions of this Agreement; (iii) a appears, and this rule shall also apply to other subdivisions within a Section or subsection; (iv) the words “herein,” “hereof,” “hereunder,” “hereby” and particular provision; and (v) the words “include,” “includes” and “including” are deemed to be followed by the phrase “without limitation.” All accounting to them under GAAP.   ARTICLE II   2.1 PURCHASE AND SALE OF ASSETS.   (a) At the Closing, as hereinafter defined, Purchaser shall pay Seller for the Assets (the “Purchase Price”) $3,360,000 USD, payable in 8% secured promissory note equal to $2,000,000 and the balance in common stock in Parent, consisting of eight million five hundred thousand (8,500,000) shares of Purchaser’s common stock (the “SHARES”), as of the Closing of this Agreement. The Shares shall be issued bearing a restrictive legend, titled and in denominations as shall be directed by Seller at Closing. The 8% secured promissory note shall be secured by the assets of Purchaser and convertible into common stock at the Purchaser’s market price.   (b) In consideration of the payment by the Purchaser of the Purchase Price, the Seller hereby agrees to sell, convey, transfer, assign, grant and deliver to the Purchaser, and the Purchaser hereby agrees to purchase, acquire and accept from the Seller, at the Closing, all of the Seller’s right, title and interest in and to all of the Assets, free and clear of all Liens. The Assets will be transferred and held in Vilacto BioIP, LLC. The term “ASSETS” means all Domain Names, websites and Intellectual Property of Seller as set forth on Schedule 4.6 attached hereto.    4      2.2 ASSUMPTION OF LIABILITIES. For greater certainty, the Purchaser assumes no Liabilities relating to the Assets of the Seller or the Seller’s business (including Tax Liabilities) except as are expressly set forth on Schedule 2.2.   2.3 EXCLUDED ASSETS. All other assets of Seller other than the Assets.   ARTICLE III THE CLOSING   3.1 CLOSING. The closing of the transactions contemplated hereby (the “CLOSING”) shall take place on November 8, 2018, at 11:59PM at the offices of the Purchaser (the “CLOSING DATE”).   3.2 DELIVERY OF ITEMS BY THE SELLER. The Seller shall deliver to the Purchaser at the Closing the items listed below:   (a) an Intellectual Property Assignment, duly executed by the Seller, in the form attached hereto as Exhibit A (the “IP ASSIGNMENT”);   (b) written letter of instructions to Purchaser, specifying the names and denominations in which the Shares are to be delivered, executed by all Sellers, together with tax identification numbers and mailing addresses for each recipient; and   (c) such other documents and instruments as the Purchaser may reasonably request.   3.3 DELIVERY OF ITEMS BY THE PURCHASER. The Purchaser shall deliver to the Seller at the Closing the items listed below:   (a)the $2,000,000 demand promissory note;   (b)the Shares; and   (b) such other documents and instruments as the Seller may reasonably request.   ARTICLE IV   As an inducement to the Purchaser to enter into this Agreement, Seller   4.1 AUTHORIZATION. The Seller has full power and authority to execute and deliver this Agreement and the Ancillary Agreements, as applicable, and to perform its obligations hereunder and thereunder. This Agreement and the Ancillary Agreements have been duly executed and delivered by the Seller and, assuming the due authorization, execution and delivery hereto and thereof by the Purchaser, constitute the valid and legally binding obligations of the Seller   4.2 BROKERS’ FEES. No agent, broker, finder, investment banker, financial Agreement on the basis of any act or statement made or alleged to have been made by the Seller, any of its Affiliates, or any investment banker, financial behalf of the Seller or any such Affiliate.    5      4.3 NONCONTRAVENTION. Neither the execution, delivery or performance of this Agreement or the Ancillary Agreements, as applicable, nor the consummation of the transactions contemplated hereby or thereby will, with or without the giving of notice or the lapse of time or both, (i) violate any Law or Order or other restriction of any Governmental Entity to which the Seller may be subject or the acceleration of any right or obligation under, create in any party the right to accelerate, terminate, modify, cancel, require any notice under or result in the creation of a Lien on any of the Assets under, any Contract to which the Seller is a party or by which it is bound and to which any of its Assets is subject.   4.4 LITIGATION. There is no pending or, to the Knowledge of the Seller, threatened Action against or affecting the Assets except as outlined in Schedule 4.4. Neither the Seller nor the Assets are subject to any Order restraining, enjoining or otherwise prohibiting or making illegal any action by the Seller, this Agreement or any of the transactions contemplated hereby. See Schedule 4.4 for relevant Seller disclosures.   4.5 CONTRACTS. Except as disclosed on Schedule 4.5, there are no executory Contracts (whether license agreements, development agreements or otherwise), to which any of the Assets are bound or subject (other than this Agreement).   4.6 INTELLECTUAL PROPERTY.     (a) Schedule 4.6 contains a list of all patents, trade names, trademarks and/or copyrights and all applications therefor owned by Seller with respect to the Assets and all licenses, if any, relating to the foregoing patents, trade names, trademarks and/or copyrights and all applications therefor. Schedule 4.6 identifies the owner of each item listed thereon and, in the case of registrations and applications, the application or registration number and date. The Seller has not taken any action that could result in any of the registrations and applications for registration for the Assets not being valid   (b) Except as disclosed on Schedule 4.6, the Seller is the sole and exclusive owner of, and has good and marketable title to, all of the Intellectual Property in and to the Assets, including the Intellectual Property set forth on Schedule 4.6, free and clear of all Liens. Except as disclosed on Schedule 4.6, the Seller has sole and exclusive right to develop, perform, use, create derivative works of, operate, reproduce, market, sell, license, display, distribute, publish and transmit the Intellectual Property in and to the Assets. Upon the Closing, except as disclosed on Schedule 4.6, the Purchaser will have sole and exclusive right, title and interest in and to the Intellectual Property in and to the Assets, such that the Purchaser shall thereafter have sole and exclusive rights to perform, reproduce, create derivative works of, develop, use, operate, market, sell, license, display, publish, transmit and distribute the Assets, free of all encumbrances. The Seller has taken reasonable measures to protect the proprietary nature of the Intellectual Property in and to the Assets and to maintain in confidence the trade secrets and confidential information that it owns or uses. Except as disclosed on Schedule 4.6, no other Person has any rights to any of Intellectual Property in and to the Assets and, to the knowledge of the Seller, no other Person is infringing, violating or misappropriating any of the Intellectual Property in and to the Assets.   (c) With respect to the Seller’s Intellectual Property contributed to the Assets, such Intellectual Property does not infringe upon, violate or constitute a misappropriation of any Intellectual Property or other right of any other Person. In addition, to Seller’s knowledge, none of the activities or business presently conducted by the Seller with respect to the Assets infringes or violates, or constitutes a misappropriation of, any Intellectual Property or other right of any other Person. Neither the Seller nor any Affiliate of the Seller has received any written complaint, claim or notice alleging any such infringement, violation or misappropriation. Further, neither the Seller nor any Affiliate of the Seller has disclosed to any Person, any product formula or design, or any portion or aspect of any product formula or design, which is part of the Assets, including the Intellectual Property.    6      ARTICLE V   As an inducement to the Seller to enter into this Agreement, the Purchaser   5.1 AUTHORIZATION. The Purchaser has full power and authority to execute and Ancillary Agreements have been duly executed and delivered by the Purchaser and, Seller, constitute the valid and legally binding obligations of the Purchaser enforceable in accordance with their respective terms. Purchaser is a corporation organized under the laws of the State of Nevada, in good standing, and has obtained all consents and other approvals necessary under Nevada law, its Articles of Incorporation, and its Bylaws necessary for the execution, delivery and performance of this Agreement and the Ancillary Agreements.   5.2 NONCONTRAVENTION.   Ancillary Agreements, as applicable, nor the consummation of the transactions contemplated hereby or thereby will, with or without the giving of notice or the lapse of time or both, violate any Law or Order or other restriction of any Governmental Entity to which the Purchaser may be subject.   (b) The execution and delivery of this Agreement and the Ancillary Agreements, as applicable, by the Purchaser does not, and the performance of this Agreement and the Ancillary Agreements by the Purchaser and the consummation of the transactions contemplated hereby and thereby will not, require any consent, Governmental Entity.   5.3 BROKERS’ FEES. No agent, broker, finder, investment banker, financial by the Purchaser, any of its Affiliates, or any investment banker, financial behalf of the Purchaser or any such Affiliate.   ARTICLE VI   6.1 CONDITIONS TO CLOSING BY THE PURCHASER. The obligation of the Purchaser to effect the transactions contemplated hereby is subject to the satisfaction or waiver by the Purchaser of the following conditions:   (a) The representations and warranties of certain of the Seller set forth in this Agreement shall be true and correct in all material respects, with respect to representations and warranties not qualified by materiality, or in all respects, with respect to representations and warranties qualified by materiality, as of the date of this Agreement and as of the Closing Date as    7      (b) The Seller shall have performed in all material respects the covenants Date.   (c) The Seller shall have executed and delivered each of the Ancillary   (d) There shall be no effective or pending Law or Order that would prohibit the Closing, and the Seller shall have obtained all necessary approvals of any Governmental Entities in connection with the transactions contemplated hereby   (e) The Seller shall have delivered each of the items described in Section 3.2.   (f) Seller shall not have made changes to current levels of compensation unless agreed upon by the Parties or paid any dividends prior to the Close.   (g) Seller shall have conducted its business only in the ordinary course and shall not have acquired or agreed to acquire as part of the business all or any substantial portion of the assets or business of any other business organization by merger or consolidation, stock purchase or asset purchase without Purchaser’s approval in writing.   (h) Seller shall have completed the approval of this Agreement and Ancillary Agreements as required under its articles of organization, operating agreements, and the laws of the jurisdictions where it is subject.   (i) There were no appraisal rights (dissenter’s rights) asserted by any owner of   6.2 CONDITIONS TO CLOSING BY THE SELLER. The obligation of the Seller to effect the transactions contemplated hereby is subject to the satisfaction or waiver by the Seller of the following conditions:   Agreement shall be true and correct in all material respects, with respect to representations and warranties not qualified by materiality, and in all materiality, in each case as of the date of this Agreement and as of the Closing   (b) The Purchaser shall have performed in all material respects the covenants Date.   (c) The Purchaser shall have executed and delivered each of the Ancillary   Closing, and the Purchaser shall have obtained all necessary approvals of any   (e) The Purchaser shall have delivered each of the items described in Section 3.3.    8      ARTICLE VII POST-CLOSING COVENANTS   7.1 TRANSFER TAXES. Notwithstanding anything herein to the contrary, Purchaser shall be liable for and shall pay any Transfer Taxes or other similar tax imposed in connection with the transfer of the Assets pursuant to this Agreement. The party responsible under applicable Law for remitting any such tax shall pay and remit such tax on a timely basis and, if such party is the Seller, the Seller shall notify the Purchaser of the amount of such tax, and the Purchaser shall promptly pay to the Seller the amount of such tax.   7.2 FURTHER ACTION. From and after the Closing each of the parties hereto shall execute and deliver such documents and take such further actions as may reasonably be required to carry out the provisions of this Agreement and the Ancillary Agreements and to give effect to the transactions contemplated hereby and thereby, including to give the Purchaser effective ownership and control of the Assets.   7.3 ACCOUNTING. Purchaser will appoint an accounting firm of its choosing to maintain Sellers’ financial records to ensure compliance with US GAAP. Within 71 days of Closing, Seller shall provide Purchaser with an audit for the two latest fiscal year periods and reviewed financials for an interim period ending September 30, 2018 prepared by Seller’s independent auditor, satisfactory to Purchaser.   ARTICLE VIII MISCELLANEOUS   8.1 SURVIVAL. Notwithstanding any right of the Purchaser (whether or not exercised) to investigate the affairs of the Seller or any right of any party (whether or not exercised) to investigate the accuracy of the representations and warranties of the other party contained in this Agreement or the waiver of any condition to Closing, each of the parties hereto has the right to rely fully contained in this Agreement. The representations, warranties, covenants and agreements of the parties hereto contained in this Agreement and any certificate or other document provided hereunder or thereunder will survive the Closing.   8.2 NO THIRD-PARTY BENEFICIARIES. The terms and provisions of this Agreement are such rights, upon any other Person.   8.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits and the Schedules hereto) constitute the entire agreement between the Parties hereto with respect agreements or representations by or between the Parties hereto, written or oral,   8.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to permitted assigns. No Party hereto may assign either this Agreement or any of approval of the other Parties hereto.    9      8.5 DRAFTING. The Parties have participated jointly in the negotiation and   8.6 GOVERNING LAW. This Agreement shall be governed by, and construed in   8.7 AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement Parties hereto. No waiver by any Party hereto of any default, misrepresentation unless such waiver is in writing and signed by the Party against whom such   8.8 SEVERABILITY. If any provision of this Agreement is held to be illegal,   8.9 EXPENSES. Except as otherwise expressly set forth herein or therein, each of the Parties hereto will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby or thereby, whether or not the transactions contemplated hereby or thereby are consummated.   8.10 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits, Annexes and made a part hereof. Unless otherwise specified, no information contained in any particular numbered Schedule shall be deemed to be contained in any other numbered Schedule unless explicitly included therein (by cross reference or otherwise).   8.11 SPECIFIC PERFORMANCE. The Parties hereto agree that irreparable damage available to them at law or equity.   8.12 HEADINGS. The descriptive headings contained in this Agreement are included   8.13 COUNTERPARTS. This Agreement may be executed in one or more counterparts,   8.14 CONFIDENTIALITY. This Exhibits and Schedules of this Agreement shall remain strictly CONFIDENTIAL among The Parties. No discloser of the information contained herein or associated Agreements and Schedules may take place without the express and written consent of The Parties and their represented signees as designated below. Except as required by law.      10        PURCHASER   Vilacto Bio, Inc. By: /s/ Gert Andersen Name: Gert Andersen Title: CEO   Vilacto BioIP, LLC     Name: Gert Andersen Title: Manager   SELLER 9 Heroes APS     Name: Gert Andersen Title: CEO    11      EXHIBIT A   IP ASSIGNMENT   This Intellectual Property Assignment (the “Assignment”) is made as of November 8, 2018 by and between Vilacto Bio, Inc., a Nevada corporation (“Parent”), and subsidiary of Parent (“Assignee”), on the one hand, and 9 Heroes APS, a Denmark corporation (“Assignor”), on the other hand.     1.     Intellectual Property Assignment. Assignor hereby assigns to Assignee, its successors and assigns, for good and sufficient consideration in connection with execution of the Asset Purchase Agreement dated November 8, 2018, the entire right, title and interest in and to any and all of the following that exist as of the date hereof: (a) Intellectual Property (as defined in the Asset Purchase Agreement) relating to Assignor (b) any and all Intellectual Property Rights (defined below) claiming or covering such Intellectual Property and (c) any and all causes of action that may have accrued to the undersigned in connection with such Intellectual Property and/or Intellectual Property Rights.  Assignor further agrees to execute and deliver the Patent Assignment Agreement as attached hereto as Annex “A.”   2.     Intellectual Property Rights Definition. “Intellectual Property Rights” means, collectively, all rights in, to and under the Intellectual Property.   4.     Prior Inventions. The Assignor has listed in Annex “B” all inventions, which were made by the Assignor prior to the date hereof, (collectively, the “Prior Inventions”), which belong to the Assignor, which relate to Assignor’s proposed or current business, products or research and development, and which are not being assigned to Assignee; or, if no such list is attached, the Assignor represents that there are no such inventions.  In the event that any Prior Inventions are listed on Exhibit B, the Assignor hereby grants to Assignor a present, non-exclusive, royalty free, irrevocable, perpetual, world-wide license to make, have made, sublicense, modify, use and sell such Prior Invention as part of or in connection with Assignor’s products and technology   5.     Further Assurances. Assignor agrees to execute any and all papers and documents, and take such other actions as are reasonably requested by Parent, to evidence, perfect, defend the foregoing assignment and fully implement Assignor’s proprietary rights in the subject matter assigned hereunder, such as obtaining and enforcing copyrights, patents or trademarks and to fully cooperate in the prosecution, enforcement and defense of such proprietary rights.  Assignor further agrees that if Parent or Assignee is unable, for any reason, to secure signatures to apply for or to pursue any application for any patent, copyright, trademark or other proprietary right covering any Intellectual Property assigned to Assignee above, then Assignor hereby irrevocably designates and appoints Assignee’s duly authorized agent as Assignor’s agent and attorney-in-fact, to act for and in Assignor’s behalf and stead to execute and further the prosecution and issuance of patents, copyrights, trademarks and by Assignor.     6.     Representations and Covenants. The Assignor represents and warrants that (i) the Assignor is the owner of the entire right, title and interest in and to the Intellectual Property, (ii) the Assignor has the sole right and authority to enter into this Assignment and grant the rights hereunder, and (iii) the Assignor has not previously granted any rights or licenses in the Intellectual Property.        7.     Governing Law. This Assignment and actions taken hereunder shall be governed by, and construed in accordance with the laws of the State of Nevada   8.     Miscellaneous. If any one or more provisions contained in this Assignment other provision of this Assignment, but this Assignment shall be construed as if herein.  The terms and provisions of this Assignment may be modified or amended only by written agreement executed by all parties hereto.      12      IN WITNESS WHEREOF, the undersigned has caused this Intellectual Property Assignment to be executed.   PARENT   Name: Gert Andersen Title: CEO   ASSIGNEE   Vilacto BioIP, LLC     Name: Gert Andersen Title: Manager   ASSIGNOR 9 Heroes APS     Name: Gert Andersen Title: CEO    13      Annex A Patent Assignment Agreement   Whereas, 9 Heroes APS (the “Assignor”) a Limited Liability Company, is the owner of the entire right, title and interest in, and to:   • United States Patent Application # 8,637,075 entitled “Colostrum Composition” • European Patent Application # EP2341916 entitled “Colostrum Composition” • Hong Kong Patent Application # HK1159997 entitled “Colostrum Composition” • Canada Patent Application # 2,773,277 entitled “Colostrum Composition”   and of the invention therein described; and   Whereas, Vilacto BioIP, LLC, (the “Company”) a limited liability company America, and having a place of business at Fabriksvej 48 4700 Naestved, Denmark, such patent applications, and such invention.   Now, therefore, in consideration acknowledged above to Assignor in hand paid, acknowledged, Assignor has sold, assigned, transferred and set over, and by these presents does hereby sell, assign, transfer and set over, unto Company, its successors, legal representatives and assigns, the entire right, title and interest in, to and under the invention, including the right to sue for past infringement, and all patents of the United States which may be granted thereon and all reissues and extensions thereof; and all applications for industrial property protection, including, without limitation, all applications for patents, utility models, and designs which have already been and which may hereafter be filed for the invention in any country or countries foreign to the United States, together with the right to file such applications and the right to claim for the same the priority rights derived from the patent under the patent laws of the United States, the International Convention for the Protection of Industrial Property, or any other international agreement or the applicable; and all forms of industrial property protection, including, without limitation, patents, utility models, inventors' certificates and designs which may be granted for said invention in any country or countries foreign to the United States and all extensions, renewals and reissues thereof; and   Assignor Hereby authorizes and requests the Commissioner of Patents and foreign to the United States, whose duty it is to issue patents to issue the same to Company, its successors, legal representatives and assigns, in accordance with the terms of this instrument; and   Assignor Hereby covenants and agrees that it has the full right to convey the entire interest herein assigned, and that Assignor has not executed, and will   Assignor Hereby further covenants and agrees that Assignor will communicate to Company, its successors, legal representatives and assigns, any material facts known to Assignor respecting the invention, and generally do everything possible to aid Company, its successors, legal representatives and assigns, to obtain and      14       IN WITNESS AND IN TESTIMONY WHEREOF, I, hereunto set my hand and seal this 29th   9 Heroes APS     /s/ Gert Andersen Name: Gert Andersen Title: CEO     Vilacto BioIP, LLC     Name: Gert Andersen Title: Manager   [For Patents, a proper assignment must be made at the USPTO Office within 3 months of executing this agreement which can be done electronically at http://epas.uspto.gov/]    15      Annex B Prior Inventions    16      SCHEDULE 2.2   ASSUMED LIABILITIES   None.    17      Schedule 4.4 – Seller Litigation Disclosures   None.    18       SCHEDULE 4.5   None.     19      SCHEDULE 4.6   INTELLECTUAL PROPERTY     The patent portfolio covers a product against Psoriasis, which is under development. According to the company, the product will be marketed in 2019 and will be covered by the patent applications until 2029.    20   

Exhibit 10.6 TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IRVINE SENSORS CORPORATION THAT SUCH       No.                                                 , 20      IRVINE SENSORS CORPORATION Void after                                         , 20      certifies that, for value received, J.P. Turner Partners, LP (including any permitted successors and assigns, “Holder”), is entitled, subject to the terms                                         , 20      (the “Expiration Date”), fully exercise price per Warrant Share of $      per share, subject to adjustment as purpose of raising capital or acquiring another corporation or business entity.       under the Securities Act of 1933, as amended, on or prior to the anniversary (the “Net Issuance Date”) of the issuance date of this Warrant (it being understood that the Company is under no obligation to effect such registration), the Holder shall have the right to convert this Warrant (the “Conversion Right”) into Warrant Shares as provided in this Section 5 from time to time after the Net Issuance Date until the Expiration Date. Upon exercise of the Conversion Right with respect to shares subject to the Warrant (the “Converted Warrant paid and nonassessable Warrant Shares computed using the following formula:   2                A Where:     to the Holder. follows: to be the closing selling price of the Common Stock on the stock exchange or market;   3   increased in accordance with Section 6(h) hereof. shall be appropriately decreased in accordance with Section 6(h) hereof. Section 6(a) above or stock dividend provided for in Section 6(b) above or a combination of shares provided for in Section 6(c) above, or a reorganization,   4     5   9. Miscellaneous. such person. additional legend required by (a) any applicable state securities laws and (b) any securities exchange upon which such Warrant Shares may, at the time of Warrant.   6     7               IRVINE SENSORS CORPORATION a Delaware corporation       By:           Name:   John C. Carson        Title:   President & Chief Executive Officer        Address:   3001 Red Hill Avenue   8   EXHIBIT A FORM OF SUBSCRIPTION To:   IRVINE SENSORS CORPORATION purchase       shares of Common Stock under the Warrant pursuant to the Net Please issue a certificate or certificates representing       shares of Common specified below:   (Name)         (Address) applicable securities laws.           (Print Name)         (Address) Dated:                                                EXHIBIT B FORM OF ASSIGNMENT hereby assigned to:       Name:               (Please Print)       Address:               (Please Print) Dated:                                         , 20      Holder’s Signature:                                                                                  Holder’s Address:                                                                                  the foregoing Warrant.       EXHIBIT C DATE:                                          Irvine Sensors Corporation 3001 Red Hill Avenue Gentlemen: covenant as follows:     promulgated under the Securities Act of 1933 (the “Act”);       and have such knowledge and experience in financial, tax, and business matters merits and risks of an investment decision with respect thereto, or I have a the officers or directors of the Company;   2.     3.         I am not relying on the Issuer or J.P. Turner & Company, L.L.C. respecting   4.         I am acquiring the Warrants and the underlying securities related thereto distribution. I acknowledge that neither the Warrants nor the underlying     Name: Holder of Warrants to purchase       shares of common stock of Irvine Sensors Corporation pursuant to the terms of the Common Stock Purchase Warrant of even date herewith    

Exhibit 10.1 FOURTEENTH AMENDMENT TO THE AMENDED AND RESTATED KAYDON CORPORATION     FOURTEENTH AMENDMENT to the above Plan made by the duly authorized officers of the Company effective as provided below.   1.   Recitation. The Employer has determined that an amendment to the Plan is desirable to reinstate matching contributions under the Plan at Indiana Precision, Inc.     2.   Amendment. The Plan is amended at Appendix J, effective January 4, 2010, as follows:      (a) At Section 4.1(f), to reinstate Matching Contributions for Participants employed at Indiana Precision, Inc. based on elective deferral contributions made out of Compensation earned on or after January 4, 2010; and      (b) At Section 6.2(f), to reinstate allocations of Matching Contributions to Participants employed at Indiana Precision, Inc. based on elective deferral contributions made out of Compensation earned on or after January 4, 2010.   3.   Substitution. The Amendment is incorporated in revised plan pages which are attached to this Amendment. The pages have been substituted for their respective counterparts in the Plan as amended. The pages deleted shall be preserved, attached to the Amendment and marked in the upper right hand corner to indicated that they were AMENDED by this Amendment.               KAYDON CORPORATION               By   Debra K. Crane           Its V.P., General Counsel and Secretary               And   Anthony T. Behrman         /s/ Anthony T. Behrman         Its V.P. – Human Resources     KAYDON CORPORATION (As Amended and Restated February 19, 2002 Effective January 1, 1997)     KSOP 1.10 APPENDIX J Canfield Technologies, Inc. Tridan International, Inc. and Indiana Precision, Inc. The following sections of the Plan are added or modified as follows:      “Employees of Canfield Technologies, Inc., Tridan International, Inc. and Indiana Precision, Inc. are added to the Plan effective October 1, 2000.      Section 2.7 to add the following sentence:      “Employee also excludes persons included in a collective bargaining unit at      New Section 2.7A is added as follows:      2.7A Employee Group. The Employee Groups are:      (a) Canfield. Employees of Canfield Technologies, Inc. not included in a collective bargaining unit.      (b) Tridan. Employees of Tridan International, Inc.      (c) Indiana Precision. Employees of Indiana Precision, Inc.      (d) Other Non-Bargaining Unit. Employees of all other Employers not included in a collective bargaining unit.      (e) Other Bargaining Unit. Employees of all other Employers included in a participating collective bargaining unit.      New Section 2.10A is added as follows:      2.10A Matching Contribution. A Matching Contribution is any Employer Contribution made to the Plan on behalf of an Active Participant on -3-   KSOP 1.10 account of an Elective Contribution made by the Active Participant for the Plan Year or any forfeiture allocated on the basis of Matching or Elective Contributions, excluding any contribution or allocation used to meet the top heavy minimum contribution or benefit requirement of Code Section 416 and any Matching Contribution to the extent considered for purposes of Code Section 401 (k) testing.      Section 2.17(c) to add the following sentence:      “A Year of Service also includes Years of Service credited prior to October 1, 2000 with Canfield Technologies, Inc., Tridan International, Inc., or      New Subsections 3.2(b)(v), (vi) and (vii) are added as follows:      (v) Canfield. Each Employee who was a participant in the Canfield Technologies, Inc. Simple IRA on August 27,2000 who was employed by an Employer on October 1, 2000 became an Active Participant in this Plan on October 1, 2000;      (vi) Tridan. Each Employee who was a participant in the Tridan International, Inc. 401(k) Profit Sharing Plan on August 27, 2000 who was employed by an Employer on October 1, 2000 became an Active Participant in this Plan on October 1, 2000; and      (vii) Indiana Precision. Each Employee who was a participant in the Indiana Precision, Inc. 401 (k) Profit Sharing Plan on August 27, 2000 who was employed by an Employer on October 1, 2000 became an Active Participant in this Plan on October 1, 2000.      Section 4.1 (b) is deleted and replaced with new Section 4.1 (b) as follows: -4-   KSOP 1.10      (b) Regular Profit Sharing. May contribute a Regular Profit Sharing Contribution. The amount of the contribution, if any, is determined by the Board of Directors of each Employer for its Employee Group or Groups in its discretion (or as required by the applicable collective bargaining agreements), subject to the maximum limitations of this Plan. The tentative contribution is reduced by the amount of forfeitures to be reallocated to Employer Accounts on the Allocation Date after the allocation of forfeitures as Matching Contribution. A Regular Profit Sharing Contribution is allocated under Article VI and is subject to the applicable Vesting Schedule.      New Section 4.1(f) is added as follows:      (f) Matching. For Canfield Technologies, Inc., Tridan International, Inc. and Indiana Precision, Inc. only, contribute a Matching Contribution which is the sum of $0.25 for each dollar of each eligible Participant’s Elective Contributions (excluding Catch-Up Contributions) which do not exceed the appropriate limits, except that no Matching Contribution shall be made for Participants employed at Tridan International, Inc. based on elective deferral contributions made out of Compensation earned on or after March 29, 2009 and no Matching Contribution shall be made for Participants employed at Indiana Precision, Inc. based on elective deferral contributions made out of Compensation earned on or after March 29, 2009 and prior to January 4, 2010.      The tentative contribution is reduced by the amount of forfeitures to be reallocated to Employer Accounts on the Allocation Date. The Matching Contribution is allocated under Article VI and is subject to the applicable Vesting Schedule.      Section 6.1(a)(i) to add the following sentence:      “This Account also includes prior plan profit-sharing amounts rolled-over into this Plan.” -5-   KSOP 1.10      New Subsection 6.1 (a)(viii) is added as follows:      (viii) Employer Matching Contributions Account. The Accounts to which any Employer Matching Contributions and amounts rolled-over to this Plan are credited;      The preface of Section 6.2 is deleted and replaced with a new preface as follows:      6.2 Allocation of Employer Contributions. Employer Regular Profit Sharing Contributions for the Plan Year are allocated to the Employer Regular Profit Sharing Accounts of Active Participants who complete one thousand (1,000) Hours of Service during the Plan Year and are Employees in the designated Employee Group of the Employer making the contribution on the last day of that Plan Year, or who are Employees in that Employee Group during the Plan Year but who retire, die, or become Disabled during the Plan Year, first, to each Employee Group as provided in a resolution of the Employer and, second, within each Employee Group in the proportion which the Compensation of each Active Participant within that Employee Group for the Plan Year bears to the aggregate of the Compensation of the Active Participants within that Employee group for the Plan Year (or as otherwise required by an applicable collective bargaining agreement), subject to the Testing Adjustment.      New Subsection 6.2(f) is added as follows:      (f) Matching. Matching Contributions are allocated to the Matching Account of each Active Participant employed by Canfield Technologies, Inc., Tridan International, Inc. or Indiana Precision, Inc. eligible for an allocation of Employer Regular Profit Sharing Contributions for the Plan Year based on each eligible Active Participant’s Elective Contributions for the year which are eligible for a Matching Contribution as provided under Article -6-   KSOP 1.10 IV. The amount allocated is $0.25 for each dollar of the Participant’s Elective Contributions up to the maximum Elective Contribution allowed the Participant for the year, except that no Matching Contribution shall be allocated to Matching Contribution shall be allocated to Participants employed at Indiana      Section 6.3 is deleted and replaced with new Section 6.3 as follows:      6.3 Allocation of Forfeitures. Forfeitures from the Non-Vested Accounts of participants who have incurred five (5) consecutive Breaks in Service, received a distribution of their entire Vested Account Balance, or died after terminating employment during the Plan Year are first allocated to reduce any Forfeiture Restoration Contribution. Any remaining forfeitures are allocated first in the same manner as Matching Contributions and next in the same manner as Employer Regular Profit Sharing Contributions. Forfeitures allocated as Contributions reduce the contribution of the Employer for the year.      The preface of Section 6.5 is deleted and replaced with a new preface as follows:      6.5 Vesting. The Account Balance in each Account other than the Employer Regular Profit Sharing and the Employer Matching Contributions Account, if any, is fully vested and nonforfeitable at all times. The Account Balance in each Employer Regular Profit Sharing Account and each Employer Matching Contributions Account is fully vested and nonforfeitable upon the Participant’s attainment of Normal Retirement Age, Death, or -7-   KSOP 1.10 Disability while an employee of the Employer (or Affiliated Employer) and under one or a combination of the following Vesting Schedules:      New Subsection 6.5(e) is added as follows:      (e) Matching. Effective for Matching Contributions attributable to Plan Year beginning on and after January 1, 2002, the schedule applicable to Employer Matching contributions is:           Years of Service for Vesting Purposes   Percentage To Date Employment Terminated   Vested Less than 1 year     0 %     10 %     20 %     40 %     60 % 5 years but less than 6 years     80 % 6 years or more     100 %      New Section 7.16 is added as follows:      7.16 Loans. An Active Participant, a participant who is a party in interest under ERISA with respect to the Plan, or a beneficiary of a deceased participant who was a party in interest (other than an Owner-Employee or Shareholder-Employee) may maintain a loan rolled-over to this Plan from a plan maintained by Canfield Technologies, Inc., Tridan International, Inc. or Indiana Precision, Inc. which was qualified under Section 401 (a) of the Code in which the participant was not an owner-employee or a shareholder-employee. The Committee may authorize continuation of the loan on the terms and conditions prescribed in this Section and in Appendix J.      (a) Maximum Amount. A loan is limited to the lesser of:           (i) Maximum Dollar Amount. $50,000.00, reduced by the excess of: -8-   KSOP 1.10                (A) Prior Balance. The highest outstanding balance of loans from the Plan during the 1 -year period ending on the day before the date on which the loan is made, over           (B) Outstanding Balance. The outstanding balance of loans from the Plan on the date on which the loan is made;           (ii) One-Half Vested Account. One-half (I /2) of the participant’s Vested Account Balance; or                (iii) Aggregation. The amount tentatively determined in (i) or (ii) above reduced by the aggregate outstanding principal balance of all loans from any qualified plans maintained by the Employer (or Affiliated Employer).      (b) Spousal Consent. The Committee may accept the loan only if spousal consent of any Qualifying Spouse was obtained within ninety (90) days before the loan or the Committee determines that spousal consent was not required.      (c) Conditions. Loans: constitute an investment of the participant’s Account; must be evidenced by a promissory note bearing a reasonable rate of interest, providing for level amortization and having a definite maturity date or repayment schedule with payments not less frequently than quarterly; and must be secured by a mortgage, pledge, guarantee or other adequate collateral. The participant must demonstrate a realistic plan and intention for repayment of any loan.      (d) Term. The term for repayment of the note must not exceed five (5) years unless the participant or beneficiary certified that the proceeds of the loan would be used for the acquisition or construction of a structure which was used, within a reasonable time determined at the time the loan was made, as the principal residence of the participant.      (e) Set Off. If a participant or beneficiary dies, retires, is totally and permanently disabled, terminates employment, revokes a payroll deduction -9-   KSOP 1.10 payment authorization, requests a distribution which would cause the remaining Account Balance to fail to be adequate security under ERISA, or defaults under the terms of the loan or any agreement securing the loan, or if the Plan is terminated, with all or a portion of the note (including principal and interest) outstanding, the balance in the Account and all benefits payable under the Plan are reduced by the outstanding amount at the earliest time which will not cause      (f) Accounting. For purposes of allocating earnings, losses and adjustments in value of the Trust, the participant’s Account is reduced by the principal amount of any loan outstanding. Interest paid on the loan is credited directly to the participant’s Account.      (g) Suspension of Loan Payments. If permitted by the administrator, loan payments shall be suspended for a period that a Participant is on a leave of absence either without compensation or at a level of compensation that is less loan.           (i) Length of Suspension/Due Date.      (A) Military Leave of Absence. If a Participant is performing service in States Code), whether or not Qualified military Service, loan payments shall be suspended until the end of the leave of absence. The loan, including accrued interest, must be repaid by the end of the period that equals the original term of the loan plus the period of military service.      (B) General Leave of Absence. For all other leaves of absences, loan payments shall be suspended for the period of the leave of absence, but not longer than one year. The -10-   KSOP 1.10 loan, including accrued interest, must be repaid by the latest date permitted under (c)(ii) above.      (ii) Payments on Resumption. The installment payments due at the end of the suspension must be at least equal to, and as frequent as, those required under the original terms of the loan. If installment payments are not increased on resumption of payment, the Participant must repay the entire remaining balance of the loan on the due date specified in (i) above.      Section 9.9 to add the following sentence:      “Expenses not paid by Kaydon Corporation shall be charged against participants’ accounts in a reasonable manner.” -11-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-Q (Mark One) xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2008 OR oTRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NO. 0-17629 ADM TRONICS UNLIMITED, INC. (Exact name of registrant as specified in its charter) Delaware 22-1896032 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or organization) Identification Number) 224-S Pegasus Ave., Northvale, New Jersey 07647 (Address of Principal Executive Offices) Registrant's Telephone Number, including area code: (201) 767-6040 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YESx NO o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filero (Do not check if a smaller reporting company) 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). YES oNO x State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: 53,939,537 shares of Common Stock, $.0005 par value, as of August 14, 2008 ADM TRONICS UNLIMITED, INC. INDEX Page Number PARTI. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Condensed Consolidated Balance Sheets – June 30, 2008 (unaudited) and March 31, 2008 3 Condensed Consolidated Statements of Operations - For the three months ended June 30, 2008 and 2007 (unaudited) 4 Condensed Consolidated Statements of Cash Flows - For the three months ended June 30, 2008 and 2007 (unaudited) 5 Notes to Condensed Consolidated Financial Statements (unaudited) 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 14 ITEM 4T.CONTROLS AND PROCEDURES 14 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 15 ITEM 1A. RISK FACTORS 15 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 15 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15 ITEM 5. OTHER INFORMATION 15 ITEM 6. EXHIBITS 15 PARTI. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 2008 MARCH 31, 2008 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,921,752 $ 2,072,325 Accounts receivable, net of allowance for doubtful accounts of $1,088 and $1,088, respectively 60,936 101,270 Receivables – Ivivi 10,235 - Inventories 414,769 469,403 Prepaid expenses and other current assets 22,317 83,731 Total current assets 2,430,009 2,726,729 Property and equipment, net of accumulated depreciation of $18,681 and $17,873, respectively 54,480 55,288 Inventory - long term portion 84,880 78,416 Investment in Ivivi 6,077,500 2,154,517 Advances to related parties 65,504 74,299 Other assets 27,782 28,486 Total assets $ 8,740,155 $ 5,117,735 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 138,539 $ 237,331 Accrued expenses and other current liabilities 44,308 87,439 Customer deposits – Ivivi 154,793 241,828 Total current liabilities 337,640 566,598 Deferred tax liability 277,612 Stockholders' equity: Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding Common stock, $.0005 par value; 150,000,000 shares authorized, 53,939,537 shares issued and outstanding at June 30, 2008 and March 31, 2008 26,970 26,970 Additional paid-in capital 32,153,597 32,153,597 Accumulated deficit (24,055,664 ) (27,629,430 ) Total stockholders' equity 8,124,903 4,551,137 Total liabilities and stockholders' equity $ 8,740,155 $ 5,117,735 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2 (Unaudited) 2008 2007 Revenues $ 600,941 $ 293,086 Costs and expenses: Cost of sales 399,210 170,059 Research and development - 2,493 Selling, general and administrative 288,668 248,719 Total operating expenses 687,878 421,271 Operating loss (86,937 ) (128,185 ) Interest income 15,334 25,143 Change in fair value of investment in Ivivi (5,297,500 ) Equity in net loss of Ivivi (469,607 ) Net loss before income taxes (credit) (5,369,103 ) (572,649 ) Income taxes (credit) (2,147,576 ) Net loss $ (3,221,527 ) $ (572,649 ) Net loss per share, basic and diluted $ (0.06 ) $ (0.01 ) Weighted average shares outstanding, basic and diluted 53,939,537 53,882,037 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2 (Unaudited) 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,221,527 ) $ (572,649 ) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 1,510 3,223 Deferred income tax benefit (2,147,576 ) Loss from equity investment 469,607 Bad debts 100 Change in fair value of investment in Ivivi 5,297,500 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable 40,334 42,861 Inventory 48,170 (124,188 ) Prepaid expenses and other current assets 61,414 21,180 Receivables – Ivivi (10,235 ) Other assets (369 ) Increase (decrease) in: Accounts payable and accrued expenses (141,923 ) 7,647 Customer deposit – Ivivi (87,035 ) Net cash used by operating activities (159,368 ) (152,588 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (11,189 ) Collections of advances to related parties 8,795 Receivable from Ivivi 1,372 Net cash provided (used) by investing activities 8,795 (9,817 ) Net decrease in cash (150,573 ) (162,405 ) Cash and cash equivalents, beginning of period 2,072,325 2,498,276 Cash and cash equivalents,end of period $ 1,921,752 $ 2,335,871 Cash paid for: Interest $ $ Income taxes $ $ NONCASH FINANCING AND INVESTING ACTIVITIES: During the three months ended June 30, 2007, Ivivi recorded an increase in additional paid-in capital as a result of the recognition of compensation expense related to option grants to employees and others. We have recorded a proportional increase in our investment in Ivivi in the amount of $112,290, with a related credit to additional paid-in capital. We have also recorded a change of ownership percentage adjustment of $121. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, (Unaudited) NOTE 1 - ORGANIZATIONAL MATTERS ADM Tronics Unlimited, Inc. ("we", "us", the “Company" or "ADM"), was incorporated under the laws of the state of Delaware on November 24, 1969.We are authorized under our Certificate of Incorporation to issue 150,000,000 common shares, with $.0005 par value, and 5,000,000 preferred shares with $.01 par value. The accompanying condensed consolidated financial statements as of June 30, 2008 (unaudited) and March 31, 2008 and for the three month periods ended June 30, 2008 and 2007 (unaudited) have been prepared by ADM pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-K.The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations.We believe that the disclosures provided are adequate to make the information presented not misleading.These financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the audited financial statements and explanatory notes for the year ended March 31, 2008 as disclosed in our 10-KSB for that year as filed with the SEC, as it may be amended.The results of the three months ended June 30, 2008 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending March 31, 2009. NATURE OF BUSINESS We are a manufacturer and engineering concern whose principal lines of business are the production and sale of chemical products and the manufacture and sale of medical devices.Our chemical product line is principally comprised of water-based chemical products used in the food packaging and converting industries.These products are sold to customers located in the United States, Australia, and Europe. Medical equipment is manufactured in accordance with customer specification on a contract basis.Our medical device product line consists principally of proprietary devices used in the treatment of joint pain, postoperative edema, and tinnitus.These devices are known own as "Electroceutical" units.These products are sold or rented to customers located principally in the United States. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its subsidiaries.All significant intercompany balances and transactions have been eliminated in consolidation. USE OF ESTIMATES These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Significant estimates made by management include expected economic life and value of our medical devices, deferred tax assets, option and warrant expenses related to compensation to employees and directors, consultants and investment banks, the value of warrants issued in conjunction with convertible debt, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS On April 1, 2008, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements", and SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". Please refer to Notes 4 and 5 for additional details. For certain of our financial instruments, including accounts receivable, inventories, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their relatively short maturities. CASH AND EQUIVALENTS Cash equivalents are comprised of certain highly liquid investments with maturity of three months or less when purchased. We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses to date as a result of this policy. 6 ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable represent uncollateralized customer obligations due under normal trade terms generally requiring payment within 30 days from the invoice date.

EXHIBIT 10.9   NOTE EXTENSION AGREEMENT       RECITALS:   Note, dated December 31, 2013, in the principal amount of up to Two Hundred Thirty Two Thousand One Hundred Nine ($232,109.00) (the “Note”),                         1             Chief Executive Officer March 7, 2014   Chief Executive Officer March 7, 2014     2  

Title: Investor uses credit line meant for startup company to fund his other startup - leaving company unable to pay bills. Now wants members to buy him out. Question:Florida A group of Investors bought into our company for a cash amount plus a $150,000.00 credit line to support the company through its growth phase. The promised credit line was part of the executed agreement. After almost a year we have managed to keep the use of the credit line to a minimum - less than 30K. Only occasionally drawing $2-5k to cover expenses shortfalls when needed. Most of the time we managed to keep the company afloat through monthly collections/sales. The company had over $500k in sales commitments for the past year but we are living on the edge as we re-invest almost everything into growing the company nationally and getting systems in place to scale the business. In August we did financial forecasts that showed we would be needing additional funds from the credit line for the rest of this year to the tune of $80k (We have some projects coming to fruition and it needs funds to be completed. Once these projects are completed in 1st quarter 2019, a profit will be turned. We managed to not draw the forecasted funds from the credit line in August or September by keeping costs low and collections/sales up. Last week we requested a $20k draw from the credit line to pay vendors and staff - with the commitment that I would replace at least $10k by the end of the month as more clients will be paying us. The forecasted (and approved) draw from the facility for October was $17k. Suddenly the investors wants a meeting. Just to put it in perspective - The company that invested also has 2 other projects that they are busy with and both of them are big money drains at this stage - $40-50k per month. In the meeting the investor says that they don't have an appetite for the risk anymore, changing numbers on the forecasts and saying he doesn't believe the company would ever be profitable etc. Only later a glimpse of the truth slips out when the investor says he had to find another $50k in September and that it is also gone and the credit line that was supposed to be used for our company has been depleted by the other projects. So he needs to go and find the $20k that we need. Basically the contract says they have to provide us with a $150k credit line to use in growing the business but they used that credit line for their other businesses and now want to withdraw from our company. They are talking about shutting some of our new projects down and just pulling the plug to recover the $30k that was already drawn from the credit line - the credit line was a pre approved bank credit line in the investment company's name. They own a 50% stake in our company. If they shut down the projects it will cause huge reputational damage to the company and the brand. We told them it is fine if they withdraw from the company and take their credit line with them - We got through this month end with the help of family, friends and a renewed cash collection drive. And we are confident that we can make it work going forward - will need to cut costs to the bone and maybe hold back on growth strategies until the first big projects are completed and we get the money from that. It can be done though. They now seem to insist that we buy them out of the company if we want to continue with it and complete the projects - we do not have the money for that yet. What rights do we have? Answer #1: Clearly you need to hire a lawyer.Answer #2: Does your equity contract not discuss penalties of non-performance or non-availability of credit? The credit was only part of the deal - they also paid cash and are likely entitled to the fair market value of the business equal to their percentage of ownership. Keep in mind that your business's value may be at or below book value at this point. You do need a lawyer and need to decide when you want to make an issue of this.

As filed with the Securities and Exchange Commission on June 7, 2011 Registration Nos. 2-99810 and 811-04391 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment [] Post-Effective Amendment No. 118 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. 116 [X] OLD MUTUAL FUNDS II (Exact name of registrant as specified in Declaration of Trust) 4643 South Ulster Street, Suite 700, Denver, Colorado 80237 (Address of Principal Executive Offices) Registrant’s Telephone Number, Including Area Code (720) 200-7600 Julian F. Sluyters Old Mutual Capital, Inc. 4643 South Ulster Street, Suite 700, Denver, Colorado 80237 (Name and Address of Agent For Service) Copies to: Matthew R. DiClemente, Esq. and to Kathryn L. Santoro, Esq. Stradley Ronon Stevens & Young, LLP Old Mutual Capital, Inc. 2600 One Commerce Square 4643 South Ulster Street, Suite 700 Philadelphia, PA19103 Denver, CO 80237 (215) 564-8082 (720) 200-7600 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Filing. It is proposed that this filing will become effective (check appropriate box) [X]immediately upon filing pursuant to paragraph (b) []on [date] pursuant to paragraph (b) []60 days after filing pursuant to paragraph (a)(1) []on [date] pursuant to paragraph (a)(1) []75 days after filing pursuant to paragraph (a)(2) []on [date] pursuant to paragraph (a)(2) If appropriate, check the following box: [] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Offered: Common Stock SIGNATURES Pursuant to the requirements of the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver and State of Colorado on this 7th day of June, 2011. OLD MUTUAL FUNDS II Registrant By: /s/ Julian F. Sluyters Julian F. Sluyters President Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ John R. Bartholdson * Trustee June 7, 2011 John R. Bartholdson /s/ Robert M. Hamje * Trustee June 7, 2011 Robert M. Hamje /s/ Jarrett B. Kling * Trustee June 7, 2011 Jarrett B. Kling /s/ L. Kent Moore * Trustee June 7, 2011 L. Kent Moore /s/ Julian F. Sluyters President and Principal June 7, 2011 Julian F. Sluyters Executive Officer /s/ Robert T. Kelly Treasurer and Principal June 7, 2011 Robert T. Kelly Financial Officer *By /s/ Julian F. Sluyters Julian F. Sluyters Attorney-in-Fact, pursuant to a power of attorney OLD MUTUAL FUNDS II INDEX TO EXHIBITS Exhibits: EX-101.INS XBRL Instance Document EX-101.SCH XBRL Taxonomy Extension Schema Document EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document EX-101.DEF XBRL Taxonomy Extension Definition Linkbase Document EX-101.LAB XBRL Taxonomy Extension Labels Linkbase Document EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 10.51 a2001stockincentivepl_image1.jpg [a2001stockincentivepl_image1.jpg] AMENDED AND RESTATED KB HOME 2001 STOCK INCENTIVE PLAN (as amended on April 13, 2017) SECTION 1. Purpose. The purpose of the KB Home 2001 Stock Incentive Plan (the the Code or that are not intended to satisfy such requirements (“Non-Qualified Options”), as well as for certain other “Awards,” as defined below. The Plan is an amendment and restatement of the KB Home 2001 Stock Incentive Plan, which amendment and restatement shall be effective as of October 2, 2008 (the indicated meanings: (a) Amendment Date: Amendment Date shall have the meaning set forth in Section 1 hereof. (b) Award: An award under this Plan of a Performance Stock Award, Restricted Stock Award, or Stock Unit Award. (c) Board: The board of directors of KB Home. references to the Code or any section thereof shall include the Treasury (e) Committee: The Committee specified in Section 3(a) of this Plan. (g) Effective Date: Effective Date shall have the meaning set forth in Section (h) Exchange Act: The Securities Exchange Act of 1934, as amended. 1 (i) Fair Market Value: As of any given date, (a) if Shares are traded on a securities exchange, the closing price of a Share as reported in the Wall Street Journal for such date or, if no sale occurred on such date, for the first (b) if Shares are not traded on a securities exchange, (i) the last sales price on such date (if Shares are then listed as a Global Market Issue under the NASDAQ Global Market System) or (ii) the mean between the closing representative bid and asked prices (in all other cases) for Shares on such date; or, if no sales prices or bid and asked prices, as applicable, are reported by a national quotation system, the first date immediately prior to such date on which sales quotation system; or (c) if Shares are not publicly traded, or with respect to any non-Share based Award or settlement of an Award, the fair market value (j) Limited Stock Appreciation Right: A right granted pursuant to Section 6(b) (k) Option: An Option is a right granted under Section 6(a) to purchase a number of shares of Common Stock at such exercise price, at such times, and on such (l) Participant: An individual eligible under Section 5(a) to participate in this Plan.     (m) Performance Objectives: With reference to a particular Option or Award, qualify as “qualified performance-based compensation” under Code Section 162(m), the term “Performance Objective” shall mean any one or more of the following on equity, (v) return on capital, (vi) earnings per share (including earnings before interest, taxes, depreciation and amortization), (vii) unit volume, (viii) net sales, (ix) service quality or (v) total shareholder return, in each case as determined in accordance with Generally Accepted Accounting Principles, if applicable. (n) Performance Stock Award: Performance Stock is an award of shares of Common Stock made under Section 7(a), the grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are expressed in (o) Plan: The KB Home 2001 Stock Incentive Plan, as it may be amended from time to 2 time. (p) Restricted Stock Award: Restricted Stock is a right granted under Section 7(b) to shares of Common Stock issued or issuable under the Plan but subject during specified periods of time to such conditions on vesting, restrictions on transferability and/or repurchase rights as are expressed in the document(s) evidencing the Award. (q) Section 409A: Section 409A of the Code and, for the avoidance of doubt only, the Treasury Regulations and other Department of Treasury guidance issued thereunder. (r) Stock Unit Award: An award granted under Section 8 of this Plan. (s) Subsidiary: Any corporation of which the Company owns, directly or shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to issue and/or execute agreements or other documents under this Plan on behalf of the Committee or the Company. (b) The Committee shall have full power and authority, subject to applicable law, the terms of the Plan, and such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be issued or adopted by the Board, to grant to eligible persons Options, Limited Stock Appreciation Rights and Awards pursuant to the provisions of the Plan, to fix the exercise price and other terms of Options, to fix the terms of any Performance Stock Award and/or Restricted Stock Award in a manner consistent with the terms of Section 7, to fix the terms of any Stock Unit Award in a manner consistent with the terms of Section 8, to prescribe, amend and rescind rules and regulations, if any, relating to the Plan, to interpret the provisions of the Plan, Options, Limited Stock Appreciation Rights and Awards issued under the Plan, to amend such Options, Limited Stock Appreciation Rights and Awards from time to time subject to the provisions of the Plan, and to supervise the administration of the Plan. optionees. Board 3 her in connection with any claim, action, suit or proceeding to which he or she harmless. private transactions. this Section 4(b), the aggregate number of shares reserved for issuance upon the exercise of Options and pursuant to Awards which may be granted under the Plan shall not exceed 4,200,000 shares of Common Stock. The aggregate number of (c) The aggregate number of shares of Common Stock issued and issuable pursuant to ISOs may not exceed 4,200,000 shares. The maximum number of shares of Common Stock subject to Options granted during any calendar year to any one Participant shall not exceed 1,000,000. The maximum number of shares of Common Stock subject to Awards (other than Stock Units issued or issuable upon exercise of Options) that may be granted during any calendar year to any one Participant shall not exceed 500,000 in the aggregate. Rights, and (3) the exercise price with respect to any of the foregoing and/or, if deemed appropriate, make provision for a cash payment to a Participant, made 4 (a) The persons eligible to receive Awards, Options and associated Limited Stock Appreciation Rights under the Plan shall consist of employees or prospective employees of the Company and consultants or advisors of the Company who, in the Committee’s judgment, can make substantial contributions to the Company’s long-term profitability and value. For purposes of the administration of previously granted Options and Awards, the term “Participant” shall also include a former Participant and any permitted transferee (including any trust, Participants by the Committee from time to time at its sole discretion, provided that no Option may be granted to a Participant unless the Company is an with respect to such Participant. Options intended to qualify as ISOs pursuant to Code Section 422 and Non-Qualified Options which are not intended to qualify as ISOs may be granted as the Committee in its sole discretion shall determine. Each Option grant shall contain such terms and conditions as may be approved by the Committee. Subject to the terms of the Plan, the Committee may establish provisions regarding (1) the number of shares of Common Stock which may be issued upon exercise of the Option, (2) the purchase price of the shares of Common Stock and the means of payment for the shares of Common Stock, (3) the term of the Option, (4) such terms and conditions of exercisability as may be determined from time to time by the Committee, (5) restrictions on the transfer of the Option and forfeiture provisions, and (6) such further terms and from time to time by the Committee. The grant of an Option shall not constitute or be evidence of any agreement or other understanding, express or implied, on the part of the Company or any Subsidiary to employ an individual for any specific period. Company, any Option granted on or after the Effective Date of the Plan may include a Limited Stock Appreciation Right at the time of grant of the Option. 5 date of its grant; and (2) A Limited Stock Appreciation Right shall, upon its exercise, entitle the optionee to whom such Limited Stock Appreciation Right was granted to receive an amount of cash equal to the amount by which the the Fair Market Value per share of Common Stock on the date of exercise of such Limited Stock Appreciation Right shall exceed the exercise price of the associated Option, multiplied by the number of shares of Common Stock with respect to which such Limited Stock Appreciation Right shall have been exercised. Upon the exercise of a Limited Stock Appreciation Right, any associated Option shall cease to be exercisable to the extent of the shares of Common Stock with respect to which such Limited Stock Appreciation Right was exercised. Upon the exercise or termination of an associated Option, any related Limited Stock Appreciation Right shall terminate associated Option was exercised or terminated. (1) The price at which each share of Common Stock may be purchased upon exercise of a particular Option shall be as specified by the Committee, in its sole discretion, but in no event shall the exercise price be less than 100% of the Fair Market Value of a share of Common Stock at the time such Option is granted, except that the Committee may specifically provide that the exercise price of an Option may be higher or lower in the case of an Option granted to employees of a company acquired by the Company in assumption and substitution of options held by such employees at the time such company is acquired, provided that such assumption and substitution shall not cause a violation of the requirements of Section 409A. (2) Unless approved by shareholders and subject to adjustment pursuant to Section 4(d), the exercise price of any Option previously awarded under the Plan may not be adjusted downward, whether through amendment, cancellation or replacement grants, or by any other means. (3) If the Committee, in its discretion, shall deem it desirable, and subject to the requirements of Section 409A, if applicable, the grant of an Option may be made conditional upon the receipt of a payment therefor by the optionee or upon the optionee agreeing to forego receipt of an amount of other compensation. Such condition and the terms and conditions as to its satisfaction may also provide for the reimbursement to the optionee of any part or all of such payment under such circumstances as the Committee may specify. 6 conditions as the Committee may, in its sole discretion, specify, provided, however, that except in connection with a Change of Ownership, (i) Options granted to Participants who are subject to Section 16 of the Exchange Act shall not become exercisable within six (6) months from the date of grant and (ii) in no event may any Option granted hereunder be exercisable after the expiration of 15 years from the date of such grant. Subject to the foregoing, each Option grant shall specify the effect thereon of the death, retirement or other termination of employment of the optionee. In addition, the Committee may impose such other conditions with respect to the exercise of Options, including without (2) No shares shall be delivered pursuant to any exercise of an Option until the Participant has made payment in full of the option price therefor or provision for such payment satisfactory to the Committee. The exercise price of an Option may be paid in cash or certified or cashiers’ check or by delivery (either actually or by attestation) of shares of Common Stock that have been acquired or held by the Participant in such manner as to not result in an accounting charge. To the extent authorized by the Committee, either at the time of grant or at the time of exercise of an Option, the exercise price of an Option also may be paid through one of more of the following: (i) shares of capital stock of the Corporation, (ii) other property deemed acceptable by the Committee, (iii) a reduction in the number of shares or other property otherwise issuable pursuant to such Option, (iv) a promissory note of or other commitment to pay by the Participant or of a third party, the terms and conditions of which shall be determined by the Committee, or (v) any combination of the foregoing. No optionee or the legal representative, legatee or distributee of an optionee shall be deemed to be a holder of any shares subject to any Option prior to the issuance of such shares upon exercise of such Option. (e) Transferability of Options. Unless the documents evidencing the grant of an Option (or an amendment thereto authorized by the Committee) expressly states that the Option is transferable as provided hereunder, no Option granted under (f) Evidence of Grant; Other Terms and Conditions. All Options shall be evidenced by an award agreement between the Company and the Participant. Such award agreement shall include such additional provisions not inconsistent with the Plan as may be specified by the Committee. The Committee shall determine the number of Shares subject to an Option and the 7 exercise price of such Option on or before the date of grant of such Option, and shall not amend an Option to reduce the per Share exercise price (except as permitted by Section 4(d) hereof), extend the exercise period of an Option beyond the earlier of the latest date upon which the Option could have expired date of grant of such Option, or otherwise modify such Option or add any feature for the deferral of compensation in any manner that would cause a violation of SECTION 7. Performance Stock Awards and Restricted Stock Awards. (a) Performance Stock Awards. Subject to the terms of this Plan, Performance at its sole discretion. Performance Stock Awards shall consist of an award of shares of Common Stock, the grant, issuance, retention and/or vesting of which shall be subject to such Performance Objectives, and to such further terms and conditions as the Committee deems appropriate. Each Performance Stock Award shall contain provisions regarding (1) the number of shares of Common Stock subject to such Award or a formula for determining such, (2) the performance the number of shares of Common Stock granted, issued, retainable and/or vested, (3) the period as to which performance shall be measured for determining achievement of such performance criteria (a “Performance Period”), (4) forfeiture provisions, and (5) such further terms and conditions, in each case Committee. The grant, issuance, retention and/or vesting of each Performance Stock Award shall be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria for any Performance Stock that is intended by the Committee to satisfy the requirements for “qualified performance-based compensation” under Code Section 162(m) shall be a measure based on one or more Performance Objectives selected by the Committee and specified at the time the Performance Stock Award is granted. Notwithstanding anything in this Plan to the contrary, Performance Stock Awards may provide that upon satisfaction of Performance Objectives the shares subject to the Award are subject to such further holding periods and/or restrictions on transferability as the Committee may provide. Any Performance Stock Award shall comply with, or be exempt from, the requirements of Section 409A. (b) Restricted Stock Awards. Subject to the terms of this Plan, Restricted Stock Awards may be granted to Participants by the Committee from time to time at its sole discretion. Restricted Stock consists of shares of Common Stock which are registered or are issuable by the Company in the name of a Participant in Company 8 to a Participant pursuant to a Restricted Stock award shall be determined by the Committee. (2) Subject to the requirements of applicable law, the Committee shall determine the price, if any, at which shares of Restricted Stock shall be sold or awarded which may be below the Fair Market Value of such Shares at the date of grant. (3) All shares of Common Stock transferred or sold as Restricted Stock hereunder shall be subject to such restrictions or conditions as the Committee may determine, including, without limitation any or all of the following: (i) a death, disability or retirement of the holder of such Shares, or otherwise); (c) Settlement of Awards. To the extent that any Performance Share Award or Restricted Stock Award provides for shares to be issued, or the Award to be otherwise settled, later than the date of grant of such Award, such issuance or settlement shall occur within 60 days after the date on which such Award shall vest. The Committee may provide for any Performance Share Award or Restricted Stock Award to be settled at such other time as it determines appropriate, provided that in no event shall any such Award be settled after the later of: (d) Rights with Respect to Shares. Unless the terms of the Award provide otherwise, unless and until shares subject to the Award are forfeited pursuant to the terms of this Plan or the Award, a Participant shall have the right to vote and to receive dividends and other distributions 9 on shares subject to a Performance Stock Award or Restricted Stock Award, subject, however, to the terms, conditions and restrictions described in this (e) Escrow. Shares of Common Stock issued pursuant to a Performance Stock Award or Restricted Stock Award may be held in escrow by the Company until such time as the Committee shall have determined that the restrictions set forth in (f) Restrictive Legends. Certificates for shares of Common Stock delivered of such event. (g) Designation of Beneficiaries. A Participant may designate a beneficiary or beneficiaries to receive such Participant’s Common Stock hereunder in the event any such beneficiary designation. All beneficiary designations and changes therein shall be in writing and shall be effective if and when delivered to the (h) Discretionary Adjustments. Notwithstanding satisfaction of any Performance Objectives, the number of shares of Common Stock granted, issued, retainable and/or vested under a Performance Stock Award on account of either financial discretion shall determine. The Committee may make adjustments or modifications, and its determination thereof shall be conclusive, in any applicable Performance Objectives to give effect to the intent of this Plan in connection with any event affecting the performance criteria established as the Performance Objectives, including without limitation, any reorganization, recapitalization, merger, consolidation, offering of additional shares of Common Stock or other change in the Company’s shareholders’ equity by means other than earnings, or any similar event, provided that any such adjustment or modification shall be made only to the extent that it will not cause a violation of the requirements of Section 409A. The grant of an Award shall not constitute or be evidence of any agreement or other understanding, express or implied, on the part of the Company or any Subsidiary to employ an individual for any specific period. SECTION 8. Stock Unit Awards 10 (a) Grant of Stock Unit Awards. The Committee shall have authority to grant to compensation, as specified by the Committee, provided that Stock Units shall not be granted in substitution for or payment of any Award or other compensation in a manner that causes a violation of the requirements of Section 409A. Subject to the provisions of the Plan, Stock Unit Awards shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules as the (b) Transferability of Stock Units. Unless the Stock Unit Award (or an amendment thereto authorized by the Committee) expressly states otherwise, any shares of Common Stock which are part of a Stock Unit Award shall not be assigned, sold transferred, pledged or otherwise encumbered before the date on which the shares are issued. (c) Settlement of Stock Units. Settlement of Stock Units shall be made by issuance of Common Stock (unless provided otherwise by the Committee at the time of grant).and shall occur within 60 days after the date on which such Stock Units shall vest. The Committee may provide in the terms of the Stock Unit Award for Stock Units to be settled in cash (in the sole discretion of the Company) and to be settled at such other times as it determines appropriate, provided that in no event shall any Stock Unit be settled after the later of: (i) the 15th day of the third month following the end of the Participant’s first taxable year in which the Stock Unit is no longer subject to a substantial risk of Company’s first taxable year in which the Stock Unit is no longer subject to a substantial risk of forfeiture. The amount of shares of Common Stock, or other settlement medium, to be so distributed may be increased by an interest factor or by dividend equivalents, which may be valued as if reinvested in Common Stock. Until a Stock Unit is settled, the number of shares of Common Stock occurred if either (1) individuals who, as of the Effective Date of this Plan, generally and as of the Effective Date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors constituting the Board of Directors, provided that any person becoming a director subsequent to the Effective Date of this Plan whose election, or nomination for election by the (i) in connection with the acquisition by a third 11 (ii) in connection with an actual or threatened election contest relating to the as described in this Section 10 shall have occurred. Options which become fully or expiration of any such Option. (b) For purposes of this Plan and any Option or Award hereunder, termination of employment shall not be deemed to occur upon the transfer of any optionee from the employ of the Company to the employ of any Subsidiary or affiliate. For purposes of this Plan, “affiliate” means (1) any entity 50% or more of the voting interest in which is owned, directly or indirectly, by an entity which owns, directly or indirectly, 50% or more of the voting interest in the Company (c) Either at the time an Award is granted or by subsequent action, the Committee may impose such restrictions, conditions or limitations as it Participant or other subsequent transfers by a Participant of any shares issued and manner of sales by Participants, and (iii) restrictions as to the use of a (d) The existence of outstanding Awards (including any Options) shall not affect authorize any or all adjustments, recapitalizations, reorganizations, exchanges, merger or consolidation of the Company, or any issuance of shares or other preferred or prior preference stock ahead of or affecting the shares or the as herein expressly provided, (i) the issuance by the Company of shares of stock or warrants to subscribe therefor, or upon 12 reason thereof shall be made with respect to, the number of shares subject to Options theretofore granted or the purchase price per share, unless the to provide equitable treatment to Participant. pursuant to an Award or any exercise of an Option until the requirements of such laws and regulations as may be deemed by the Committee to be applicable thereto are satisfied. of the restrictions pertaining to an Award, to the transfer of shares issued under an Award or to the delivery of shares in connection with the exercise of an Option, the Company may require the Participant to pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any taxes Stock. (b) Financing. If requested by a Participant who exercises an Option or who has received shares of Common Stock pursuant to an Award, the Committee may in its discretion provide financing to the Participant in a principal amount sufficient for the purchase of shares of Common Stock pursuant to such Option exercise or under such Award, and/or to pay the amount of taxes required by law to be Option. (1) If requested by a Participant who acquires shares of Common Stock upon the exercise of an Option or who has received Common Stock pursuant to an Award with respect to which the restrictions shall have lapsed, the Committee may in its discretion permit the Participant to satisfy any tax withholding obligations, in whole or in part, by having the Company withhold a portion of such shares with a value equal to the amount of taxes required by law to be withheld, based on the applicable minimum statutory withholding rates (or such other rate that will not create an adverse accounting cost or consequence). (2) Requests by a Participant to have shares of Common Stock withheld shall be SECTION 12. Amendments, Suspension or Discontinuance. The Board of Directors may 13 amend, suspend or discontinue the Plan or any Option or Award granted under the Plan. Notwithstanding the foregoing, except as permitted by Section 4(c), the Board may not, without prior approval of the shareholders of the Company, make any amendment which operates (a) to reduce the exercise price of outstanding Options or amend the provisions of Section 6(c)(2) relating to repricing Options, (b) to materially increase the total number of shares of Common Stock which may be delivered in respect of Awards or on exercise of Options granted under the Plan, (c) to extend the maximum option period or the period which Options or Awards may be granted under the Plan or (d) to reduce the minimum permissible Option exercise price. (a) Effective Date. The Plan became effective on February 1, 2001, the date the subsequently approved by the Company’s shareholders. This amendment and (b) Expiration Date. The Plan will expire on, and no Option or Award shall be granted under the Plan after, the date that is ten (10) years after the date on which the Plan was approved by the Company’s shareholders or after such earlier date as the Committee may decide, in its sole discretion. SECTION 14. Option Grants by Subsidiaries. In the case of a grant of an option be implemented by the Company issuing any subject shares to the Subsidiary, for such lawful consideration as the Committee may determine, upon the condition or understanding that the Subsidiary will transfer the shares to the optionholder in accordance with the terms of the option specified by the Committee pursuant option may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Committee shall determine. SECTION 15. Liability of the Company. The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, an Eligible Person or other persons as to: Participant, Eligible Person or other person due to the receipt, exercise or settlement of any option or other Award granted hereunder. SECTION 16. Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board or the Committee to adopt such 14 SECTION 17. Section 409A. (a) To the extent that the Committee determines that any Option or Award granted Option or Award shall comply with the requirements of Section 409A. To the extent applicable, the Plan and award agreements shall be interpreted in accordance with Section 409A, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the Effective Date or the Amendment Date. Notwithstanding any Date the Committee determines that any Option or Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the Effective Date or the Amendment Date, the Committee may adopt such amendments to the Plan and the applicable award agreement or adopt other policies and procedures (including amendments, policies and procedures (including amendments, or Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Option or Award, or (ii) comply with the (b) If, at the time of a Participant’s “separation from service” (within the meaning of Section 409A), (i) such Participant is a “specified employee” (within the meaning of Section 409A as determined annually by the Committee in accordance with the methodology specified by resolution of the Board or the Committee and in accordance with Section 1.409A-1(i) of the Treasury Regulations) and (ii) the Company shall make a good-faith determination that an amount payable pursuant to an Option or Award constitutes “deferred compensation” (within the meaning of Section 409A) the payment of which is 409A in order to preserve the tax treatment intended for such payment or to avoid additional tax, interest, or penalties under Section 409A, then the agreement between the Company and the relevant Participant. (c) For purposes of this Plan, whether a “separation from service” within the meaning of Section 409A has occurred shall be determined in accordance with Section 1.409A-1(h) of the Treasury Regulations. Without limiting the foregoing, (i) for a Participant who provides services to the Company as an employee, a separation from service shall be deemed to occur when a Participant has experienced a termination of employment with the Company, and the facts and anticipate that either (A) no further services will be performed for the Company after a certain date or (B) the level of bona fide services the Participant will independent 15 Company less than 36 months); and (ii) for a Participant who provides services to the Company as an independent contractor, a separation from service shall be deemed to occur upon expiration of all contracts under which services are performed for the Company, provided that such expiration constitutes a Participant and the Company, and provided, further, that for a Participant who provides services to the Company as both an employee and an independent contractor, a separation from service shall generally not occur until the Participant has ceased providing services for such Company as both an employee and an independent contractor pursuant to clauses (i) and (ii) of this sentence. For purposes of determining whether a separation from service has occurred, services performed for the Company shall include services performed both for the Company and for any other corporation that is a member of the same “controlled group” of corporations as the Company under Section 414(b) of the Code or any other trade or business (such as a partnership) that is under common control with the Company as determined under Section 414(c) of the Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations and substituting 1563(a) of the Code or Section 1.414(c)-2 of the Treasury Regulations. (d) A Participant shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on such Participant or for such Participant’s account in connection with an Option or Award (including any taxes, interest, and penalties under Section 409A), and neither the Company nor its affiliates shall have any obligation to indemnify or otherwise hold such Participant harmless from any or all of such taxes, interest, or penalties. 16

Exhibit 10.46     TO THE DIRECTORS AND STOCKHOLDERS OF INTEGRAL TECHNOLOGIES, INC. We have audited the accompanying consolidated balance sheet of Integral Technologies, Inc. as of June 30, 2013, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows the year 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 audit. audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, Company’s internal control over financial reporting. Accordingly, we express no then ended in conformity with accounting principles generally accepted in the The accompanying consolidated financial statements have been prepared assuming consolidated financial statements, the Company has no revenues and limited capital, which together raise substantial doubt about its ability to continue as described in note 3. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.   Chartered Accountants Vancouver, Canada September 27, 2013      

CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT by and between State Street Corporation, a Massachusetts corporation (the “Company”), and (the “Executive”), dated as of the day of , ___. The Board of Directors of the Company (the of Control (as defined in Section 3) of the Company. The Board believes that it to the Company Group (as defined in Section 2) currently and in the event of any period commencing on the date hereof and ending on December 31, 2018; provided, however, that commencing on December 31, 2017, and on each annual anniversary of of Rule 13d-3 promulgated   Information Classification: Limited Access 2 under the Exchange Act) of 25% or   Information Classification: Limited Access 3 3. Employment Period. The Company Executive by the Company Group in respect of the 12-month period immediately shall be payable as earned in equal installments, no less frequently than monthly, pursuant to the Company Group’s customary payroll policies applicable to the Executive in force at the time of payment, less any required or authorized payroll deductions, and unless the Executive shall elect to defer the receipt of a portion of such Annual Base Salary in accordance with the   Information Classification: Limited Access 4 (ii) Annual Bonus. In addition to least equal to the target bonus amount applicable to the Executive under the Company’s Senior Executive Annual Incentive Plan or any successor plan for the year in which the Effective Date occurs (the “Target Bonus Amount”). Each such Annual Bonus shall be paid no later than March 15th of the year succeeding the year for which the Annual Bonus is earned, unless the Executive shall elect to defer receipt of such Annual Bonus in accordance with the requirements of Section 409A of the Code. (iii) Incentive, Savings and Retirement Plans. During applicable generally to other peer executives of the Company Group, but in no provided by the Company Group for the Executive under such plans, practices, pursuant to this Section 4(b)(iii) shall be provided and paid in compliance with the relevant requirements of Section 409A of the Code. (iv) Welfare Benefit programs provided by the Company Group (including, without limitation, medical, generally to other peer executives of the Company Group, but in no event shall such plans, practices, policies and programs provide the Executive and/or the Executive’s family with benefits that are less favorable, in the aggregate, than Group in the country in which the Executive is employed. To the extent applicable, the benefits provided to the Executive and/or the Executive’s family pursuant to this Section 4(b)(iv) shall be provided and paid in compliance with the relevant requirements of Section 409A of the Code. (v) Expenses. During the Company Group in effect for the Executive at any time during the 120-day period employed. Reimbursement shall be made as soon as practicable after a request for reimbursement is received by the Company Group, but in no event later than the expense was incurred.   Information Classification: Limited Access 5 (vi) Fringe Benefits. During the the Executive is employed. (viii) Vacation. During the Employment Period, the favorable plans, policies, programs and practices of the Company Group as in the Company Group in the country in which the Executive is employed. 5. Termination of Employment. For purposes of this Agreement, the terms the   Information Classification: Limited Access 6 Executive’s employment. In such event, the Executive’s employment with the Company Group shall terminate “Disability Effective Date”); provided that, within the 30 days after such absence of the Executive from the Executive’s duties with the Company Group on a Executive’s legal representative. (b) Cause. The Company may terminate the Executive to perform substantially the Executive’s duties with the Company Group gross misconduct that is materially and demonstrably injurious to the Company. the Company or a senior officer of the Company who is a member of the Company’s executive management committee or based upon the advice of counsel for the specifying the particulars thereof in detail. (c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason during the the assignment to the Executive of any duties materially inconsistent in any by Section 4(a), or any other action by the Company Group which results in a excluding for this purpose an isolated, insubstantial and inadvertent   Information Classification: Limited Access 7 action not taken in bad faith and which is remedied by the Company Group promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company Group to comply with any of the provisions of Section 4(b), other than an isolated, insubstantial and required immediately prior to the Effective Date; (iv) any purported termination by the Company Group of the Executive’s employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with Resignation without Good Reason. Notwithstanding anything in this Agreement to the contrary, following the Effective Date, the Executive may, voluntarily, terminate his employment without Good Reason during the Employment Period. (e) other party hereto given in accordance with Section 14(b). For purposes of this termination date (which date shall be not more than 30 days [for Hong Kong employees: and not less than 7 days] after the giving of such notice [for Hong Kong employees: in all cases other than termination for cause or the death of (i) if the Executive’s employment is terminated by the Company for Cause, [or by the Executive for Good Reason,] the date of receipt of the Notice of Termination employment is terminated by the Company other than for Cause or Disability, [for Hong Kong employees: or by the Executive for Good Reason,] the Date of Termination shall be [for Hong Kong employees: 7 days after] the date on which the Company notifies the Executive of such termination [for Hong Kong employees: (unless payment in lieu of notice is made]; and (iii) if the Executive’s   Information Classification: Limited Access 8 6. Obligations of the Company upon in a lump sum in cash within [30 days] [for Hong Kong employees: 7 days] after the Date of Termination the aggregate of the following amounts: (A) the sum of extent not theretofore paid, (2) any earned Annual Bonus in respect of the fiscal year ended immediately prior to the Date of Termination to the extent not theretofore paid, (3) the product of (x) the Target Bonus Amount and (y) a (4) any accrued vacation pay, to the extent not theretofore paid (the sum of the to as the “Accrued Obligations”); and (B) the amount equal to the product of (1) two and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Target Bonus Amount; provided that any amount payable to the Executive pursuant to this clause (B) shall not exceed $10,000,000 (ten million dollars) (“Base and Bonus Cap”) and all rights to any amount payable under this subparagraph 7(i)(B) exceeding the Base and Bonus Cap shall be cancelled and the Executive shall have no further rights or entitlement to the amounts payable under this subparagraph 7(i)(B) that exceed the Base and Bonus Cap; and (C) the amount equal to the contributions allocated to the Executive under (x) the Company Group tax-favored defined contribution retirement plans applicable to the Executive and (y) the State Street Corporation Management Supplemental Savings Plan or any successor plan (the “Supplemental Savings Plan”) for the most recent full fiscal year; and (D) an amount equal to the product of (1) two and (2) an amount equal to the sum of any Company Group credits and the value of any share award allocated to the Executive under the State Street Corporation Executive Supplemental Retirement Plan or any successor plan (the “ESRP”) for the most recent full fiscal year; Section 4(b)(iv) if the Executive’s employment had not been terminated or, if with respect to other peer executives of the Company Group and their families in the country in which the Executive is employed on the same basis as in effect becomes reemployed with another employer and is eligible to   Information Classification: Limited Access 9 receive medical or other welfare plan during such applicable period of eligibility; provided further that to the extent necessary to avoid the imposition of additional taxes, penalties and interest under Section 409A of the Code, any reimbursements of expenses pursuant to this Section 6(a)(ii) shall be made on or before the last day of the calendar year next following the calendar year in which such expense was incurred. For Termination, in his benefits under the Supplemental Savings Plan and the ESRP. (b) Death. If, during the Employment Period, the Executive’s employment is terminated by reason of the Executive’s death, this Agreement shall terminate benefits under the Supplemental Savings Plan and the ESRP. The Accrued applicable, in a lump sum in cash within [30 days] [for Hong Kong employees: 7 days] after the Date of Termination. With respect to the provision of Other benefits provided by the Company Group to the estates and beneficiaries of peer executives of the Company Group under such plans, programs, practices and Company Group and their beneficiaries in the country in which the Executive is employed. (c) Disability. If, during the Employment Period, the Executive’s employment is terminated by reason of the Executive’s Disability, this Agreement shall terminate without further obligations to the Executive under this Agreement, other than for   Information Classification: Limited Access 10 payment of Accrued Obligations, the timely payment or provision of Other Benefits, and immediate vesting, as of the Date of Termination and to the extent not theretofore vested, of the Executive’s benefits under the Supplemental Savings Plan and the ESRP. The Group and their families in the country in which the Executive is employed. (d) For Cause; Other than for Good Reason. If, during the Employment Period, the Executive’s employment shall be terminated for Cause, this Agreement shall to pay or to provide to the Executive (x) his Annual Base Salary through the Date of Termination within [30 days] [for Hong Kong employees: 7 days] unpaid. Subject to Section 7, if, during the Employment Period, the Executive voluntarily terminates employment, excluding a termination for Good Reason, this the Date of Termination. 7. Non-exclusivity of Rights. Nothing in this Agreement plan, program, policy or practice provided by the Company Group and for which the Executive may qualify, nor, subject to Section 14(g), shall anything herein contract or agreement with the Company Group, including, without limitation, the ESRP; provided, however, that, following the Effective Date, the severance provisions of this Agreement shall supersede any Company severance pay plan in which the Executive may otherwise participate. Amounts which are vested benefits Code. Anything in the ESRP to the contrary notwithstanding, during the   Information Classification: Limited Access 11 8. Full Settlement. The Company’s Company may have against the Executive or others, except as required by applicable law or regulation. In no event shall the Executive be obligated to employment. Furthermore, the Executive shall be entitled to receive from the Company payment in respect of all direct and indirect damages as a result of any material breach by the Company of this Agreement. From the date hereof until the 20th anniversary of the later of (i) the Date of Termination and (ii) the date of the Executive’s death, the Company agrees to pay as incurred, to the full extent permitted by law, any legal fees and/or expenses which the Executive may liability under, or breach by the Company of, any provision of this Agreement or payment of legal fees and/or expenses shall not be provided to the Executive later than the last day of the second calendar year in which the relevant fees or expenses were incurred; provided, further, that the amount of any legal fees and/or expenses paid by the Company on behalf of the Executive during a calendar year shall not affect any legal fees and/or expenses to be paid by the Company on behalf of the Executive in any other calendar year. 9. Application of Section 4999 of the Code. (a) This Section 9 shall apply, in the event it shall be determined that any payment or distribution by the Company Group to or for the “Payments”) could reasonably be expected to be subject to the excise tax imposed “Excise Tax”). (b) If it shall be determined that the Parachute Value of the Payments (as defined below) is equal to or less than 110% of the Safe Harbor Amount (as defined below), then the amount of the Payments otherwise due to, or for the benefit of, the Executive shall be reduced to the extent necessary, and in a manner intended to comply with Section 409A of the Code, to assure that the Parachute Value of the Payments, as calculated for the Payments remaining after such reduction, does not exceed the Safe Harbor Amount (a “Cutback”). To the extent any such reduction to the Executive’s Payments becomes necessary by reason of the preceding sentence; the reduction shall be applied by (x) reducing the cash payments and benefits due to the Executive under this Agreement in the following order: Section 6(i)(B), Section 6(i)(C) and then, if applicable, Section 6(i)(D),or (y) an order of reduction specified by the Executive; provided, however, that the Executive’s right to specify the order of reduction of the payments or benefits shall apply only to the extent that it does not deferred compensation subject to Section 409A. For the purposes of this Section 9, (i) “Parachute Value of the Payments” shall mean the present value, as of the   Information Classification: Limited Access 12 determined by the Accounting Firm (as defined in Section 9(c)) for purposes of determining whether and to what extent the Excise Tax will apply to such Payments, and (ii) “Safe Harbor Amount” shall mean the maximum Parachute Value of the Payments that the Executive can receive without any Payments being subject to the Excise Tax. (c) If it shall be determined that the Parachute Value of the Payments is greater than 110% of the Safe Harbor Amount, then the value of the Payments to be made to the Executive shall be either (i) subject to a Cutback or (ii) delivered in full, whichever of an after-tax basis (taking into account the Executive’s actual marginal rate of federal, state and local income taxation and the Excise Tax). (d) All when a Cutback is required and the amount of such Cutback and the assumptions to LLP or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”); provided that such Accounting Firm shall be independent of the Executive. In the event that the independent nationally recognized accounting firm to make the determinations be binding upon the Company and the Executive. The Accounting Firm shall make the determinations required under this Section 9 on a preliminary basis and provide to both the Company and the Executive the detailed supporting calculations on an initial basis, as soon as reasonably practicable prior to the making of any Payment, but in no event later than 10 days prior to the Effective Date. Thereafter, the Accounting Firm shall timely make any further determinations as may be required under this Section 9 and provide to both the Company and the Executive additional detailed supporting calculations as necessary or appropriate to effectuate the provisions of this Section 9. If, as the time of the preliminary or a subsequent determination by the Accounting Firm hereunder, amounts that should have been subject to a Cutback were instead paid or provided to the Executive (“Overpayment”), consistent with the calculations required to be made hereunder, then, in the event that the Executive is required to make a payment of any Excise Tax solely as a result of an Overpayment, the Accounting Firm shall determine the amount of the Overpayment that has occurred and the Company shall indemnify the Executive for any damages, including, without limitation, the Excise Tax, and costs incurred by him resulting from any Overpayment. Any amounts payable by the Company or any other member of the Company Group to the Executive as a result of the Company’s indemnification obligations as provided for in the immediately preceding sentence shall be paid which the Executive remits the related taxes. 10. Confidential Information; Restriction on Solicitation of Employees and Clients. By and in consideration of the compensation and benefits provided for by the Company under this Agreement, including the severance arrangements set forth herein, the Executive agrees that: (a) The Executive shall hold in a fiduciary capacity for the benefit of to the Company   Information Classification: Limited Access 13 Group, and the respective businesses of the members of the Company Group and their Clients (as defined below), which shall have been obtained by the Executive during the Executive’s employment by the Company Group and which shall not be or become public earlier of (i) [18 months after the Termination Date] [for Hong Kong employees: 6 months after the Termination Date and for a further 6 month period after that initial period] and (ii) [one year after the Effective Date (if any)] [for Hong Kong employees: 6 months after the Effective Date (if any) and for a further 6 month period after that initial period]. If the Executive violates a restriction to which the Nonsolicitation Period applies under this Section 10(d) or 10(e), then the the Nonsolicitation Period shall be extended, with respect only to the restriction violated by the Executive, by the amount of time for which the Executive was out of compliance with such restriction. (e) During the term of employment of the Executive and during the Nonsolicitation Period, the Executive shall not, without the prior consent of the Company, [directly or indirectly,] engage in the Solicitation of Business (as defined below) from any Client on behalf of any person or entity other than the Company and its subsidiaries. For the purposes of this Section 10(c), the term “Solicitation of Business” shall mean the attempt through direct   Information Classification: Limited Access 14 personal contact on the part of the Executive with a Client with whom the Executive has had significant personal contact while serving in a Line-Function Capacity (as defined below) during his period of employment to [solicit or] induce such Client to transfer its business relationship [in whole or in part] from the Company and its subsidiaries to any other person or entity. The term “Line-Function Capacity” means service to the Company and its subsidiaries in a primary capacity other than a staff function, in which the Executive has direct and regular contact with Clients and responsibility for managing the business relationship of the Company and its subsidiaries with such Clients. During the Nonsolicitation Period, the Executive may accept employment with or enter into a business relationship with a person or entity that has or seeks to establish business relationships with one or more Clients provided that the Executive does not engage in the Solicitation of Business from such Clients and does not disclose confidential information concerning such Client and its relationship with the Company and its subsidiaries to any such person or entity. (f) In no event shall an asserted Agreement. (g) This Section 10 shall be effective from and after the date of this Agreement notwithstanding that an Effective Date has not occurred, and the restrictions and covenants set forth in this Section 10 shall be in addition to, and shall not supersede, any restrictions or covenants to which the Executive may be subject pursuant to other plans, programs or agreements with the Company, including, without limitation, the nonsolicitation and noncompetition provisions contained in Section 3.6 of the ESRP (except to the extent specifically provided otherwise in Section 7 of this Agreement). (h) The provisions contained in this Section 10 are necessary to the protection of the Company’s business and good will, and are material and integral to the undertakings of the Company under this Agreement. The Executive agrees that the Company and its subsidiaries will be irreparably harmed in the event such provisions are not performed in accordance with their specific terms or are otherwise breached by the Executive. Accordingly, if the Executive fails to comply with such provisions, the Company or any of its subsidiaries shall be entitled to injunctive or other equitable relief or remedy in addition to, and not in lieu of, any other relief or remedy at law to which it or they may be entitled hereunder in order to protect its or their legitimate business interests. Therefore, the Executive agrees that the Company or any of its subsidiaries shall, in the event of any breach or threatened breach by the Executive of the provisions of this Section 10, in addition to such other remedies as may be available, be entitled to specific performance and injunctive relief without posting a bond. The Executive hereby waives the adequacy of a remedy at law as a defense to such relief. (i) No delay or waiver by the Company in exercising any right under this Section 10 shall as to any of the provisions herein provided by the Company must be in writing, occasion. (j) The restrictions and covenants set forth in this Section 10 shall permit their enforcement to the maximum extent permitted by law, and each such provision is severable and   Information Classification: Limited Access 15 independently enforceable without forth in this Section 10 is found by any court of competent jurisdiction to be geographic area as to which it may be enforceable. 11. Section 409A of the Code. the Code with respect to amounts subject thereto and shall be interpreted and construed and shall be performed by the parties consistent with such intent, and the Company shall not accelerate any payment or the provision of any benefits under this Agreement or to make or provide any such payment or benefits if such under Section 409A of the Code. (b) Except as expressly provided otherwise herein, no reimbursement payable to the Executive pursuant to any provisions of following the calendar year in which the related expense was incurred, and no such reimbursement during any calendar year shall affect the amounts eligible 6(a), assuming that the Effective Date is the Date of Termination. 13. otherwise than by will   Information Classification: Limited Access 16 or the laws of descent and This Agreement may not be assigned by the Company, other than to a member of the Company Group, without the written consent of the Executive, and the Company perform it if no such succession had taken place. In the event that the Company obtains the express assumption and agreement to perform this Agreement as contemplated by the preceding sentence, the Executive agrees that his execution of this Agreement shall serve as his written consent in such circumstance. As agrees to perform this Agreement by operation of law, or otherwise. 14. communications hereunder shall be in writing and shall be given to the other party by hand delivery, by electronic email, or by private overnight delivery, in each case with proof of receipt, addressed as follows: If to the Executive, at the most recent address in the records of the Company Group. If to the Company: State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111-2900 Attention: Chief Legal Officer or to such other accordance herewith. For purposes of this Agreement, notice and communications shall be effective (i) on the date of delivery, with respect to hand delivery, or (ii) when posted with respect to email or private overnight delivery, except with respect to a Notice of Termination, which shall be effective when actually received by the addressee, with respect to any form of delivery. (c) The in this Agreement, unless   Information Classification: Limited Access 17 otherwise specified, refer to the applicable section, paragraph or subparagraph of this Agreement. In addition, for the purposes of this Agreement, references to statutes and regulations shall be deemed to include any amended, modified or successor statutes or regulations. pursuant to any applicable law or regulation and all other authorized deductions. (f) The Executive’s or the Company’s failure to insist upon strict provision or right or any other provision or right of this Agreement. (g) The under any other written agreement between the Executive and any member of the Company Group, the employment of the Executive by the Company Group is “at will” shall have no further rights under this Agreement. (h) This Agreement sets forth all of the promises, agreements, conditions and understandings between the parties hereto respecting the subject matter hereof and supersedes all prior negotiations, conversations, discussions, correspondence, memoranda and agreements between the parties concerning such subject matter. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof. [For Mr. Erickson: Further, this Agreement is to be read in conjunction with your individual contract of employment. In the event that there is any inconsistency between any of the terms of this Agreement and those set out in your contract of employment, the terms of this Agreement which are inconsistent shall prevail.] (i) This same instrument. For purposes of this Agreement, facsimile signatures shall be promptly as possible following execution of this Agreement. The Executive   Information Classification: Limited Access 18 IN WITNESS WHEREOF, the Executive [Executive] ______________________________ STATE STREET CORPORATION By Todd Gershkowitz EVP, Chief Operating Officer - Global Human Resources and Corporate Citizenship  

EXHIBIT 2.3 AGREEMENT AND PLAN OF MERGER By and Between ASPEN GROUP, INC. and ELIT NUTRITIONAL BRANDS, INC. AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger (the "Plan") is adopted as February 15, 2012, by and between Elite Nutritional Brands, Inc., a Florida corporation ("Elite Nutritional Brands"), and Aspen Group, Inc., a Delaware corporation and a wholly owned subsidiary of Elite Nutritional Brands ("Aspen Group"). WHEREAS, Elite Nutritional Brands is a corporation duly organized and existing under the laws of the State of Florida.; WHEREAS, Aspen Group is a corporation duly organized and existing under the laws of the State of Delaware; WHEREAS, as of the date hereof, Elite Nutritional Brands has authority to issue 300,000,000 shares consisting of 300,000,000 shares of common stock, $0.0001 par value per share ("Florida Common Stock") of which 122,400,000 shares are issued and outstanding; WHEREAS, asof the date hereof, Aspen Group has authority to issue 125,000,000 shares consisting of 120,000,000 shares of common stock. $0.001 par value per share ("Delaware Common Stock"), of which Ten shares are issued and outstanding, and 10,000 shares of preferred stock par value $0.001 per share ("Delaware Preferred Stock"); none of which shares of Delaware Preferred Stock are issued and outstanding; WHEREAS, on the date hereof, the Ten shares of Delaware Common Stock issued and outstanding are owned by Elite Nutritional Brands; WHEREAS, the respective boards of directors of Aspen Group and Elite Nutritional Brands have determined that, for the purpose of effecting the reincorporation of Elite Nutritional Brands in the State of Delaware, it is advisable and in the best interests of such corporations and their respective shareholders that Elite Nutritional Brands merge with and into Aspen Group upon the terms and conditions herein provided; WHEREAS, the respective boards of directors of Aspen Group and Elite Nutritional Brands have approved this Plan; and WHEREAS, the respective shareholders of Aspen Group and Elite Nutritional Brands have approved this Plan. NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, Elite Nutritional Brands and Aspen Group hereby agree to merge as follows: 1. Merger. Subject to the terms and conditions hereinafter set forth, Elite Nutritional Brands shall be merged with and into Aspen Group, with Aspen Group to be the surviving corporation in the merger (the “Merger”). The Merger shall be effective on the later of the date and time (the “Effective Time”) that a properly executed certificate of merger consistent with the terms of this Plan and Section 252 of the Delaware General Corporation Law (the “DGCL”) is filed with the Secretary of State of Delaware or articles of merger are filed with the Secretary of State of Florida. 2. Principal Office of Aspen Group.The address of the principal office of Aspen Group is 301 Kindermack Road, Suite A-2, Westwood, NJ 07675. 3. Corporate Documents. The Articles of Incorporation of Aspen Group, as in effect immediately prior to the Effective Time, shall continue to be the Articles of Incorporation of Aspen Group as the surviving corporation without change or amendment until further amended in accordance with the provisions thereof and applicable law. The Bylaws of Aspen Group, as in effect immediately prior to the Effective Time, shall continue to be the Bylaws of Aspen Group as the surviving corporation without change or amendment until further amended in accordance with the provisions thereof and applicable law. 1 4. Directors and Officers. The directors and officers of Elite Nutritional Brands at the Effective Time shall be and become directors and officers, holding the same titles and positions, of Aspen Group at the Effective Time, and after the Effective Time shall service in accordance with the Bylaws of Aspen Group. 5. Succession. At the Effective Time, Aspen Group shall succeed to Elite Nutritional Brands in the manner of and as more fully set forth in Section 259 of the DGCL and as set forth under Florida Law. 6. Further Assurances.From time to time, as and when required by Aspen Group or by its successors and assigns, there shall be executed and delivered on behalf of Elite Nutritional Brands such deeds and other instruments, and there shall be taken or caused to be taken by it such further and other action, as shall be appropriate or necessary in order to vest or perfect in or to confer of record or otherwise in Aspen Group the title to and possession of all interests, assets, rights, privileges, immunities, powers, franchises and authority of Elite Nutritional Brands and otherwise to carry out the purposes and intent of this Plan, and the officers and directors of Aspen Group are fully authorized in the name and on behalf of Elite Nutritional Brands or otherwise to take any and all such actions and to execute and deliver and an all such deeds and other instruments. 7. Common Stock of Elite Nutritional Brands. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof each 2.5 shares of Florida Common Stock outstanding immediately prior thereto shall be changed and converted automatically into one fully paid and nonassessable share of Delaware Common Stock. All fractional shares shall be rounded up. 8. Stock Certificates. At and after the Effective Time, all of the outstanding certificates which prior to that time represented shares of Florida Common Stock shall be deemed for all purposes to evidence ownership of and to represent shares of Delaware Common Stock into which the shares of the Florida Common Stock, represented by such certificates have been converted as herein provided. The registered owner on the books and records of Elite Nutritional Brands or its transfer agent of any such outstanding stock certificates shall, until such certificate shall have been surrendered for transfer or otherwise accounted to Aspen Group or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividend and other distributions upon the shares of Florida Common Stock. 9. Options; Warrants. Each option, warrant or other right to purchase 2.5 shares of Florida Common Stock, which are outstanding at the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become an option, warrant or right to purchase, respectively, one share of Delaware Common Stock as the case may be at an exercise or purchase price per share equal to the exercise or purchase price applicable to the option, warrant or other right to purchase Florida Common Stock. Common Stock of Aspen Group.At the Effective Time, the previously outstanding Ten shares of Florida Common Stock registered in the name of Elite Nutritional Brands shall, by reason of the Merger, be reacquired by Aspen Group, shall be retired and shall resume the status of authorized and unissued shares of Florida Common Stock and no shares of Florida Common Stock or other securities of Aspen Group shall be issued in respect thereof. Amendment.The Board of Directors of Elite Nutritional Brands and Aspen Group may amend this plan at any time prior to the Merger, provided that an amendment made subsequent to the adoption of the Plan by the sole shareholder of Aspen Group or the stockholders of Elite Nutritional Brands shall not (i) alter or change the amount or kinds of shares, securities, cash, property and/or rights to be received in exchange for the Delaware Common Stock or Delaware Preferred Stock (ii) alter or change any term of the articles of incorporation of Aspen Group, as surviving corporation to the Merger, or (iii) alter or change any of the terms and conditions of the plan if such alteration or change would adversely affect the holders of Delaware Common Stock or Delaware Preferred Stock. 2 Abandonment.At any time before the Effective Time, this Plan may be terminated and the Merger contemplated hereby may be abandoned by the Board of Directors of either Elite Nutritional Brands or Aspen Group or both, notwithstanding approval of this Plan by the sole shareholder of Aspen Group or the stockholders of Elite Nutritional Brands, or both. Rights and Duties of Aspen Group. At the Effective Time and for all purposes the separate existence of Elite Nutritional Brands shall cease and shall be merged with and into Aspen Group which, as the surviving corporation, shall thereupon and thereafter possess all the rights, privileges, immunities, licenses and franchises (whether of a public or private nature) of Elite Nutritional Brands; and all property (real, personal and mixed) all debts on whatever account, all choices in action, and all and every other interest of or belonging to or due to Elite Nutritional Brands shall continue and be taken and deemed to be transferred to and vested in Aspen Group without further act or deed; and the title to any real estate or any other interest therein, vested in Elite Nutritional Brands shall not revert or be in any way impaired by reason of such Merger; and Aspen Group shall thenceforth be responsible and liable for all liabilities and obligations of Elite Nutritional Brands; and, to the extent permitted by law, any claim existing, or action or proceeding pending, by or against Elite Nutritional Brands may be prosecuted as if the Merger had not taken place, or Aspen Group may be substituted in the place of such corporation. Neither the rights of creditors nor any liens upon the property of Elite Nutritional Brands shall be impaired by the Merger. If at any time Aspen Group shall consider or be advised that any further assignment or assurances in law or any other actions are necessary or desirable to vest the title of any property or rights of Elite Nutritional Brands in Aspen Group according to the terms hereof, the officers and directors of Aspen Group are empowered to execute and make all such proper assignments and assurances and do any and all other things necessary or proper to vest title to such property or other rights in Aspen Group and otherwise to carry out the purposes of this Plan. Consent to Service of Process.Aspen Group hereby agrees that it may be served with process in the State of Delaware in any proceedings for enforcement of any obligation of Elite Nutritional Brands, as well as for enforcement of any obligation of Aspen Group arising from the Merger. Aspen group hereby irrevocably appoints the Secretary of State of the State of Delaware and the successors of such officer its attorney in fact in the State of Delaware upon whom may be served any notice, process or pleading in any action or proceeding against it to enforce against Aspen Group any obligation of Elite Nutritional Brands. In the event of such service upon the Secretary of the State of the State of Delaware or the successors of such officer, such service shall be mailed to the principal office of Aspen Group at 301 Kindermack Road, Suite A-2, Westwood, NJ 07675. IN WITNESS HEREOF, this Agreement and Plan of Merger, having first been duly approved by resolution of the Board of Directors of Elite Nutritional Brands and Aspen Group, has been executed on behalf of each of said two corporations by their respective duly authorized officers. Elite Nutritional Brands, Inc. a Florida Company By: /s/ Don Ptalis Don Ptalis, CEO Aspen Group, Inc. a Delaware Corporation By: /s/ Don Ptalis Don Ptalis, CEO 3

Title: I paid my month's rent. 5 days after, I was flooded out. I'm about to move back into that apartment now. Am I entitled to 25 days before paying rent again? Question:I originally posted this on /r/answers , but they told me to post here. I live in NY , btw. TL:DR; Just giving context. Basement apartment flooded. Roommate and I worked to get a lot of the initial water out, then paid for the electricity that the professionals used to get more water out (without getting reimbursed). Didn't just ditch the apartment after it flooded. If more context is needed, I paid my first and last month's rent as normal when I moved in. Around 5 months ago, I paid the month's rent, and 5 days after I paid that rent there was a flash flood which ruined my basement apartment. That day, my roommate and I couldn't live there anymore, so we moved out for the time being. Moved some of our things to the upstairs apartment (where my roommate's relative was living). My landlord is my roommate's uncle (and my roommate is my friend). We'd like to keep staying at the location, so we've helped a bit with the apartment. Using a carpet cleaner to try and get water out, using baking soda to try and absorb moisture. It became obvious that this needed to be done professionally. Professionals came in and started out by airing out the place, leaving a bunch of fans on overnight. The upstairs tenant ended up having to pay the electric bill for this. We felt bad for him so we pitched in for the bill. Later, our landlord told us he couldn't reimburse us for this. We just left it at that since the landlord is my friend's uncle. Now, at present day, the rug of the apartment has been taken out and we're waiting for the new one to be put in. The bottom half of the walls were taken out and replaced to get rid of mold. We've been repainting the walls since they were two different colors. I'm not sure if any of those details matter. Just saying that we didn't ditch the place after if flooded. So as I said, do I still get those 25 days that my rent paid for when I move back in? Answer #1: Your landlord is required to abate rent for any period of time that the apartment was uninhabitable, unless he provided you with a place to stay in the meantime. http://nycourts.gov/COURTS/nyc/housing/pdfs/warrantyofhabitability.pdf edit: that link's specific to NYC, but the same rationale applies most anywhere [except Arkansas]. http://metcouncilonhousing.org/help_and_answers/statutory_rights_of_residential_tenants_in_new_yorkAnswer #2: Please have the apartment tested for mold - you could be moving back into a health hazard and not realize it.

  Exhibit 10.18 Execution Copy THIRD AMENDMENT           THIRD AMENDMENT, dated as of December 13, 2005 (this “Amendment”), to the Credit Agreement, dated as of May 13, 2004 (as amended, supplemented or Borrower;           SECTION 2. Amendment to Section 1.1 [Defined Termsl. (a) The “Applicable Percentage” definition is hereby amended by deleting the two left columns of the table set forth therein in their entirety (the columns located under the headings “Eurodollar Spread-Term Loans” and “ABR Spread-Term Loans”) and substituting in lieu thereof the following two columns:       Eurodollar Spread-Term Loans   ABR Spread-Term Loans 3.00%   2.00%           (b) The “Pricing Grid” definition is hereby amended by deleting the table set forth therein in its entirety and substituting in lieu thereof the following table:   2               Eurodollar         Spread-Revolving   ABR Spread-Revolving     Loans and Swingline   Loans and Swingline Leverage Ratio   Loans   Loans Category 1         Greater than 4.75 to 1.00   3.00%   2.00%           Category 2         Greater than 3.50 to 1.00 but less than or equal to 4.75 to 1.00   2.75%   1.75%           Category 3           2.50%   1.50%           Category 4           2.25%   1.25%           Category 5           2.00%   1.00%           (c) The “Consolidated EBITDA” definition is hereby amended by (i) deleting the term “and” set forth immediately prior to clause (xvi) and inserting in lieu thereof a “,” and (ii) inserting the following new language at the end of clause (xvi) thereof immediately prior to the word “minus”:”      “, (xvii) charges related to the shutdown of the cellulosic business incurred during such period not to exceed $15,000,000 with respect to cash charges for all periods (provided, that any increase in Consolidated EBITDA resulting from this clause (xvii) shall not be applicable for determining pricing under the “Applicable Percentage” and “Pricing Grid” definitions) and (xviii) any fees and expenses payable in connection with the Third Amendment”           (d) The “Excess Cash Flow” definition is hereby amended by (i) deleting the language set forth in clause (b)(vii) in its entirety and substituting in lieu thereof the language: “RESERVED”, (ii) deleting the term “and” set forth immediately after clause (b)(xvii) thereof and inserting in lieu thereof a “,” and (iii) inserting the following language at the end of clause (b)(xviii) thereof:      “and (xix) to the extent included in determining Consolidated EBITDA pursuant to clause (xvii) of the definition thereof, the amount of cash charges incurred in connection with the shutdown of the cellulosic business.”   3      “Index Debt Rating”: the rating of senior, unsecured, long-term      “Moody’s Ratings Reduction Event”: the occurrence of either of the following events: (i) a downgrade in the Index Debt Rating by Moody’s below the Index Debt Rating by Moody’s in effect on December 13, 2005 or (ii) the failure of Moody’s to have in effect an Index Debt Rating.      “S&P Ratings Reduction Event”: the occurrence of either of the following events: (i) a downgrade in the Index Debt Rating by S&P below the Index Debt Rating by S&P in effect on December 13, 2005 or (ii) the failure of S&P to have in effect an Index Debt Rating.           SECTION 3. Amendment to Section 2.11 [Prepayment of Term Loan Borrowings]. Section 2.1l(a) of the Credit Agreement is hereby amended by deleting such section in its entirety and substituting in lieu thereof the following:      “(a) (i) The Borrower shall pay to the applicable Lenders, through the Administrative Agent, on the dates set forth below, or if any such date is not a “Repayment Date”), a principal amount of the US$ Term Loans (as adjusted from time to time pursuant to Sections 2.1l(c), 2.12, 2.13(e) and 2.23(d)) of each such Lender, which shall be in an amount equal to such Lender’s US$ Term Percentage multiplied by the amount set forth below opposite such installment (together in each case with accrued and unpaid interest on the principal amount           Repayment Date   Principal Amount   December 30, 2006   $ 839,258.31   March 31, 2007   $ 839,258.31   June 30, 2007   $ 839,258.31   September 29, 2007   $ 839,258.31   December 29, 2007   $ 839,258.31   March 29, 2008   $ 839,258.31   June 28, 2008   $ 839,258.31   September 27, 2008   $ 839,258.31   January 3, 2009   $ 839,258.31   April 4, 2009   $ 839,258.31   June 27, 2009   $ 839,258.31   October 3, 2009   $ 839,258.31   January 2, 2010   $ 839,258.31   April 3, 2010   $ 839,258.31   July 3, 2010   $ 839,258.31   October 2, 2010   $ 839,258.31   January 1, 2011   $ 839,258.31   April 2, 2011   $ 839,258.31     4           Repayment Date   Principal Amount   July 2, 2011   $ 839,258.31   October 1, 2011   $ 839,258.31   Term Loan Maturity Date   $ 311,364,833.76        (ii) The Borrower shall pay to the applicable Lenders, through the Business Day, on the next preceding Repayment Date, a principal amount of the 2.12, 2.13(e) and 2.23(d)) of each such Lender, which shall be in an amount equal to such Lender’s Euro Term Percentage multiplied by the amount set forth below opposite such installment (together in each case with accrued and unpaid payment):           Repayment Date   Principal Amount   December 30, 2006   € 81,483.38   March 31, 2007   € 81,483.38   June 30, 2007   € 81,483.38   September 29, 2007   € 81,483.38   December 29, 2007   € 81,483.38   March 29, 2008   € 81,483.38   June 28, 2008   € 81,483.38   September 27, 2008   € 81,483.38   January 3, 2009   € 81,483.38   April 4, 2009   € 81,483.38   June 27, 2009   € 81,483.38   October 3, 2009   € 81,483.38   January 2, 2010   € 81,483.38   April 3, 2010   € 81,483.38   July 3, 2010   € 81,483.38   October 2, 2010   € 81,483.38   January 1, 2011   € 81,483.38   April 2, 2011   € 81,483.38   July 2, 2011   € 81,483.38   October 1, 2011   € 81,483.38   Term Loan Maturity Date   € 30,230,332.48             SECTION 4. Amendment to Section 2.13 [Mandatory Prepayments]. Section 2.13 of the Credit Agreement is hereby amended by deleting Section 2.13(c) in its entirety and substituting in lieu thereof the following:      “(c) No later than 90 days after the end of each fiscal year of the Borrower, the Borrower shall prepay outstanding Term Loans in accordance with Section 2.13(e) in an aggregate principal amount equal to (x) with respect to each fiscal year ended on or before December 29, 2007, 75% of Excess Cash Flow for the fiscal year then ended and (y) with respect to each fiscal year thereafter, 50% of Excess Cash Flow for the fiscal year then ended; provided, however, that, with respect to clause (y) above (but not clause (x)), (A) in the event the Leverage Ratio at the end of any such fiscal year was equal to or less than 3.75 to 1.00 and greater than 3.25 to 1.00, then such amount shall be reduced to 25% of such Excess Cash Flow and (B) in the event the Leverage Ratio at the end of any such fiscal year was equal to or less than 3.25 to 1.00, no such prepayment shall be required.”   5           SECTION 5. Amendment to Article II [The Credits]. Article II of the Credit Agreement is hereby amended by inserting the following new Sections in appropriate numerical order:      “SECTION 2.24. Pricing Increase Upon a Ratings Reduction Event. Notwithstanding anything set forth herein to the contrary, it is understood and agreed that the interest rate otherwise applicable to any Loan hereunder shall be increased by (a) 0.25% per annum, for so long as either a Moody’s Ratings Reduction Event or an S&P Ratings Reduction Event has occurred and is continuing or (b) 0.50% per annum, for so long as both a Moody’s Ratings Reduction Event and an S&P Ratings Reduction Event has occurred and is continuing.      SECTION 2.25. Prepayment Fees. In the event that, on or before December 13, 2007 (x) any prepayment of the Term Loans is made pursuant to Section 2.13(d) or (y) the Borrower optionally prepays the Term Loans with the proceeds from an incurrence of Indebtedness, the Borrower shall pay to each Term Lender a fee in an amount equal to the product of (a) 1.00% and (b) the principal amount of the Term Loans of such Lender so prepaid.”           SECTION 6. Amendment to Section 6.4 [Investments, Loans and Advances]. Section 6.4 of the Credit Agreement is hereby amended by (i) deleting the first two lines set forth in clause (c) thereof immediately prior to the first proviso therein and substituting in lieu thereof the language: “loans or advances made by the Borrower or any Subsidiary to the Borrower or any other Subsidiary”, (ii) deleting the “,” at the end of clause (c)(i) and substituting in lieu thereof the word “and”, (iii) deleting the word “and” immediately before clause (c)(iii) and substituting in lieu thereof a “.” and (iv) deleting clause (c)(iii) thereof in its entirety.           SECTION 7. Amendment to Section 6.6 [Restricted Payments: Restrictive Agreements]. Section 6.6 of the Credit Agreement is hereby amended by deleting clauses (a)(iii) through (a)(vii) thereof in their entirety and substituting in           "(iii) [RESERVED];      (iv) the Borrower and Holdings may make Restricted Payments to Holdings and/or Parent (x) the proceeds of which shall be applied by Holdings and/or Parent to pay out of pocket general corporate and overhead expenses incurred by Holdings and/or Parent not to exceed $2,500,000 during any fiscal year of the Borrower and (y) in the form of Tax Payments, to the extent directly the Subsidiaries; provided, however, that (A) the amount of such dividends shall not exceed the amount that the Borrower and the Subsidiaries would be required to pay in respect of Federal, State and local taxes were the Borrower and the Subsidiaries to pay such taxes as stand-alone taxpayers, (B) all Restricted Payments made to Holdings and/or Parent pursuant to this clause (iv) are used by Holdings and/or Parent for the purposes specified herein within 20 days of the receipt thereof and (C) in the case of any Restricted Payment made to Holdings pursuant to this clause (iv), Holdings owns, beneficially and of record, 100% of the issued and outstanding Equity Interests of the Borrower at the time of such Restricted Payment;      (v) in addition to the foregoing Restricted Payments and so long as no result therefrom, the Borrower may make additional Restricted Payments to Holdings the proceeds of which may be utilized by Holdings to make additional Restricted Payments, in an aggregate amount not to exceed 100% of Cumulative Excess Cash Flow that is Not Otherwise Applied if the Leverage Ratio as of the last day of any period of four fiscal quarters ending on or after April 4, 2009 (after giving pro forma effect to such additional Restricted Payments) was less than 3.25 to 1.00; provided, that, for the avoidance   6 of doubt, no Restricted Payments may be made under this Section 6.6(a)(v) on or before April 4, 2009;      (vi) [RESERVED]; and      (vii) Holdings, the Borrower and its Subsidiaries may make additional Restricted Payments not in excess of $5,000,000 in the aggregate so long as no result therefrom.”           SECTION 8. Amendment to Section 6.11 [Interest Coverage Ratio]. Section 6.11 of the Credit Agreement is hereby amended by deleting the table set forth therein in its entirety and substituting in lieu thereof the following table:           Date or Period   Ratio   October 2, 2004 through October 1, 2005     2.25 to 1.00   December 31, 2005     1.90 to 1.00       1.70 to 1.00   June 30, 2007     1.75 to 1.00   September 29, 2007 through June 28, 2008     1.90 to 1.00   September 27, 2008 through January 3, 2009     2.00 to 1.00   January 4, 2009 through January 2, 2010     2.75 to 1.00   April 3, 2010 and each fiscal quarter thereafter     3.00 to 1.00             SECTION 9. Amendment to Section 6.12 [Maximum Leverage Ratio]. Section 6.12 of the Credit Agreement is hereby amended by deleting the table set table:           Date or Period   Ratio   October 1, 2005     6.00 to 1.00   December 31, 2005     6.50 to 1.00       6.90 to 1.00   June 30, 2007     6.75 to 1.00   September 29, 2007     6.50 to 1.00   December 29, 2007     6.25 to 1.00   March 29, 2008     6.00 to 1.00   June 28, 2008     5.75 to 1.00       5.50 to 1.00   January 4, 2009 through October 3, 2009     4.25 to 1.00   January 2, 2010 and each fiscal quarter thereafter     4.00 to 1.00     7           SECTION 10. Amendment to Article 9 of the Credit Agreement. Article 9 in appropriate numerical order:      “SECTION 9.20. Testing of Financial Covenants. Notwithstanding anything to the contrary contained herein, it is hereby understood and agreed that each of the Leverage Ratio and the Interest Coverage Ratio shall, in addition to the dates on which this Agreement otherwise sets forth for the calculation of such financial covenants, be tested on January 4, 2009; provided, that (i) for the purposes of calculating the Leverage Ratio and the Interest Coverage Ratio as of such date, Consolidated EBITDA shall be calculated based on the four fiscal quarters of the Borrower ending September 27, 2008, (ii) for the purpose of calculating the Leverage Ratio as of such date, total Indebtedness of the Borrower and its Subsidiaries shall be calculated as of January 4, 2009, (iii) for the purpose of calculating the Interest Coverage Ratio as of such date, Consolidated Interest Expense shall be calculated based on the four fiscal quarters of the Borrower ending September 27,2008, (iv) on or before January 5, 2009, a Financial Officer of the Borrower shall deliver a certificate setting demonstrating compliance with such financial covenants, and (v) for the avoidance of doubt, there shall be no Default or Event of Default with respect to any noncompliance with the Leverage Ratio and the Interest Coverage Ratio being tested pursuant to this Section 9.20 until on or after January 4, 2009.”           SECTION 11. Conditions to Effectiveness of Amendment. The amendments Lender executing this Amendment on or prior to December 13, 2005, an amendment fee in an amount equal to 0.25% of the sum of (i) such executing Lender’s Term Loans then outstanding and (ii) such executing Lender’s Revolving Credit Administrative Agent, including (i) fees separately agreed between the Borrower and the Administrative Agent and (ii) the reasonable fees and expenses of counsel to the Administrative Agent; and   8           SECTION 12. Representations and Warranties. Each of the representations and warranties made by each of Holdings and the Borrower in or respects on and as of the date hereof as if made as of the date hereof, except correct in all material respects as of such earlier date; provided, that each           SECTION 13. Effect on the Loan Documents. (a) Except as specifically confirmed.           SECTION 14. Expenses. Holdings and the Borrower agree to pay or           SECTION 15. Affirmation of Guaranty and Credit Agreement. The           SECTION 16. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND           SECTION 17. Execution in Counterparts. This Amendment may be executed                 PP HOLDING CORPORATION       By:   /s/ Lynn K. Amos        Name:   Lynn K. Amos       Title:   CFO                 POLYPORE, INC., as Borrower       By:   /s/ Peter A. Dedousis        Name:   Peter A. Dedousis       Title:   Managing Director     Title:   Vice President           By:   /s/ Marie G. Mollo        Name:   Marie G. Mollo       Title:   Duly Authorized Signatory         ACKNOWLEDGEMENT AND CONSENT             DARAMIC, LLC             DARAMIC INTERNATIONAL, INC.             POLYPORE HOLDINGS, INC.             CELGARD, LLC             DARAMIC ASIA, INC.  

EXHIBIT 10.2   THIRD MODIFICATION AGREEMENT This Third Modification Agreement ("Agreement") is made as of January 29, 2014, by and among ESSEX PORTFOLIO, L.P., a California limited partnership ("Borrower"), U.S. BANK NATIONAL ASSOCIATION, a national banking association, as administrative agent ("Agent"), under the Loan Agreement described below, U.S. BANK NATIONAL ASSOCIATION, a national banking association, as a Lender ("U.S. Bank"), and each of the other Lenders set forth on the signature pages hereof (and together with any other bank that becomes a party to the Loan Agreement in the future, collectively, "Lenders"). Factual Background A.            Under a Term Loan Agreement dated November 15, 2011 (as amended by the modification agreements referenced below, the "Loan Agreement"), certain of the Lenders originally agreed to make an unsecured term loan of up to $200,000,000 (with an additional $100,000,000 "accordion" feature) to Borrower (as amended as described below, the "Loan"), subject to the terms and conditions specified therein. B.             Borrower, Agent, and Lenders subsequently executed that certain Modification Agreement dated as of July 30, 2012 (the "First Modification Agreement"), which, among other things, extended the term of a portion of the Loan, modified the interest rate payable under the Loan, and made additional Loan proceeds available under the Loan (so that the total available principal amount of the Loan was $350,000,000, with a $150,000,000 "accordion" feature), as more fully set forth therein). C.             Borrower, Agent, and Lenders subsequently executed that certain Second Modification Agreement dated as of August 16, 2012 (the "Second Modification Agreement"), which, among other things, modified the negative pledge and limitations on affiliate indebtedness covenants in the Loan Agreement. D.            Borrower's obligations under the Loan are currently evidenced by (i) an Amended and Restated Note dated July 30, 2012 made payable to U.S. Bank National Association in the stated principal amount of Fifty-Three Million Five Hundred Thousand Dollars ($53,500,000), (ii) an Amended and Restated Note dated July 30, 2012 made payable to Bank of the West in the stated principal amount of Twenty-Five Million Dollars ($25,000,000), (iii) an Amended and Restated Note dated July 30, 2012 made payable to Bank of Montreal in the stated principal amount of Thirty-Six Million Dollars ($36,000,000), (iv) an Amended and Restated Note dated July 30, 2012 made payable to PNC Bank National Association in the stated principal amount of Forty-Six Million Dollars ($46,000,000), (v) an Amended and Restated Note dated July 30, 2012 made payable to Comerica Bank in the stated principal amount of Ten Million Dollars ($10,000,000), (vi) an Amended and Restated Note dated July 30, 2012 made payable to Capital One, N.A. in the stated principal amount of Twenty Million Dollars ($20,000,000), (vii) a Note dated July 30, 2012 made payable to Citibank, N.A.  in the stated principal amount of Fifteen Million Dollars ($15,000,000), (viii) an Amended and Restated Note dated July 30, 2012 made payable to Union Bank, N.A. in the stated principal amount of Forty-Six Million Dollars ($46,000,000), (ix) an Amended and Restated Note dated July 30, 2012 made payable to KeyBank National Association in the stated principal amount of Twenty-Five Million Dollars ($25,000,000), (x) an Amended and Restated Note dated July 30, 2012  made payable to Wells Fargo Bank National Association in the stated principal amount of Forty-Eight Million Five Hundred Thousand Dollars ($48,500,000), and (xi) an Amended and Restated Note dated July 30, 2012 made payable to HSBC Bank USA, N.A. in the stated principal amount of Twenty-Five Million Dollars ($25,000,000) (collectively, the -1- E.             As of the date of this Agreement the principal balance outstanding under the Loan is $350,000,000. F.             In connection with the Loan, Essex Property Trust, Inc., a Maryland corporation ("Guarantor"), executed in favor of Agent and Lenders that certain Payment Guaranty dated as of November 15, 2011 (the "Guaranty"). G.             Subject to the terms and conditions of this Agreement, Borrower, Agent and Lenders have agreed to modify the terms of the Loan to, among other things, modify the interest rate payable under the Loan and amend certain financial covenants, as more fully set forth herein. H.            As used in this Agreement, the term "Loan Documents" means the Loan Agreement, the First Modification Agreement, the Second Modification Agreement, the Note, the Guaranty and the other "Loan Documents" described in the Loan Agreement, all as amended or modified hereby.  This Agreement shall also constitute a Loan Document.  Capitalized terms used herein without definition have the meanings ascribed to them in the Loan Agreement. Agreement Therefore, Borrower, Agent and Lenders agree as follows: Background are true, accurate and correct, and such recitals hereby are incorporated herein as an agreement of Borrower, Agent and Lenders. 2.              Reaffirmation of Obligations.  Borrower reaffirms all of its Obligations under the Loan Documents, and Borrower acknowledges that it has no claims, offsets or defenses with respect to the payment of sums due under the Note or any other Loan Document.  Without limiting the foregoing, Borrower (a) reaffirms Agent's right, following the occurrence of any Event of Default, subject only to the terms and conditions of the Loan Agreement, to apply any and all payments made by Borrower or otherwise received by Agent or Lenders with respect to the Loan to the obligations owing by Borrower under the Loan Documents in such order and manner deemed appropriate by Agent in its sole discretion (subject only, as between Agent and Lenders, to the provisions of the Loan Agreement governing the application of payments as between Agent and Lenders), and (b) expressly waives all of its rights under applicable law or otherwise to direct Agent as to such application or to designate the portion of the obligations to be satisfied. -2- 3.              Exiting Lender; Assignment and Assumption of Exiting Lender’s Commitment.  On the Effective Date, KeyBank National Association's (the "Exiting Lender") existing Commitment is being assigned to and assumed by other Lenders as indicated on Schedule 1.1 attached hereto (i.e., U.S. Bank National Association's Commitment is increasing by $7,000,000, from $53,500,000 to $60,500,000, Wells Fargo Bank, National Association's Commitment is increasing by $6,000,000, from $48,500,000 to $54,500,000, PNC Bank National Association's Commitment is increasing by $6,000,000, from $46,000,000 to $52,000,000, and Union Bank, N.A.'s Commitment is increasing by $6,000,000, from $46,000,000 to $52,000,000, each of the foregoing Lenders herein referred to as the “Assuming Lenders”).  Such assignment and assumption by the Assuming Lenders shall be automatically be effective on the Effective Date, and thereafter, Exiting Lender shall be released from its obligations under this Agreement and shall cease to be a party to the Loan Agreement but shall continue to be entitled to the benefits of Sections 3.1, 3.3, 3.4, and 10.4 with respect to facts and modified Commitments of the remaining existing Lenders following the Effective Date shall be as set forth in the new Schedule 1.1 attached to this Agreement, effective as of the Effective Date and such Commitments shall be evidenced by the existing Notes and amended and restated Notes in the amount of the applicable new Commitments as to the Assuming Lenders.  None of the new Notes are intended to, nor shall they be construed to, constitute a refinancing, repayment, accord or satisfaction, or novation of the Exiting Lender’s Note or   4.              New Definitions.  The "Definitions" section of the Loan Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:   "Third Modification Agreement":  Means that certain Third Modification Agreement dated as of January 29, 2014 executed by and among Borrower, Administrative   "Modification Fee Letter":  Means that certain letter dated as of January 29, 2014 executed by and among Borrower and Administrative Agent.   5.              Existing Definitions.   (a)            The definition of "Applicable Committed Loan Margin" contained in the "Definitions" section of the Loan Agreement is hereby deleted in its   "Applicable Committed Loan Margin" means the Applicable LIBOR Committed Loan Margin or the Applicable Reference Rate Committed Loan Margin determined from the following pricing grid based on the current published or private ratings of Guarantor's senior unsecured long term debt, as provided below: -3- TIER   GUARANTOR'S SENIOR UNSECURED LONG TERM DEBT RATING   APPLICABLE LIBOR COMMITTED LOAN MARGIN   APPLICABLE REFERENCE RATE COMMITTED LOAN MARGIN   I A- and/or A3 or better 1.00%  0% II BBB+ and/or Baal 1.05% .05% III 1.20% .20% IV 1.55% .55% V 2.00% 1.00% Borrower shall provide to Administrative Agent written evidence of the current rating or ratings on Guarantor's senior unsecured long term debt by any of Moody's, S&P and/or Fitch, if such rating agency has provided to Guarantor a rating on such senior unsecured long term debt, which evidence shall be reasonably acceptable to Administrative Agent; provided, that, at a minimum, Guarantor must provide such a rating from either Moody's or S&P.  In the event that Guarantor has a rating on its senior unsecured long term debt provided by (a) both Moody's and S&P, (b) both Moody's and Fitch, (c) both S&P and Fitch, or (d) each of Moody's, S&P and Fitch, and there is a difference in rating between such rating agencies, the Applicable Committed Loan Margin shall be based on the higher rating.  Changes in the Applicable Committed Loan Margin shall become effective on the first day following the date on which any of Moody's, S&P or Fitch that has provided Guarantor a rating on Guarantor's senior unsecured long term debt changes such rating.  Borrower shall notify Administrative Agent of any such changes in Guarantor's senior unsecured long term debt pursuant to and in accordance with Section 6.4(i); provided, however, that any increase in the Applicable Committed Loan Margin that results from a change in the rating of Guarantor's senior unsecured long term debt shall become effective on the first day following the date on which the rating agency changes such rating, as provided in the immediately preceding sentence, whether or not Borrower has notified Administrative Agent of any such change.  On the Closing Date, the Applicable Committed Loan Margin shall be based on Tier III."   (a)            The definition of "Capitalization Rate" contained in the "Definitions" section of the Loan Agreement is hereby deleted in its entirety   "Capitalization Rate” means 6.00% from the Effective Date (as defined in the Third Modification Agreement)."   6.              Further Modifications to the Loan Agreement.  The Loan Documents are hereby further amended as follows:   (a)             Section 6.10 (Certain Debt Limitations) of the Loan Agreement is -4- "Certain Debt Limitations.  (a) The Outstanding Amount of all Loans shall not exceed the Availability at any time and (b) the amount of Secured Debt at the end of each calendar quarter shall not exceed 40% of the Gross Asset Value at such time."   (b)            Section 6.12 (Maximum Unsecured Debt Leverage Ratio) of the Loan   "Maximum Unsecured Debt Leverage Ratio.  The ratio determined at the end of each calendar quarter of (a) the Unencumbered Asset Value for the four consecutive calendar quarter period ending on such date divided by (b) the amount of Unsecured Debt for such four calendar quarter period shall not be less than 1.50:1.0."   (c)             Section 6.13 (Maximum Quarterly Dividends) of the Loan Agreement   “During the continuance of any Event of Default, aggregate distributions shall not exceed the minimum amount that Guarantor must distribute to its shareholders in order to qualify as a real estate investment trust under the provisions of Internal Revenue Code Sections 856 and 857.”   (d)            The following new Section 7.17 is hereby added as follows:   “Section 7.17.  OFAC; FCPA.  None of (a) Borrower, any Subsidiary (as hereinafter defined) of Borrower or Guarantor and (b) each Person that, directly or indirectly, is in Control (as hereinafter defined) of a Person described in clause (a) above, is currently subject to any United States sanctions administered by the Office of Foreign Asset Control of the Department of Treasury of the United States (“OFAC”); and Borrower will not directly or In addition, Borrower hereby agrees to provide to Administrative Agent and Lenders any additional information that Administrative Agent or any Lender deems applicable laws concerning money laundering and similar activities.  For purposes of this Section 7.17, (i) “Subsidiary” shall mean, with respect to any parent and one or more subsidiaries of the parent and (ii) “Control” shall mean the direct or indirect (x) ownership of, or power to vote, 51% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of a Person or other Persons performing similar functions and policies of a Person whether by ownership of equity interests, contract or otherwise.  To Borrower’s knowledge, no part of the proceeds of the Loans will of the United States Foreign Corrupt Practices Act of 1977, as amended.” -5- (e)             Effective as of the Effective Date, Schedule 1.1 to the Loan Agreement is hereby deleted, and the new Schedule 1.1 attached to this Agreement is hereby substituted in place thereof, and the new Schedule 1.1 attached hereto shall, from and after the Effective Date, be the governing Schedule for the Commitments and the Pro Rata Shares of the Lenders under the Loan Agreement and   (f)              In order to properly reflect and evidence the new Commitments and Pro Rata Shares of each of the Lenders under the Loan Agreement as modified by this Agreement, Borrower shall execute and deliver new Notes to each of the Assuming Lenders whose Commitments are changing as described herein in the amount of their new Commitments, substantially in the same form of Note as previously executed by Borrower in connection with the existing Loan Agreement, with such changes thereto as Agent shall reasonably require.  Following receipt of the new Notes, the superseded old Note for the Exiting Lender and the Notes being replaced for the applicable Lenders shall be marked "cancelled" and   7.              No Other Modifications.  Except as expressly set forth in this and effect   8.              General Release.  As further inducement to Agent and Lenders to enter into this Agreement, Borrower and Guarantor hereby release Agent and Lenders as follows:   (a)            Borrower and Guarantor and their heirs, successors and assigns (collectively, the "Releasing Parties") do hereby release, acquit and forever discharge Agent and Lenders of and from any and all claims, demands, at length, which in any way, have, prior to the Effective Date, arisen out of, are connected with or related to the Loan Documents, this Agreement or any earlier and/or other agreement or document referred to therein (collectively, the "Released Claims").   (b)            The agreement of the Releasing Parties, as set forth in the preceding subparagraph (a) shall inure to the benefit of the successors, assigns, insurers, administrators, agents, employees, and representatives of Agent and Lenders.   (c)            The Releasing Parties have read the foregoing release, fully understand the legal consequences thereof and have obtained the advice of counsel with respect thereto.  The Releasing Parties further warrant and represent that they are authorized to make the foregoing release. -6- (d)            Each Releasing Party acknowledges that the foregoing release shall extend to Released Claims which the Releasing Party does not know or suspect to exist in Releasing Party's favor at the time of executing this Agreement, regardless of whether such Released Claims, if known by such Releasing Party, would have materially affected such Releasing Party's decision to enter into this Agreement.  Each Releasing Party acknowledges that they are familiar with Section 1542 of the Civil Code of the State of California which provides as follows:   the debtor.   Each Releasing Party waives and relinquishes any right or benefit which it has any similar provision of the statutory or non-statutory law of any other jurisdiction, to the full extent that it may lawfully waive all such rights and benefits.  In connection with such waiver and relinquishment, each Releasing Party acknowledges that it is aware that it or its attorneys or agents may knows or believes to exist with respect to the subject matter of this Section 8 or the other parties hereto, but that each Releasing Party intends hereby fully, finally and forever to settle, waive and release all of the Released Claims, known or unknown, suspected or unsuspected, which now exist or may exist hereafter between Releasing Parties and Agent and Lenders in connection with the Loan, except as otherwise expressly provided in this Section 8.  This foregoing release shall be and remain in effect notwithstanding the discovery or existence   (e)            Each Releasing Party warrants and represents that it is the sole respective Released Claims released hereby and that it has not heretofore purported to assign or transfer to any person or entity any such claim or any portion thereof.   (f)             This release is not to be construed and does not constitute an admission of liability on the part of Agent or Lenders.  This release shall constitute an absolute bar to any Released Claim of any kind, whether such claim legal, statutory or equitable.  The Releasing Parties specifically agree that any attempt to assert a claim barred hereby shall subject each of them to the   __________ __________ Borrower's Initials Guarantor's Initials -7- 9.              Conditions Precedent.  Before this Agreement becomes effective and any party becomes obligated under it, all of the following conditions shall have been satisfied in a manner acceptable to Agent in the exercise of Agent's sole judgment (except as waived or reserved by Agent in writing):   (a)            Agent shall have received fully executed originals of this Agreement, the new Notes for each Lender (as specified in Section 6(e) above of this Agreement), the Modification Fee Letter and any other documents which Agent may reasonably require or request in accordance with this Agreement or the other Loan Documents (including, without limitation, pertaining to the Patriot Act).   (b)            Guarantor shall have executed and delivered to Agent the attached Consent of Guarantor.   (c)            Borrower shall have paid to Agent all fees set forth in the Modification Fee Letter.   (d)            Agent and Lenders shall have received reimbursement, in immediately available funds, of all reasonable actual, out-of-pocket costs and expenses incurred by Agent and Lenders in connection with the Loan or this Agreement, including the legal fees, charges and expenses of Agent's counsel (determined on the basis of such counsel's generally applicable rates, which may be higher than the rates such counsel charges Agent in certain matters).   (e)            Agent shall have received all documents evidencing the formation, organization and valid existence of the Borrower and Guarantor (to the extent such documents have been amended or modified since the original Closing Date) and the authorization for the execution, delivery, and performance of the Agreement.   (f)             No change shall have occurred in the financial condition of Borrower or Guarantor, which would have, in Agent's sole judgment, a material adverse effect on Borrower's or Guarantor's ability to repay the Loan or   (g)            Exiting Lender shall have received the applicable payment from the Assuming Lenders necessary to pay Exiting Lender an amount equal to the outstanding balance of the Loan under the Exiting Lender’s Note as of the Effective Date.  Upon receipt of such amounts, the assignment and assumption of the Exiting Lender’s Note, in the pro rata portions indicated herein, shall immediately and automatically be effective.   (h)            Borrower's representations and warranties set forth in Section 10 below are  true and correct in all respects.   (i)             The conditions precedent shall have been satisfied prior to January 29, 2014  unless waived or reserved by Agent in writing.   (j)              Each of the Lenders shall have received credit approval from the appropriate credit committee or other authority within that Lender as to its Commitment and performance of its obligations under the Loan Agreement and other Loan Documents, as modified by this Agreement. -8- 10.           Borrower's Representations and Warranties.  Borrower represents and warrants to Agent and Lenders as follows:   (a)            Loan Documents.  Except as previously disclosed to Agent in writing, all representations and warranties made and given by Borrower in the Loan Documents are true, accurate and correct in all material respects.  Borrower is in compliance with all covenants, terms and conditions in effect and as required under the Loan Documents (as modified by this Agreement).   (b)            No Default.  No Event of Default has occurred and is continuing,   (c)            Borrowing Entity.  Borrower is a limited partnership which is State of California and is duly qualified to conduct business, and is in good standing, in the State of California and, to the extent legally required,  in each other state in which it conducts business.  Except as previously disclosed in writing by Borrower to Agent, there have been no changes in the organization, composition, ownership structure or formation documents of Borrower since the Closing Date.  Borrower's execution and delivery of this Agreement and the continued performance by Borrower of its obligations under the Loan Documents to part of Borrower and any other required parties.  This Agreement has been duly equitable principles relating to or affecting creditors' rights.   11.           Incorporation.  This Agreement shall form a part of each Loan Document, and all references to a given Loan Document shall mean that document as modified pursuant to this Agreement.  For purposes of this Agreement, the "Effective Date" shall be the date that Agent notifies Borrower that all of the conditions precedent set forth in Section 9 hereof have been satisfied in a manner acceptable to Agent in the exercise of Agent's sole judgment, or waived or reserved by Agent in writing.   12.           No Prejudice; Reservation of Rights.  Except as expressly set forth herein, this Agreement shall not prejudice any rights or remedies of Agent or Lenders under the Loan Documents.  Agent and Lenders reserve, without limitation, all rights which it has against any endorser of the Note.   13.           No Impairment.  Except as specifically hereby amended, the Loan Documents shall each remain unaffected by this Agreement and all such documents -9- integrate all the terms and conditions mentioned in or incidental to the Loan Documents; (b) supersede all oral negotiations and prior and other writings with respect to their subject matter; and (c) are intended by the parties as the terms agreed to by the parties.  If there is any conflict between the terms, instrument in effect as of the Effective Date, including any of the other Loan   15.           Miscellaneous.  This Agreement and any attached consents or exhibits requiring signatures may be executed in counterparts, and all of California, without regard to the choice of law rules of that State.  As used   -10-   Borrower:   a California limited partnership     By:  ESSEX PROPERTY TRUST, INC.,   a Maryland corporation, its general partner     By: /s/ Mark J. Mikl     Name: Mark J. Mikl       925 East Meadow Drive     Attn:    Mark J. Mikl (facsimile: (650) 843-1514) Michael T. Dance (facsimile: (650) 858-0139) Internet Website: www.essexpropertytrust.com   Agent:   as Administrative Agent     By:     Name: Michael Diemer     Title:   Vice President   [Signature Page to Third Modification Agreement] S-1 Lenders:   as Lender     By:     Name: Michael Diemer     Title:   Vice President   S-2 as Lender     By:     Kevin A. Stacker     Vice President   S-3 as Lender     By:         S-4 as Lender     By:     Nicolas Zitelli     Vice President   S-5 BANK OF MONTREAL, as Lender     By:     Gwendolyn Gatz,     Vice President   S-6 as Lender     By: /s/ Michael Pavao     Name:  Michael Pavao     Title:    Vice President     By:   /s/ Benjamin Arroyo   Name:  Benjamin Arroyo   Title:    Vice President   S-7 as Lender     By: /s/ Jack P. Kissane     Jack P. Kissane     Vice President   S-8 as Lender     By:     Frederick H. Denecke     Senior Vice President   S-9 as Lender     By:     John C. Rowland, Vice President     S-10 COMERICA BANK, a Texas banking association, as Lender     By:     Sam F. Meehan, Vice President     S-11 CONSENT OF GUARANTOR The undersigned, having read and understood the foregoing Third Modification Agreement ("Agreement"), hereby (i) consents to all of the terms, conditions and provisions of the Agreement and the transactions contemplated by the Agreement, including, but not limited to, Sections 2 through 8, inclusive, thereof, (ii) agrees that the Agreement does not terminate any of the obligations of the undersigned to Agent and Lenders under the Guaranty, and (iii) reaffirms its obligations under the Guaranty in light of the Agreement (including, but not limited to, Sections 2 through 8, inclusive, thereof).  The undersigned, having reread the Guaranty and with advice of its own counsel, hereby reaffirm and restate all waivers, authorizations, agreements and understandings set forth in the Guaranty, as though set forth in full herein.  Capitalized terms used in this consent but not otherwise defined shall have the meanings ascribed to such   Dated as of January 29, 2014.   "Guarantor"   a Maryland corporation     By:   /s/ Mark J. Mikl Name: Mark J. Mikl Title: Senior Vice President   CONSENT SCHEDULE 1.1   LENDERS NAMES, COMMITMENTS AND PRO RATA SHARES   LENDER   TERM COMMITMENT   PRO RATA SHARE % * US Bank National Association   $ 60,500,000       $ 54,500,000       $ 52,000,000     Union Bank   $ 52,000,000     Bank of Montreal   $ 36,000,000     Bank of the West   $ 25,000,000     HSBCBank USA, N.A.   $ 25,000,000       $ 20,000,000     Citibank, N.A.   $ 15,000,000     Comerica Bank   $ 10,000,000     TOTAL   $ 350,000,000   100.00% *  The Pro Rata Share Rata Percentage for a Lender shall be equal to the percentage obtained by dividing such Lender's Commitment by the total aggregate Commitment of all Lenders, as calculated by Administrative Agent.   SCHEDULE 1.1

Title: [NY] I was approached &amp; sold an exclusive story &amp; exclusive pictures to a major tabloid (regretfully). I never received payment as agreed, which I have in writing from the reporter. Question:**I've posted every bit of the detailed story below, but for those who don't have time to read it, here's a shorter TL;DR version.** Last year I was a journalism student and shared with my friends on Twitter that I was would attending a Holloywood-esque event in NYC because I was so excited about it. A major tabloid saw my Tweet, and asked (since I was a journo student) if I would provide "coverage" for them of the event, as it would be good experience for my future career. I was told I would be paid $1500 for details of the event that would be used for a story, and an extra $500 if I could get an exclusive pic. I did both. The reporter thanked me profusely, asked for my bank info / address so they could send the direct deposit payment, but it never came. This was a year ago. Since then I have been contacting the reporter regularly and attempting to contact the media corp to resolve this and get paid, but am not getting ANY responses back to calls or emails. My story and photos were used (and are still on the site), but I was not paid (which I have in writing that I would be), and wanted to know the next step I should take to try to get this resolved and get paid for my work. I am unbelievably stupid for agreeing to do this. It seemed like a ton of money at the time for a college student, and I truly thought it would be good experience for me due to my major. Full details of the event and story are below. Thanks so much! Hi Guys- Last year I posted about how I was getting ready to attend an event on my public Twitter page. I was so excited. The same day I found out I was cancer free, I ended up being given passes to this pretty cool Hollywood-esque event in NYC. I have no affiliation with the entertainment industry, and have never even met a celebrity, so I was really pumped and wanted to share everything with my friends on Twitter. A couple hours later I had a new follower who I didn't know, and they asked me to follow them back and DM them, as they had a question. Long story short, it ended up being a reporter for a major celebrity tabloid. I guess they had searched the event on Twitter, saw that I was going and contacted me. The reporter said he noticed on my Twitter profile that I was a journalism student, and wanted to know if I would be interested in "covering" the event for them since I was already going. I thought it was kind of weird because even though it was a Hollywood-type party, it wasn't a big deal, or something most people would even know about, but as a student was really excited at the prospect of providing coverage for an event for such a well known media site, as I had no experience yet. He also said that I would be paid for my work. I asked for further information, and the reporter essentially said the entire time I was at the event he wanted me to text him. Tell him everything: who was there, what they were wearing and all the little details down to the food. He said he would compile it into a story. I asked if I would be credited and could help write it as it would be good experience for me and he said absolutely, as it would be great experience for my journalism classes. He offered to pay me $1500 for my work (ie; texting him all the "inside info"). He also said he would pay me additionally if I was able to take photos to send to him. I told him I wasn't sure if cameras were allowed, and if not I wouldn't be comfortable taking photos as it would be extremely rude. He said no problem. I went to the event, and as planned, kept in touch with the reporter all night. I began to regret it, as I was there having such a good time and celebrating my recovery, but he kept texting asking for more details on this, that, or the other thing (which I would provide him). Towards the end of the night he sent me a text that he just received a tip that there would be a surprise appearance by a MAJOR celeb who would be announcing exciting news of some sort. He said this celeb (and pictures of them) were always huge on their site and caused a lot of views. He asked me if I could take a photo. I told him no, since I didn't see anyone else taking pictures and wasn't sure if I could or not. He said he didn't think he'd be able to run the story without a photo. He then told me that if I was able to take a photo of the person, and immediately send him the photo so they could put it up on their site right away (therefore being the first to have a photo of the celeb/announcement news at the event, which would make it an "exclusive" which apparently is big in the tabloid world) he would be able to give me an extra $500. As a dumb college kid this offer seemed too good to turn down, so I took the photo, sent it, and just as he wanted...the photo and "breaking news" was on their site before any others. When I got home that night I called the reporter, who thanked me for my "tireless effort" as he put it, and praised me for being so thorough with the job I did. I asked him when I should have my story about the event in to him and how many words he would like. He kind of "umm'ed" and "awww'ed" and said it wouldn't be necessary, because their team had been writing the story from the get go with all the info I was providing them. I was really bummed about that, as the main reason I agreed to do it was because I thought I would be providing coverage for them and writing the article (as I said above, the first thing the reporter said to me was he noticed I was journalism student, and later said I would be assisting to write the story which "would be good experience for my journalism classes"). That made me feel awful, and it seems like he was pretty much smooth talking me to get me to send him the details. He asked me to send him either my mailing address so they could send me a check for the information and exclusive pictures I provided, or give him my bank account direct deposit info. I ended up doing both, but asked for it to be DD since it would be quicker. Long story short: I was never paid. Not by direct deposit, and not by check. After a month (which I felt was plenty of time) I contacted the reporter directly. I left him a message and he did not return my call. I emailed him as well letting him know I did not recieve the money as promised for my story (the $1500 plus the extra for the exclusive picture), and wanted to know when I could expect that by. Nothing. The event was now almost exactly one year ago, and I have left 21 phone messages, sent 19 emails (I emailed several times in the first month and have been sending one per month). I've saved and documented each time I made contact. I basically say the same thing: I covered XYZ Event for you on XYZ date. I was promised payment for this, which I have in writing. I have not received my payment, and am not receiving contact back from you. I am going to pursue this legally if I do not hear back from you with X number of days." Still, nothing back. I have also tried to go over the reporter's head and deal with the company directly. I have done SO much research, and their contact info is impossible to find (and I'm EXCELLENT at pulling anything from the internet, so it's definitely nowhere online, and even 411 doesn't have it). The only contact info listed online is their "Tip Line", which I have called. The tip line operator told me they are just an answering service, and provide the messages and contact information to newsroom staff. They are outsourced. I explained my issue to the tip line operator, and she said she would get a message to the newsroom. I asked for their contact info directly and she said she legally wasn't allowed to give it out. If she did she would most likely be fired. So now I feel like the biggest idiot ever, and don't know what to do. Looking back, I cannot BELIEVE I agreed to work with a tabloid, and feel embarrassed about it. Lesson learned. Despite this, I want to be paid, because I provided a service as promised, every last bit of the info I gave (and only my info) was used on the story [which is still up on their site] as well as my exclusive pictures. The story was quite popular with several hundred comments, so it obviously generated the site a lot of money. (Gosh, I just realized how long this is. Sorry about that- I just wanted to make sure I put down all the info. If you've made it this far you are seriously a saint). Is this worth pursing? HOW should I go about pursing it? The tabloid is operated in a different state than I am. Any type of recommendations would be greatly appreciated! Thank you so, so much! Answer #1: If this is a major tabloid, then they have a general counsels office. After a quick Google to get you their info, print off all of your email logs with the reporter, an invoice for the amount, maybe some phone logs for good measure and send it registered snail mail to the address you find, care of the general counsel. Maybe add that you believe this was an oversight and would appreciate the general counsels office getting you payment before you have to waste both of yours time in small claims. Answer #2: Small claims court. They will pay rather than show up, and if they don't show you can get a default judgement. Have your agreement and a copy of the article for the judge. Then contact another tabloid and sell them your story of having to sue to collect

Exhibit 10.2 SIXTH AMENDMENT AND LIMITED CONSENT TO CREDIT AGREEMENT      THIS SIXTH AMENDMENT AND LIMITED CONSENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered into as of May 3, 2010 by and between TEKELEC, a California corporation (the “U.S. Borrower”), TEKELEC INTERNATIONAL, SPRL, a societe privee a responsabilité limitée organized under the laws of the Kingdom of Belgium (the “Belgian Borrower”, and together with the U.S. Borrower, each a “Borrower” and collectively, the “Borrowers”), the lenders who are or may become a party to this Agreement (collectively, the “Lenders”) and WELLS FARGO BANK, N.A. (successor by merger to Wachovia Bank, National Association), a national banking association, as Administrative Agent for the Lenders (the STATEMENT OF PURPOSE      WHEREAS, the Borrowers have requested, among other things, that: (i) the Lenders consent to the acquisition (the “Camiant Acquisition”) by Borrowers of Camiant, Inc., a Delaware corporation, and its subsidiaries (collectively, “Camiant”) pursuant to the terms set forth in that certain Term Sheet dated March 22, 2010 (the “Camiant Term Sheet”); (ii) the Lenders consent to the acquisition (the “Blueslice Acquisition” and together with the Camiant Acquisition, the “Acquisitions”) by Borrowers of Blueslice Networks Inc., a Canadian corporation, and its subsidiaries (collectively, “Blueslice”) pursuant to the terms set forth in that certain Term Sheet dated April 6, 2010 (the “Blueslice Term Sheet”) and (iii) the Lenders amend certain provisions of the           WHEREAS, the Lenders and the Administrative Agent are, subject to the terms and conditions set forth herein, willing to grant the consents and amendments requested by the Borrowers as hereinafter set forth. follows:      2. Amendments. Pursuant to Section 14.2 of the Credit Agreement and effective in accordance with Section 4 hereof, the Lenders hereby agree as follows:      (a) Section 1.01 of the Credit Agreement shall be amended by deleting subsection (e) in the definition of “Permitted Acquisition” and substituting in lieu therof the following new subsection (e) to read as follows:          “(e) the Borrower Agent shall have obtained the prior written consent of the Administrative Agent and the Required Lenders prior to the consummation of such acquisition if either of the following conditions exist: (i) the Permitted Acquisition Consideration for any such acquisition (or series of related acquisitions), together with all other acquisitions consummated during the preceding four fiscal quarters exceeds $100,000,000 in the aggregate, or (ii) the Permitted Acquisition Consideration for any such acquisition (or series of related acquisitions), as calculated in the Officer’s Compliance Certificate required to be delivered to the Administrative Agent pursuant to subsection (b) above, both prior to and after such acquisition shall cause the Borrowers’ Consolidated Tangible Net Worth to be less than the sum of (A) $200,000,000 plus (B) an amount equal to fifty percent (50%) of the cumulative Consolidated Net Income occurring after January 1, 2011.      Notwithstanding any of the foregoing, in the event that the purchase price for any acquisition by any Credit Party is paid with the Capital Stock of the U. S. Borrower, clause (e) shall not apply to such Permitted Acquisition.”      (b) Section 11.6 of the Credit Agreement shall be amended by deleting subsections (c) and (d) in their entirety and substituting, in lieu thereof, the following new subsection (c) to read as follows:      “(c) the U.S. Borrower may declare or pay cash dividends upon its Capital Stock and/or repurchase shares of its Capital Stock, provided that (i) no Default or Event of Default shall have occurred or be continuing (prior to and immediately after the declaration and payment of such cash dividend and/or repurchase), (ii) the Borrowers shall be in pro forma compliance with the covenants set forth in Article X (prior to and immediately after the declaration and payment of such cash dividend and/or repurchase) and (iii) the U.S. Borrower maintains, prior to and immediately after such cash dividend and/or repurchase, a Consolidated Tangible Net Worth greater than or equal to the sum of (A) $200,000,000 plus (B) an amount equal to fifty percent (50%) of the cumulative Consolidated Net Income occurring after January 1, 2011.      3. Limited Consent. The parties hereto acknowledge and agree that as of the Sixth Amendment Effective Date and so long as the Borrowers comply with the terms and conditions set forth in the definition of Permitted Acquisitions (other than subsection (e) of such definition) and the Credit Agreement, the Administrative Agent and Lenders shall be deemed to have consented to the Acquisitions. For the avoidance of doubt, the Acquisitions shall be deemed permitted separately under the Credit Agreement and shall not be included in the calculations going forward under subsection (e) (i) of the Permitted Acquisition definition.      4. Conditions to Effectiveness. Upon satisfaction of each of the following stated (the “Sixth Amendment Effective Date”): 2        5. Limited Effect of Amendment. Except as expressly modified herein, the      6. Representations and Warranties. After giving effect to the amendments Loan Documents is true and correct in all material respects as of the Sixth Default or Event of Default has occurred and is continuing as of the Sixth Amendment Effective Date.      7. Release. For and in consideration of the agreements of the      8. Covenant Not to Sue. The Borrowers, on behalf of themselves and their other legal representatives violates the 3   violation, all reasonable attorneys’ fees and costs incurred by any Released      9. Miscellaneous. Amendment shall control. assigns. other reproduction hereof. 4               TEKELEC,       By:   /s/ Stuart H. Kupinsky         Name:   Stuart H. Kupinsky        Title:   SVP - Corporate Affairs, General Counsel, & Secretary        TEKELEC INTERNATIONAL, SPRL, as Borrower Title:   Manager    [Tekelec Sixth Amendment to Credit Agreement]                           AGENTS AND LENDERS: Lender and Lender       By:   /s/ Michael Paysley         Name:   Michael Paysley        Title:   Sr Vice President       

Title: Practicing without medical license NM Question:I know someone practicing medicine without a license and without proper supervision. Who do I notify? Answer #1: A good start would be the New Mexico Medical Board. Their site will probably have a link to report this.

Exhibit 10.13   AMENDED AND RESTATED WARRANTY AND MAINTENANCE AGREEMENT   This Amended and Restated Warranty and Maintenance Agreement (this “Agreement”) is effective May 1, 2003, (the “Effective Date”) and is between Duquesne Light Company, a Pennsylvania corporation (“DLC”), and Itron, Inc., a Washington corporation (“Itron”).   RECITALS   A.    DLC and Itron had been parties to the Amended and Restated Utility Automated Meter Data Acquisition Equipment Lease and Services Agreement dated January 15, 1996, as amended (the “Duquesne Contract”), pursuant to which Itron provided installed equipment and provided software and services for the operation and maintenance of the Fixed Network (as defined below).   B.    DataCom Information Systems, LLC, a Delaware limited liability company, (“DataCom”) is an affiliate of DLC. On or about March 30, 2000, DataCom bought from Itron certain equipment, and licenses to software, that Itron had used to supply services to DLC. DataCom and Itron entered into a Warranty and Maintenance Agreement, dated as of March 30, 2000, (the “First Maintenance Agreement”) pursuant to which Itron has provided certain maintenance and support services for the operation and maintenance of the Fixed Network.   C.    Concurrently with the execution and delivery of the First Maintenance Agreement, DLC and Itron terminated the Duquesne Contract by mutual agreement.   D.    As permitted by the terms of the First Maintenance Agreement, DataCom assigned the First Maintenance Agreement to DLC as of January 1, 2003.   E.    The Parties now desire to amend and restate the First Maintenance Agreement as set forth herein, pursuant to which Itron will continue to provide certain maintenance and support services for the Fixed Network.   AGREEMENT   Section 1.    Definitions   Where not defined elsewhere in this Agreement, the following capitalized terms have the following meanings whether used in this Agreement or any Schedule attached hereto:   “AAA” is defined in Section 11.11(b).     1   “Applicable Laws” means any law, statute, rule, regulation, ordinance, order, code, interpretation, judgment, decree, directive, or decision in effect from time to time of any national, state or local government, any political subdivision thereof or any other governmental, judicial, public or statutory other governmental entity, which is applicable to or affects this Agreement.   101-1330, as in effect on the date hereof.   Pittsburgh, Pennsylvania, are required or authorized to be closed. Unless qualified by the term “Business,” references in this Agreement to “day” or “days” shall refer to a calendar day or calendar days, respectively.   “CCU” means cell control unit.   “Change in Control” means any of the following events: (i) any Person becomes the beneficial owner (as defined in Rule 13(d)(3) under the Securities Exchange Act of 1934), directly or indirectly, of securities of Itron representing 50% or more of the combined voting power of Itron’s then outstanding voting securities; (ii) the individuals who as of the date of this Agreement are members of the Board of Directors of Itron (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board of Directors of Itron (provided, however, that if the election, or nomination for election by Itron’s of the Incumbent Board, such new director will be considered to be a member of the Incumbent Board); (iii) an agreement by Itron to consolidate or merge with any other entity pursuant to which Itron will not be the continuing or surviving corporation or pursuant to which shares of the common stock of Itron would be converted into cash, securities or other property, other than a merger of Itron in which holders of the common stock of Itron immediately prior to the merger would have the same proportion of ownership of common stock of the surviving corporation immediately after the merger; (iv) an agreement of Itron to sell, lease, exchange or otherwise transfer in one transaction or a series of related transactions substantially all the assets of Itron; (v) the adoption of any plan or proposal for a complete or partial liquidation or dissolution of Itron; or (vi) an agreement to sell more than 50% of the outstanding voting securities of Itron in one or a series of related transactions.   2   “CCU Transition Date” is defined in Section 2.9(a).   “Compliant System Components” means, collectively, the Itron Proprietary Components and the Third Party Components.   “Confidential Information” means all nonpublic information disclosed by a Disclosing Party to the Receiving Party that is designated as confidential or disclosure, should reasonably be considered as confidential. Confidential Information includes, but is not limited to, security codes, computer passwords, customer information, trade secrets, documents, designs, drawings, manufacturing processes, research developments, business activities and operations, inventions and engineering concepts. The Parties acknowledge and agree that all information concerning DLC’s customers is highly confidential and is the Confidential Information of DLC. Confidential Information does not include any information that (i) has become publicly available without breach of this Agreement, (ii) party who did not acquire or disclose such information by a wrongful act or (iv) can be shown by documentation to have been independently developed by the Receiving Party without reference to any Confidential Information.   “Configuration Change” means any change to the Fixed Network requested by DLC and approved via the Change Control procedures attached as Schedule A solely to optimize the Fixed Network within its designed functionality and wide area and local area infrastructures as they exist on the Effective Date.   “Critical Maintenance Release” means a revision to Software that corrects a Critical Nonconformity.   “Critical Nonconformity” means a Nonconformity resulting in a material degradation in (a) the operation, performance and reliability of the Fixed Network, or (b) the ability of DLC to (i) read, collect or pass daily or interval meter data, (ii) collect or pass customer billing data; (iii) operate the Fixed Network; or (iv) aggregate monthly CCU Nonconformities in excess of 4% of the deployed CCUs in the Fixed Network.   “Cure Period” is defined in Section 7.1(b).   “Custom Release” means any revision to Software that (i) Itron may prepare or have prepared in response to a written request received from DLC and (ii) is not a Maintenance Release, Critical Maintenance Release or Configuration Change.   “DataCom” is defined in Recital B.   3   “DCU” means a data command unit.   “Disaster Recovery Equipment” means all equipment and software located in the Spokane Operations Center that is used for Disaster Recovery Services, as listed on the attached Schedule F.   “Disaster Recovery Services” is defined in Section 2.8(a).   “Disaster Recovery Service Period” is defined in Section 2.8(a).   “Disclosing Party” means a Party that discloses Confidential Information to the   “Dispute” is defined in Section 11.11(a).   “DLC Default” means any failure by DLC to comply in any material respect with any covenant, obligation, responsibility, representation or warranty of DLC   “DLC Disaster Recovery Center” is defined in Section 2.8(d).   “DLC Operations Center” means the operations center for the Fixed Network, as operated by DLC, currently located at 2841 New Beaver Avenue, Bldg. #3, 2nd Floor, N3-DP, Pittsburgh, PA 15233, as the same may be moved from time to time.   “DLC Service Administrator” is defined in Section 5.2(a).   “Duquesne Contract” is defined in Recital A.     “Environmental Laws” is defined in Section 3.8(f)(ii).   “Equipment” means the items of Compliant System Components which are not Software.   “ERT” means an Itron manufactured or branded encoder receiver transmitter device installed in a meter for the purpose of communicating meter data over the Fixed Network. ERTs include, without limitation, the 40ER model ERT, the 41ER-1 model ERT and the 50ESS model ERT.   “Escrow Agreement” shall mean the escrow agreement, dated as of March 30, 2000, by and among Itron, DLC, as assignee of DataCom, and Fort Knox Escrow Services, Inc., attached as Exhibit A hereto.   4     “Excluded Equipment” means equipment that is not a Compliant System Component.     “Final Cure Date” is defined in Section 3.8(a)(ii).   “First Maintenance Agreement” is defined in Recital B.   “Fixed Network” means the Compliant System Components and communications system infrastructure consisting of fixed wireless and wired local area and wide area networks that communicate remotely with meters that measure electric power usage or other applications, as installed pursuant to the Duquesne Contract, and as modified, maintained and expanded from time to time pursuant to the First Maintenance Agreement and this Agreement.   “Force Majeure Event” means epidemics, major storms, floods, lightning, earthquakes, fires, riots, civil disturbances, labor strikes or unrest, vandalism, terrorist attack, or sabotage beyond the reasonable control of a Party, acts of God, or any cause or condition beyond a Party’s reasonable control, provided that a Party shall not be excused from liability or performance hereunder where its delay or failure to perform is due to its financial inability to perform.   “Genesis System” means the Itron communications network bearing the “Genesis” trademark name.   “Infringing Material” is defined in Section 9.3.   “Initial Cure Period” is defined in Section 3.8(a)(i).   “Itron Equipment” means the equipment and materials, as set forth in Schedule E, that are in Pittsburgh as of the Effective Date and used extensively for certain maintenance of the Compliant System Components and that will remain Itron assets and be used in performing the Services.   “Itron Commercial Replacement ERTs” is defined in Section 2.3(a).   “Itron Commercial Replacement Meter” is defined in Section 2.3(b).   “Itron Proprietary Components” means (a) the components of the Fixed Network identified in Schedule C hereto as “Itron Proprietary Components”; (b) all Critical Maintenance Releases, Maintenance Releases, Custom Releases; (c) any Itron-   5 manufactured hardware added to the Fixed Network pursuant to the Transition Plan; and (d) any other components added to Schedule C as “Itron Proprietary Components” as agreed upon by the Parties in writing from time to time.   “Itron Service Administrator” is defined in Section 5.2(a).   “Itron Residential Replacement ERTs” is defined in Section 2.3(a).   “Itron Residential Replacement Meter” is defined in Section 2.3(b).   “Itron Removal Meters” is defined in Section 2.4(b).   “Itron Servicing Location” means the warehouse located at 357 Flaugherty Run Road, Building 101, Moon Township, PA 15108, which location may not be moved outside of the Pittsburgh area without DLC’s prior written consent.   “JAMS” is defined in Section 11.11(b).   “L/C Amount” means an amount equal to Four Million Dollars ($4,000,000.00) less all amounts drawn by DLC against the Letter of Credit.   “Letter of Credit” is defined in Section 6.5.   “Losses” is defined in Section 9.1.   “Maintenance Inventory” has the meaning set forth in Section 5.2(h).   “Maintenance Release” means any revision to Software that Itron may prepare, or that Itron may have prepared by or may receive from any third party, from time to time after the Effective Date that maintains or enhances Software operability and functionality, including available fixes for reported or identified Software problems and Nonconformities which are not Critical Nonconformities, but not including Custom Releases.   “Mandatory Maintenance Release” means any Maintenance Release to Software listed as an Itron Proprietary Component on Schedule C that is designated as a Mandatory Maintenance Release by Itron.   wastes, toxic or hazardous substances, petroleum and petroleum products and residual wastes.   “MV90” means a system component of the Fixed Network that processes meter reading data generally originating from commercial and industrial meters.   6   “Mobile Collector Units” means Itron’s portable “Mobile Data Collector” units.   “NCN” means network control node.   “Nonconforming” means having a Nonconformity.   “Nonconformity” means a deviation of an Itron Proprietary Component from normal functionality or a failure of an Itron Proprietary Component to conform to the requirements of this Agreement (including, without limitation, the warranties set forth herein), in each case that is not caused by a DLC Default.   “Optional Maintenance Release” means any Itron Maintenance Release to Software listed as an Itron Proprietary Component on Schedule C that is not designated by Itron as a Mandatory Maintenance Release.   “Outage Management System” means the system implemented by DLC for the purpose of processing ERT daily reads and CCU outage messages from the Fixed Network as   “Operations Process Clock” is defined in Section 3.2(c).   “Party” or “Parties” means DLC and Itron, individually or collectively as the case may be.   “Person” means any individual, company, corporation, partnership or other legal entity.   “Preferred Price” means, with respect to any goods or services, the lowest of (i) the most favorable price or rate then offered by Itron to any Person for the same quantity of such goods or services, (ii) if such goods or services are the subject of a then current list price published by Itron, (a) for goods, a quantity discount based on the accumulated quantity of such goods purchased by DLC since the Effective Date and (b) for services, a 20% discount off the list price, (iii) the price determined by Itron as commercially reasonable for such goods or services, or (iv) if DLC is not satisfied with the price under (i), (ii) or (iii), then such price as the Parties may negotiate in good faith.   “Premium Standard Service” is defined in Section 3.5.   “PUC” means the Pennsylvania Public Utility Commission.   “Qualifying Bank” means ABN AMRO Bank N.V. or a commercial bank reasonably acceptable to DLC with a minimum credit rating of at least two of the following ratings: (i) AA as determined by Standard & Poor’s Corporation, or (ii) Aa2 as determined by Moody’s Investors Service, Inc., or (iii) a comparable rating by another nationally recognized rating service reasonably acceptable to DLC.   7   “Radio Frequency Sharing Agreement” means the Radio Frequency Sharing Agreement dated as of March 30, 2000, between DLC, as assignee of DataCom, and Itron,   “Receiving Party” means a Party that receives Confidential Information from the   “Replacement Target Date” means the later of (a) nine (9) months after the Effective Date, or (b) December 31, 2003.   “Reserve Inventory” is defined in Section 5.2(g).   “RMA” is defined in Section 5.2(f).   “Services” means Itron’s responsibilities identified in Sections 2 and 3 of this Agreement, as such may be expanded from time to time pursuant to this Agreement or by the agreement of the Parties in a writing signed by their respective authorized representatives.   “Siris Device” means the telephone based meter device used for reading residential and small commercial meters over the Fixed Network.   “Software” means (a) all licensed and unlicensed Genesis System network software, computer programming object code, DNI software, and other software for the Genesis System now or hereafter owned by Itron or licensed from third parties and necessary for effective system operation of the Fixed Network from time to time, as listed on Schedule C, as may be amended from time to time by written agreement of the Parties, and (b) all related documentation for the foregoing furnished by or through Itron.   “Software License” means the Software License Agreement, dated as of March 30, 2000, between Itron and DLC, as assignee of DataCom, attached as Exhibit C hereto.   “Software Releases” means Maintenance Releases, Critical Maintenance Releases and Custom Releases.   “Spokane Operations Center” means the Itron customer support center located in Spokane, Washington, which will be consolidated into the DLC Operations Center as provided herein.   “Standard Services” is defined in Section 3.1.   8   “Supplemental Services” is defined in Section 3.7.   “Term” is defined in Section 8.1.   “Third Party Components” means (a) the components of the Fixed Network identified in Schedule C hereto as “Third Party Components”; and (b) any other components added to Schedule C as “Third Party Components” as agreed upon by the   “Transition Plan” means the transition plan set forth in the attached Exhibit D.   Section 2.    Transition Services   2.1    Transition Plan   The Parties will fulfill their respective obligations as set forth below and in the Transition Plan. The Parties will provide reasonable cooperation with each other in executing their respective obligations set forth below and under the Transition Plan. The Parties presently anticipate that they will complete and each party will sign the Transition Plan no later than thirty (30) days after the Effective Date.   2.2    Project Coordination   Within thirty (30) days after the Effective Date, each Party will identify to the other Party its respective project team and project manager that will be primarily responsible for coordinating the execution of such Party’s responsibilities and obligations under the Transition Plan. Each Party may add, remove or exchange members of its project team or its project manager from time to time upon notice to the other Party.   2.3    ERT and Meter Supply Obligations   (a)     ERT Supply Obligations   (i)    Itron Residential Replacement ERTs.    Itron will furnish, at no additional cost to DLC, the number of 41ER-1 ERTs specified in the Transition Plan, not to exceed 24,000, for installation and deployment by Itron pursuant to Section 2.4(a) (“Itron Residential Replacement ERTs”).   (ii)    Itron Commercial Replacement ERTs.    Upon approval and acceptance by DLC, Itron will furnish, at no additional cost to DLC, the number of 50ESS ERTs specified in the Transition Plan, not to exceed 17,500, to ABB Electricity Metering, Inc. (“ABB”) for installation in new ABB A3 Alpha meters to be purchased by DLC and deployed by Itron pursuant to Section 2.4(b) (“Itron Commercial Replacement ERTs”).   9   (b)    Meter Supply Obligations   (i)    Itron Residential Replacement Meters.    On the schedule specified in the Transition Plan or as otherwise agreed by the Parties, DLC will deliver to Itron the initial seed stock of meters specified as Itron Residential Replacement Meters in the Transition Plan (“Itron Residential Replacement Meters”). Such of these meters that Itron removes from service will be retrofitted by Itron with 41ER-1 ERTs and redeployed per the Transition Plan.   (ii)    Itron Commercial Replacement Meters.    DLC will purchase from ABB the ABB A3 Alpha meters containing the 50ESS ERTs supplied by Itron pursuant to Section 2.3(a)(ii) (each such ABB A3 Alpha meter containing a 50ESS ERT, an “Itron Commercial Replacement Meter”), and will provide such Itron Commercial Replacement Meters to Itron in “field ready” condition for installation (e.g., not requiring any additional calibration prior to installation).   2.4    ERT and Meter Installation Obligations   (a)    Itron Residential Replacement Meters.    Itron will (i) remove the Siris Devices in each Itron Residential Replacement Meter, (ii) install a Itron Residential Replacement ERT (not to exceed 24,000) in each Itron Residential Replacement Meter, (iii) perform all necessary “as found” and “as left” testing in connection with the Itron Residential Replacement Meters after the Siris Device is replaced by an Itron Residential Replacement ERT, and (iv) on or before the Replacement Target Date, install the Itron Residential Replacement Meters containing the Itron Residential Replacement ERTs in the applicable field locations specified in the Transition Plan.   (b)    Itron Commercial Replacement Meters.    On or before the Replacement Target Date, Itron will (i) remove the meters designated as Itron Removal Meters in the Transition Plan (“Itron Removal Meters”), (ii) install the Itron Commercial Replacement Meters (not to exceed 17,500) to replace the Itron Removal Meters, and (iii) return the Itron Removal Meters to DLC.   2.5    Other ERT Obligations   (a)    Necessary Permissions and Approvals.    DLC hereby grants to Itron the right to perform the services set forth in Section 2.3 and 2.4, and subject to the procedures mutually agreed upon in the Transition Plan, DLC will use its reasonable best efforts to ensure that Itron (including, without limitation, Itron’s employees and subcontractors) will have access to the meters specified in the Transition Plan at the times, in the manner, and upon the terms and conditions specified in the Transition Plan. The Transition Plan shall clearly define the obligations, responsibilities and actions required for non-access situations. If required, DLC, at its expense, will secure   10 and maintain any and all consents, approvals, licenses, permissions, agreements and other actions required of any third party (under any third party agreement, Applicable Law, regulatory approval or otherwise) for DLC and Itron to perform their respective obligations in accordance with Sections 2.3 and 2.4.   (b)    Ownership and Treatment of ERTs.    Upon installation thereof in the field locations specified in the Transition Plan, DLC will own title to the Itron Residential Replacement ERTs and the Itron Commercial Replacement ERTs. Upon installation, calibration and testing in accordance with Itron-approved procedures (and, in the case of Itron Residential Replacement ERTs, generation of meter reads consistent with performance of the Fixed Network), the Itron Residential Replacement ERTs and the Itron Commercial Replacement ERTs will be deemed Itron Proprietary Components.   (c)    Daily Reads.    Notwithstanding anything to the contrary in this Agreement, any inability of the Itron Residential Replacement ERTs and/or Itron Commercial Replacement ERTs to deliver a particular level of daily reads due to circumstances beyond Itron’s reasonable control (such as no communication coverage for the Itron Residential Replacement ERTs and/or Itron Commercial Replacement ERTs) shall not be deemed a Nonconformity or a Critical Nonconformity hereunder. For avoidance of doubt, “reasonable control” will not be interpreted or construed to require Itron to erect any new communications tower, rent space on any existing communications tower, add to or modify the Genesis LAN/WAN infrastructure, or take any steps to enhance in any way the existing communications coverage to the location of any residential or commercial customer of DLC.   2.6    Disposition of Siris Devices   (a)    Ownership and Treatment of Siris Devices.    All Siris Devices shall become Itron property and shall no longer be deemed Compliant System Components upon the earlier of (i) replacement of a particular Siris Device with an ERT as provided in Section 2.4, (ii) twenty four (24) months after the Effective Date, or (iii) for all Siris Devices referenced in Section 2.6(d), upon the earlier of (A) return of such Siris Device to Itron, or (B) thirty (30) days after the Effective Date.   (b)    Return of Removed Siris Devices.    On or before thirty (30) days after the Replacement Target Date, DLC will remove all Siris Devices from the Itron Removal Meters and return them to Itron, or, at DLC’s option, certify destruction thereof in accordance with Section 2.6(c).   (c)    Certification of Destruction.    DLC may, at its option, elect not to remove one or more Siris Devices from meters removed pursuant to Sections 2.4(b); provided, that DLC will (i) destroy such removed meters (including the Siris Device contained therein) in accordance with all Applicable Laws (including, without limitation, all applicable guidelines of the Environmental Protection Agency), and (ii) DLC will furnish Itron with a signed, written record certifying such destruction.   11   (d)    Return of All Other Siris Devices.    On or before thirty (30) days after the Effective Date, DLC will at DLC’s sole cost and expense, (i) return to Itron all Siris Devices comprising part of the Reserve Inventory, (ii) return to Itron all Siris Devices comprising part of the Maintenance Inventory, and (iii) return to Itron any other Siris Devices in DLC’s possession (in inventory or otherwise).   2.7    Mobile Collector Units and DataPaks   Itron will deliver to DLC three (3) Mobile Collector Units upon the delivery schedule set forth in the Transition Plan. Upon delivery to DLC, such Mobile Collector Units shall be deemed Itron Proprietary Components. DLC will return to Itron, upon the schedule set forth in the Transition Plan, all DataPaks. Upon return to Itron, such DataPaks shall no longer be deemed Compliant System Components.   2.8    Disaster Recovery Services   (a)    Disaster Recovery During the Disaster Recovery Service Period.    Itron shall operate and maintain a disaster recovery program at its Spokane Operations Center for the DLC Operations Center from the Effective Date until such time as the Parties transition operational responsibility for such disaster recovery services to DLC as provided in the Transition Plan, in no event later than March 31, 2004 (the “Disaster Recovery Service Period”). During the Disaster Recovery Service Period, Itron shall provide DLC with the disaster recovery services listed in Schedule F (the “Disaster Recovery Services”) for the identified Compliant System Components, on a twenty-four (24) hour per day basis for a period of up to ninety-six (96) consecutive hours following commencement of Disaster Recovery Services. After the first ninety-six (96) hours of Disaster Recovery Services, (i) Itron will provide Disaster Recovery Services, including operations personnel for up to eight (8) hours per day, and (ii) DLC shall be responsible for providing operations personnel for the remaining hours per day, unless DLC’s requirement for Disaster Recovery Services was caused by Itron’s negligence, willful misconduct or failure to perform its obligations hereunder, in which case, Itron shall continue to provide, at its cost and expense, Disaster Recovery Services on a twenty-four (24) hour per day basis until completed. All Disaster Recovery Services after the first ninety-six (96) hours will be deemed Supplemental Services at the Preferred Price.   (b)    Disaster Recovery After the Disaster Recovery Service Period.    After the expiration of the Disaster Recovery Period through the remainder of the Term, DLC will be solely responsible for, and Itron will have no obligation to provide, (i) any Disaster Recovery Services, and (ii) any third party hardware or software licenses, support, maintenance, additions or upgrades to the Disaster Recovery Equipment   12 or otherwise related to the Disaster Recovery Services. Any changes required to the production system will, if applicable, be implemented with respect to the Disaster Recovery System at (a) Itron’s sole cost and expense in the case of a Critical Maintenance Release or a Mandatory Maintenance Release, and (b) DLC’s sole cost and expense in the case of an Optional Maintenance Release or a Custom Maintenance Release.   (c)    Transfer of Disaster Recovery Equipment.    Prior to the expiration of the Disaster Recovery Service Period, Itron will transfer to DLC at no additional cost to DLC all of Itron’s right, title and interest to the Disaster Recovery Equipment, to the extent that the same may be legally transferred. Such transfer shall include all applicable manufacturer’s specifications for such Disaster Recovery Equipment, to the extent available and not previously provided to DLC. The transfer of the Disaster Recovery Equipment shall be “AS IS, WHERE IS” and with no representation or warranty (express or implied) of any kind, including, without limitation, as to merchantability, fitness for a particular purpose, completeness, noninfringment or assignability. For avoidance of doubt, following such transfer, all Itron-manufactured hardware and Itron-owned Software comprising part of the Disaster Recovery Equipment shall be deemed an Itron Proprietary Component. Schedule C shall be updated by the Parties within thirty (30) days after the expiration of the Disaster Recovery Services Period to reflect the transfer of the Disaster Recovery Equipment as contemplated by   (d)    Disaster Recovery Transition Assistance.    Itron will, at no cost to DLC, provide reasonable technical support and assistance to facilitate the establishment of a DLC-operated disaster recovery operations facility (“DLC Disaster Recovery Center”) and the transfer of the Disaster Recovery Equipment thereto, as such obligations are defined in the Transition Plan.   (e)    Delay in Disaster Recovery Transition.    In the event that DLC causes a delay beyond the transition date mutually agreed upon in the Transition Plan, in the transition of the Disaster Recovery Services and Disaster Recovery Equipment from Itron to DLC pursuant to this Section 2.8, (i) Itron will continue to provide Disaster Recovery Services on the terms set forth in Section 2.8(a) until the actual date of such transition, (ii) any such Disaster Recovery Services provided by Itron after the transition date mutually agreed upon in the Transition Plan, will be deemed Supplemental Services for which DLC will pay Itron accordingly, and (iii) DLC will reimburse Itron for the additional costs reasonably incurred by Itron to accommodate such delay.   (f)    Annual Disaster Recovery Test.    After the expiration of the Disaster Recovery Services Period, DLC will conduct an annual test of Disaster Recovery Services and Disaster Recovery Equipment in accordance with the attached Schedule F. DLC will give Itron reasonable advanced written notice of such annual testing and allow Itron a reasonable opportunity to attend and participate in such test. DLC will furnish to Itron a report detailing the findings of each such annual test within thirty (30) days after the completion thereof.   13   2.9    CCU Maintenance   (a)    CCU Field Repair and Maintenance.    Not later than January 1, 2004 and for the remainder of the Term, (the “CCU Transition Date”) DLC will assume from Itron all responsibility for installation and de-installation of CCUs comprising part of the Fixed Network, including replacement of batteries for the CCUs, as provided in Section 3.4(d). In addition, DLC, as Itron’s subcontractor, will be responsible for field investigation and field de-install and re-install of CCUs comprising part of the Fixed Network pursuant to a mutually agreed upon process.   (b)    CCU Shop Repair and Maintenance.    Before and after the CCU Transition Date, Itron will provide corrective maintenance for Nonconforming CCUs as set forth in Section 3.4(b) during regular hours at the Itron’s Servicing Location, except that after the CCU Transition Date (i) DLC will deliver any Nonconforming CCU to Itron’s Servicing Location at no cost to Itron; (ii) DLC will take delivery of the repaired or replaced CCU at Itron’s Servicing Location; and (iii) DLC will be responsible for all labor to replace batteries for the CCU units, as provided in Section 3.4(d).   2.10    Support of 50ESS ERT Technology   Itron, at its sole cost and expense, will upgrade and modify the Software to support the 50ESS ERT technology as provided in the Transition Plan. DLC, at its sole cost and expense, will upgrade and modify its DISCUS customer information system to support the 50ESS ERT technology as provided in the Transition Plan. For avoidance of doubt, the Transition Plan will provide for the use of 50ESS technology implemented around a P+2, MVRS, or P+4 application architecture (as determined by Itron) and the existing Genesis System Software for monthly and daily reads. If Itron selects an MVRS or P+4 solution, Itron will at its sole cost provide up to 25 handhelds to DLC that are compatible with the selected platform. DLC may choose a solution different than what Itron selects, and in such case DLC will pay for any additional work required to develop the option chosen by DLC on a mutually agreed upon schedule.   Section 3    Itron Services   3.1    Standard Services   During the Term, Itron will perform the Services described in Sections 3.2, 3.3, 3.4 and 3.5 for the Fixed Network and all Itron Proprietary Components (“Standard Services”).   14   3.2     Software Releases and Support   (a)    Critical Maintenance Releases.    Whenever Itron prepares or has prepared a Critical Maintenance Release, Itron shall provide DLC an electronic copy of, and obtain all necessary licenses for DLC to use, the Critical Maintenance Release. Unless directed otherwise by DLC in writing, Itron shall (i) give any request for a Critical Maintenance Release priority over all other DLC reported problems and (ii) provide DLC with corrective action reports and project timetables with respect to the Critical Nonconformity on not less than a weekly frequency. Itron shall provide, at its sole cost and expense, assistance and on-site support to DLC for the implementation of Critical Maintenance Releases in the form of installation, testing and training of designated DLC personnel identified in writing to Itron. All Critical Maintenance Releases shall be   (b)    Maintenance Releases.    Itron shall provide DLC an electronic copy of and, if necessary, a license to use, all Maintenance Releases as soon as they have been prepared or received, and tested for release, by Itron. All Maintenance Releases and related training of DLC personnel as may be reasonably required will be provided upon DLC’s request without any additional cost or expense to DLC. Itron shall notify DLC promptly upon scheduling of and completion of any Maintenance Release and upon its receipt of a Maintenance Release from a third party. Such notice shall describe, in reasonable detail, the nature and subject of the forthcoming Maintenance Release. All Maintenance Releases shall be deemed Itron Proprietary Components.   (c)    Upgrades Required by Critical Maintenance Releases or Mandatory Maintenance Releases.    If any Critical Maintenance Release or Mandatory Maintenance Release prevents or materially impairs DLC’s meter reads during the “operations process clock” as specified in Schedule A (the “Operations Process Clock”), Itron shall, at its expense, provide DLC with all necessary software and hardware upgrades or modifications to permit DLC to conduct such meter reads during the Operations Process Clock.   (d)    Upgrades Required by Optional Maintenance Releases.    Optional Maintenance Releases will be compatible with Itron Proprietary Components. If DLC elects to install an Optional Maintenance Release, any and all upgrades of Third Party Components and third party hardware and software will be at DLC’s   (e)    Documentation.    Itron shall, as-is and as available, provide DLC such documentation, including commands and/or scripts, as may be necessary to install and operate the Fixed Network, the Compliant System Components, Software, Software Releases, and Disaster Recovery Equipment. Such publications need not, however,   15 include engineering blueprints, source code, proprietary protocols, and other Itron technical documents unless otherwise agreed to in writing by the Parties. Technical publications, object and source codes, protocols, and other proprietary Itron information shall be made available to DLC pursuant to the terms of the Escrow Agreement. DLC may modify any scripts provided by Itron at DLC’s sole risk, but 3Itron shall have noobligation to modify, enhance or otherwise support any scripts provided to DLC hereunder.   (f)    Third Party Software.    As of the Effective Date, Itron represents and warrants that the Software is compatible and functional with respect to the Compliant System Components, including, without limitation, the third party software comprising part of the Compliant System Components.   (g)    Compatibility.    Itron shall provide Mandatory Maintenance Releases to ensure compatibility of the Software with all Compliant System Components. Itron will also provide Custom Releases to ensure compatibility of the Software with other third party software related to the Fixed Network upon the terms provided   (h)    Software Release Support.    During the installation of, and for a period of ninety (90) days after the installation of any Software Release, Itron shall make one or more qualified technical representatives available via the toll-free telephone number set forth in Schedule D during the routine support hours set forth in Schedule D, to assist the DLC Service Administrator with installation, use and maintenance of the Software Release.   3.3    Technical Support   (a)    Fixed Network and Itron Proprietary Components Routine Technical Support.    Itron shall make one or more qualified technical representatives available via the toll-free telephone number set forth in Schedule D during the routine support hours set forth in Schedule D, to assist the DLC Service Administrator with technical support for routine Nonconformities and other general technical support for the Itron Proprietary Components that may be   (b)    Fixed Network and Itron Proprietary Components Critical Technical available via the toll-free telephone number set forth in Schedule D on a twenty-four (24) hour basis to assist the DLC Service Administrator with any Critical Nonconformity. Such assistance shall include, if requested by the DLC Service Administrator, the dispatch of a technician to correct the Critical Nonconformity within the time periods set forth in Schedule D and in accordance with the other requirements set forth in this Agreement.   16   (c)    Configuration Changes.    Upon approval by the Change Control board, Itron shall take such actions as shall be mutually agreed upon to support a Configuration Change; provided, that Itron shall not unreasonably withhold or delay its approval of such Configuration Change. If the Parties have a good faith dispute over whether a requested change is a Configuration Change, such dispute shall be submitted for resolution to an officer of DLC and an officer of Itron who shall have the authority to settle the dispute.   3.4    Fixed Network Installation, Investigation and Maintenance   Subject to the obligations of the Parties as set forth in Section 2, Itron will undertake the following:   (a)    Field Investigations.    In situations where DLC’s standard troubleshooting activities in accordance with Section 5.3(f) and 5.3(j) cannot identify or correct a Nonconformity and problem analysis by telephone or remote system access is neither successful nor expedient, and upon receipt of a service request from DLC, (i) Itron will provide services as set forth in Schedule D, and shall dispatch appropriate employees or contract personnel to investigate any Nonconformity; and (ii) as part of its field investigation process, Itron will make available all labor, material, exchange equipment, tools, and consumable supplies (e.g., wire, batteries, brackets, and cables) necessary for de-installation and re-installation of such Nonconforming Itron Proprietary Components. If necessary for DLC to relocate a CCU in order to maintain performance of the Fixed Network, Itron shall provide technical assistance to DLC with respect to such relocation to ensure the integrity of the Fixed Network is not materially impaired solely from such necessary relocation. DLC accepts that Itron will not ensure that previous daily read performance will be maintained at levels before such relocation.   (b)    Itron Proprietary Components Corrective Maintenance.    Itron shall (i) provide corrective maintenance for Nonconforming Itron Proprietary Components during regular hours at Itron’s servicing location,within the response/return times documented in Schedule D; (ii) upon receiving the Itron Proprietary Component at the servicing location, complete the corrective maintenance, or arrange for all corrective maintenance necessary, to return the Itron Proprietary Component to its original operating specifications, excluding minor cosmetic deficiencies (e.g., minor cracks, dents, and scratches); and (iii) furnish all parts and materials necessary to complete the corrective maintenance and eliminate any Nonconformity. Parts so furnished will be new, or in a condition equivalent to new, and shall be functionally equivalent to those parts removed from service. Nonconforming, malfunctioning or inoperative parts so replaced by Itron will become Itron property.   17   (c)    Itron Proprietary Component Installation and Maintenance.    Itron will ensure all Itron Proprietary Components installed by Itron pursuant to the Transition Plan have been installed properly as of the Effective Date, and subsequently if installed by or under Itron’s direction pursuant to this Agreement. Itron will maintain all Itron Proprietary Components within manufacturer specifications, including performing all necessary or appropriate preventative maintenance on such Itron Proprietary Components.   (d)    CCU Batteries.    On and after January 1, 2004, Itron will supply batteries for the CCUs to DLC in accordance with Itron’s initial forecast of the number of CCU batteries needed in the next twelve (12) months. Thereafter, on or before each subsequent six (6) month anniversary of the Effective Date during the Term, DLC shall provide Itron with a rolling twelve (12) month forecast in writing of DLC’s good faith best estimate of the number of CCU batteries needed in each of the coming twelve (12) months. Itron will notify DLC within thirty (30) days of receipt of a DLC forecast if DLC’s forecast is not reasonably consistent with Itron’s CCU battery life projections. In case of such inconsistency, the Parties will negotiate in good faith to agree upon a revised forecast. Itron will use commercially reasonable efforts to make available to DLC CCU batteries in sufficient quantities to meet the demand forecast by DLC and accepted by Itron. Itron will have no obligation to supply any CCU batteries in excess of DLC’s approved forecast. DLC will be solely responsible for (i) proper removal and disposal of all CCU batteries from CCU units in accordance with all Applicable Laws (including, without limitation, all applicable guidelines of the Environmental Protection Agency), and (ii) proper installation of new CCU batteries in such CCU units, whether such service is done in the field or elsewhere.   3.5    Additional Charge for Standard Services   If, but only to the extent that, Itron is required to perform any Standard Services as a result of any of the following events or circumstances (a “Premium Standard Service”), then (i) Itron shall use its reasonable best efforts to perform said Premium Standard Services, in which case the provisions of Schedule D and Section 3.9(a) shall not apply, and (ii) at Itron’s option, DLC shall pay for such Premium Standard Service as if it were a Supplemental Service at the Preferred Price:   (a)    Any repair, maintenance, service, modification to or alteration of the Fixed Network performed after the Effective Date by any personnel other than Itron personnel (including its employees, agents and contractors) or Itron-trained DLC personnel (including its employees, agents and contractors) after the Effective Date without prior notice to and approval by Itron, which   18   (b)    Any damage to or accident involving the Fixed Network or Compliant System Components due primarily to the negligence of, or an intentional act of sabotage by, DLC or any of its employees, contractors, subcontractors or agents;   (c)    Any DLC Default;   (d)    Any Nonconformity resulting from a major modification to or alteration of the Fixed Network by DLC which had not been approved or otherwise permitted pursuant to the Change Control procedures attached as Schedule A; or   (e)    Any Service required because DLC did not operate the Fixed Network or Compliant System Components within the normal operating standards employed at the DLC Operations Center as of the Effective Date and as modified from time to   3.6    Failure to Perform Standard Services   Subject to DLC’s fulfillment of its obligations under this Agreement, Itron shall perform the Standard Services within the time periods set forth in Schedule D or as otherwise required by this Agreement, and such Standard Services shall comply with all performance standards and other requirements of this Agreement. In the event that Itron fails to perform any of the Standard Services as and when required under the terms of this Agreement, and provided that DLC has followed the escalation process provided in Schedule G, then, in addition to any other rights and remedies it may have hereunder, at law, in equity or otherwise, upon written notice to Itron, DLC may perform or cause a third party to perform such Standard Services and shall be entitled to (a) offset the costs and expenses of performing or having performed such Standard Services against any amounts owed to Itron pursuant to Section 6, and (b) upon offsetting all such amounts then due and payable to Itron pursuant to Section 6, draw upon the Letter of Credit for payment of the costs and expenses of such Standard Services.   3.7    Supplemental Services   Upon receipt of a written request from DLC, Itron shall provide the following services (“Supplemental Services”) to DLC, each of which shall be at the Preferred Price:   (a)    Excluded Equipment.    At DLC’s request and after Itron’s agreement, which will not be unreasonably withheld, Itron shall make commercially reasonable efforts to provide Services at a commercially reasonable price for any Excluded Equipment.   19   (b)    Custom Releases.    Within thirty (30) days of receipt of a written request from DLC for a Custom Release, Itron shall provide DLC with a budgetary estimate of Itron’s price and time required to prepare or cause preparation of the Custom Release. The budgetary estimate shall include, but not be limited to, the following information: a requirements definition, and estimates and descriptions of project management, design, tooling, programming, documentation, testing, implementation and ongoing service. Itron will prepare a firm estimate of Itron’s price and time required to prepare or cause preparation of the Custom Release within sixty (60) days of such request. If DLC provides Itron with a written notice to proceed within thirty (30) days of the receipt of the budgetary estimate or firm estimate, as applicable, Itron shall, as soon as commercially reasonable, (i) prepare or cause to be prepared, (ii) provide DLC an electronic form copy of, and (iii) obtain all necessary licenses for DLC to use, the Custom Release in accordance with such estimate, and shall otherwise perform all services and obligations as set forth in such estimate.   (c)    Optional Support and Training Services.    Within fifteen (15) days of receipt of a written request from DLC, Itron shall provide DLC with a firm estimate of Itron’s price and time required to provide DLC with support and/or training services that are not Standard Services, in each case as may be set forth in the request. If DLC provides Itron with a written notice to proceed within 30 days of the receipt of the firm estimate, Itron shall provide the services in accordance with the firm estimate.   (d)    Itron Proprietary Component Upgrades.    Within thirty (30) days of receipt of a written request from DLC, Itron shall provide DLC with a budgetary and to implement an upgrade of or enhancement to a Itron Proprietary Component that is not otherwise provided for in this Agreement. Within sixty days of that is not otherwise provided for in this Agreement. If DLC provides Itron with a written notice to proceed within 30 days of the receipt of the budgetary estimate or firm estimate, as applicable, Itron shall prepare and implement the upgrade or enhancement in accordance with such estimate.   (e)    Other Supplemental Services.    Upon request from DLC, Itron shall provide the following Supplemental Services at the Preferred Price for labor, materials, and expenses:   (i)    Services and expenses outlined as obligations of DLC in this Agreement;   20   (ii)    Service requests that include services, overtime or holiday coverage, response/return times, special freight or expenses over and above the Standard Services;   (iii)    Additional services that are required due to DLC’s inability to provide Itron with reasonable access to system performance data and use of operational tools available to the Fixed Network;   (iv)    Any field investigations or corrective maintenance that are not   (v)    Field investigation support for meters, ERTs, Siris Devices and Excluded Equipment;   (vi)    Installation and/or acceptance tests, data, reports, documentation, upgrades and/or enhancements not specifically related to Itron Proprietary Components or included as part of this Agreement; and   (vii)    Assistance to DLC for the implementation of a Maintenance Release in the form of installation and testing.   3.8    Warranties and Performance Standards   (a)    Critical Nonconformities.    Notwithstanding anything to the contrary set forth elsewhere in this Agreement and except as otherwise provided in Section 3.6, in performing the Standard Services, the following requirements shall apply to any and all Critical Nonconformities:   (i)    Itron shall exercise its reasonable best efforts to eliminate a Critical Nonconformity within 120 hours after it receives written notice from DLC that a Critical Nonconformity exists (the “Initial Cure Period”). If a Critical Nonconformity has not been eliminated within the Initial Cure Period, DLC shall have the option, exercisable in its sole discretion, to require Itron to pay a penalty of $5,000 to DLC within ten days after the end of the Initial Cure Period.   (ii)    With respect to any Critical Nonconformity which has not been eliminated within the Initial Cure Period, Itron shall exercise its reasonable best efforts to eliminate such Critical Nonconformity as soon as possible, but in any event on or before the date which is 15 days after the end of the Initial Cure Period (the “Final Cure Date”). If a Critical Nonconformity has not been eliminated on or before the Final Cure Date (as it may be extended pursuant to (iii) below), an Event of Default under Section 7.1 shall be deemed to exist.   21   (iii) If it would not be possible through the exercise of reasonable best efforts for Itron or any other similar company to eliminate the Critical Nonconformity on or before the Final Cure Date, then the Final Cure Date may be extended at DLC’s sole discretion if DLC is satisfied that continuing reasonable best efforts by Itron will eliminate the Critical Nonconformity.   (b)    Itron Warranties.    Itron represents, warrants and guarantees that any Services provided under this Agreement shall be (i) provided in accordance with the requirements of this Agreement; and (ii) provided in a timely, skillful,   (c)    Third Party Warranties.    To the extent permitted and subject to Section 9.1, Itron will assign to DLC, without recourse to Itron, all third party manufacturer’s warranties related to the items listed on Schedule C which are in effect on the Effective Date. The expiration of such warranties, however, shall not be acceptable cause for non-delivery, or unsatisfactory delivery, of   (d)    Applicable Standards.    Itron will perform, and will cause its contractors to perform, any Services safely, reliably, efficiently, in compliance with all Applicable Laws, including FCC and PUC requirements, in conformance with industry standards and under conditions reasonably required by DLC’s insurers.   (e)    Relations with Labor.    Itron shall maintain good relations with its employees and contractors with regard to its performance of the Services. Itron shall promptly notify DLC in writing of any material complaint made by or any material dispute that arises with any of these Persons in connection with the Services.   (f)    Environmental Compliance.   (i)    Prior to commencement of any Services involving Materials of Environmental Concern, Itron shall provide to DLC a list of all Materials of Environmental Concern that may be used or generated in connection with the Services.   (ii)    In furtherance of and not in limitation of any other portion of this Agreement, Itron shall, and shall cause its subcontractors to, comply with all Applicable Laws relating to safety and the protection of the environment including, but not limited to, handling, protection, transportation and disposal of all Materials of Environmental Concern (“Environmental Laws”). The Services shall at all times comply with Environmental Laws.   (g)    CCU, NCN and Communications Equipment Performance.    A CCU will be considered Nonconforming when communications have failed for three (3) consecutive days or if its continued operation interferes with other Fixed Network   22 components; provided, however, such failure is not caused by a DLC Default. Itron’s Services shall be performed in a manner that ensures that CCU/NCN reads (data collection) are successful for ninety-six percent (96%) of the attempts during each month during the Term; provided, however, such shortcoming is not caused by a DLC Default. Itron agrees that maintenance and support activities will be reviewed and revised, if necessary, in consultation with DLC, if aggregate CCU/NCN read performance falls below ninety-six percent (96%) for any consecutive seven day period; provided, however, such shortcoming is not caused by a DLC Default.   3.9    Personnel and Qualifications   (a)    General.    Itron shall provide all labor and personnel required in connection with the performance of the Services. All personnel used by Itron in the performance of Services shall be qualified by training, licenses or certifications, as required, and experienced to perform their assigned tasks. Itron shall ensure that all personnel assigned to perform Services that involve contact with DLC customers are subject to the same current background checks, security requirements and other protective personnel procedures, including, without limitation, drug testing procedures, as are personnel of DLC in similar positions. At DLC’s request, Itron shall remove from performing Services any employee whom DLC, in its reasonable discretion and with sufficient cause, deems unqualified, incompetent, disorderly, insubordinate, careless or otherwise objectionable (except that Itron shall have no obligation to remove any employee if such removal would violate Applicable Law).   (b)    Use of Contractors.    Itron may, at its sole discretion, use contract personnel to perform any Services pursuant to this Agreement. Such contract personnel shall possess the required qualifications, training and experience necessary to perform the required tasks in accordance with applicable industry standards. Such contract personnel will be dispatched by and responsible to Itron. DLC shall not direct Itron’s contract personnel to perform any tasks not included as Standard Services or Supplemental Services under this Agreement.   3.10    Interference With DLC’s Facilities   Itron shall not materially and adversely interfere or tamper with any of DLC’s facilities in any way that is not necessary or appropriate to the performance of the Services without the prior written consent of DLC, and Itron shall take all actions necessary or appropriate to prevent its employees, other contractors or subcontractors from doing so.   23   3.11    Assumption of Risk and Insurance   (a)    Assumption of Risk.    Each party acknowledges that the services to be provided by either party under this Agreement may involve work at or near energized electric lines or equipment, above and below ground, and potential exposure to Materials of Environmental Concern and that, for this reason, there are certain risks attendant to the performance of services provided by either party under this Agreement. Each party explicitly assumes these risks and the risks of pre-existing conditions during the performance of such party’s services, excluding any conditions to the extent caused by the other party’s   (b)    Insurance.    During the Term, Itron shall maintain, at no cost to DLC, at least the following kinds and amounts of insurance to cover bodily injury (including death) and tangible property damage suffered or (in the case of liability insurance) caused by Itron or its employees, if any, in connection with the performance of the Services:   (i)    Employer’s Liability Insurance.    Limit of not less than $500,000.   (ii)    Comprehensive General Liability Insurance.    Includes premises operation, independent contractor’s protective, products, completed operation, and blanket contractual liability coverage with a combined single limit of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate, and coverage for blasting or explosion, collapse and underground work if applicable. The property damage liability insurance shall include the broad form comprehensive general liability coverage and shall include coverage (on a replacement cost basis) for Compliant System Components while in the care, custody and possession of Itron.   (iii)    Excess Umbrella Liability Insurance.    Single limit of not less than $15,000,000.   (iv)    Worker’s Compensation.    A worker’s compensation policy in such coverage and with such limits as may be required from time to time by Applicable Law.   Itron’s liability policies required under this section shall contain a waiver of subrogation in favor of DLC. DLC shall be named as an additional insured on Itron’s liability policies required under this section, as its interests may appear. Upon DLC’s request, Itron shall provide written evidence that Itron complies with the requirements of this section, stating the policy number and the inception and expiration data of all policies. A “notice of cancellation/material alteration” clause shall be included in Itron’s liability policies required under this section that shall require the policy issuer or policy holder to give DLC at least thirty (30) days’ notice prior to cancellation or material alteration under such policy.     24   3.12    Change Control   The Change Control Procedure attached as Schedule A will govern material changes to the Fixed Network and the Fixed Network test environment.   3.13    Review and Inspection   During the Term, each party will, upon at least ten (10) Business Days’ prior written request by the other party, allow the other party to review and inspect the nonrequesting party’s operating records, equipment, facilities and other relevant materials related to the Fixed Network or nonrequesting party’s obligations set forth in this Agreement to the extent necessary to verify the nonrequesting party’s compliance or non-compliance with the obligations provided in this Agreement; provided, that any such inquiry is conducted during normal business hours and in a manner designed to not unreasonably interfere with the nonrequesting party’s ordinary business operations.   Section 4.    Licenses   4.1    Licenses   During the Term and to the extent permitted by third party licensors (if applicable) and with no additional cost to Itron, Itron hereby grants DLC a non-exclusive, unrestricted, royalty-free license (for Itron-owned Software) or sublicense (for third-party-owned Software listed on Schedule C) to use, in connection with the Fixed Network, all Software, including commands and/or scripts, and all subsequent Software Releases. The terms of Itron’s end-user license for any third party Software as in effect on the Effective Date shall apply to any sublicense for such third party Software under this section. Notwithstanding the foregoing, if the effective operation of the Fixed Network requires that DLC own any Software or Software Release, Itron shall, at its sole cost and expense, take such commercially reasonably steps as may be necessary to procure for DLC a license of such Software or Software Release.   4.2    Ownership of Software and Software Releases   All Software and Software Releases not owned by a third-party are owned by Itron unless and until such ownership has been licensed to DLC pursuant to Section 4.1 hereof.   Section 5.    Implementation   5.1    Cooperation   The Parties will cooperate in good faith in performing their respective   25   5.2    General Obligations   (a)    Service Administrators.    DLC will identify at least two (2) employees to act as primary and backup service administrators (each, an “DLC Service Administrator”), and Itron will identify at least two (2) employees to act as primary and backup service administrators (each, an “Itron Service Administrator”). The DLC Service Administrators and the Itron Service Administrators shall act as liaisons between DLC and Itron for all Service issues.   (b)    Service Requests.   (i)    Itron shall maintain and make available to DLC a staff of service personnel to respond to DLC service requests in accordance with Schedule D.   (ii)    Service requests for Nonconformities other than Critical Nonconformities shall be reported to Itron by DLC’s Service Administrator via Itron’s Customer Support Hotline at (800) 635-8725.   (iii)    Service requests for Critical Nonconformities shall be reported by the DLC Service Administrator to the on-duty Itron Service Administrator at (800) 635-8725. The on-duty Itron Service Administrator will take all necessary action to remedy such Critical Nonconformity on an urgent basis, including immediately dispatching a technician to the DLC Operations Center if necessary or if requested by DLC as set forth in Schedule D.   (iv)    Upon initiating a Service Request, DLC’s Service Administrator should provide, at a minimum, the following information:   Contact Name: Telephone Number: Description of Problem: Type of Equipment: Equipment Item/Part Number: Software (Version): Materials to be Returned:    Y/N   (c)    Security.    DLC, at its expense, shall establish and maintain physical and remote access to the Fixed Network, which will include security badges and facilities entry security for Itron service personnel and mutually designated service providers enabling Fixed Network access twenty-four (24) hours per day, seven (7) days per week and computer passwords will allow Itron service personnel to access, but not, without DLC’s consent, to make changes to, Fixed Network menus, commands, and databases as necessary for Itron to provide Services. Itron shall hold, and shall cause each of its   26 employees and contractors to hold, all security badges, computer passwords and other security codes and information relating to the Fixed Network in strict confidence, and neither Itron nor any of its employees, contractors or agents shall permit any unauthorized Person to have any access to or possession of any of said items.   (d)    Technical Library.    DLC shall maintain, and provide Itron with access to, a technical library at the DLC Operation Center for storage and maintenance of all related Fixed Network agreements, back-up software, installation guides, operators manuals, service manuals, engineering change orders, specifications, service bulletins and reports associated with installation, operation, maintenance and administration of the Fixed Network, Software and Software Releases. Itron will support DLC as the co-proprietor of this library. Unless specifically identified as “Public Information,” all materials maintained in the technical library shall be Confidential Information, and each Party agrees to not copy, make available or distribute materials, documents, Software or Software Releases from the technical library to any third party for any reason without prior written consent from the other Party; except that Itron, with the prior approval of DLC, may make materials in the technical library available to third parties who have entered into a written agreement with Itron to protect the confidentiality of such materials.   (e)    Communications.    Itron will maintain the routers and other frame relay communications Equipment as set forth on Schedule C, as may be modified pursuant to this Agreement, between the NCN sites and the DLC and Spokane Operation Centers at its own cost and expense, other than the communications charges, which will be the responsibility of DLC. In addition to the circuits required for operation of the Fixed Network, Itron will, at DLC’s sole cost and expense, maintain links to Itron for remote access support services. Itron shall use these support links solely for its system maintenance and support activities as documented herein, and shall not make material changes to the Fixed Network without prior authorization of DLC. DLC shall work with Itron and the communications service provider toward establishing a working relationship that will enable Itron to perform the Services hereunder.   (f)    Returned Materials.    Prior to returning any Itron Proprietary Component to Itron for Service, DLC will request Itron to assign a return materials authorization (“RMA”) number to the request. Upon issuance of the RMA, DLC will return the Itron Proprietary Component via prepaid freight to Itron’s servicing location with reference to the assigned RMA number on all shipping labels and documents. Upon receiving returned Itron Proprietary Components from DLC and completion of Services, if applicable, Itron will return materials to DLC via prepaid freight.   27   (g)    Reserve Inventory.    The following items (the “Reserve Inventory”) are owned by DLC:   Item    Quantity ERTs ERT 50ESS    3,000 100 CCUs    300 NCNs    2   DLC shall have the right to hold and use the Reserve Inventory as and when it, in its sole discretion, determines. Itron shall have no right to use any of the Reserve Inventory in connection with its services hereunder without the prior written approval of DLC. Itron shall have no obligation to replenish any of the Reserve Inventory used by DLC.   (h)    Maintenance Inventory.    The following items (the “Maintenance Inventory”) are owned by DLC:   Item    Quantity DCU    1 ERTs    2,000 CCUs    200 NCNs    3 Routers    3 Telestructures    10   DLC, at its expense, will own, warehouse and make available to Itron the Maintenance Inventory for the performance of the maintenance responsibilities described herein and at no cost to Itron. DLC shall supply Itron with information regarding the disposition of any such assets used for maintenance or expansion purposes that are not Itron’s responsibility under this Agreement. DLC agrees that the Maintenance Inventory will be used exclusively in connection with the Fixed Network for exchange of field equipment on a “like for like basis”, or, upon payment of any associated incremental cost (including the cost of additional CCU or NCN equipment that may be required to be installed), on a “non-like for like” basis and will also make these materials available to Itron service representatives. As additional consideration for the fees payable by DLC pursuant to Section 6, from time to time, within 30 Business Days after its receipt of a written report from DLC showing that the quantities of the Maintenance Inventory held by DLC are less than the numbers shown above, Itron, upon DLC’s request, shall transfer title, free and clear of all liens and encumbrances, and deliver to DLC, such additional quantities of such materials as are necessary to maintain the quantities of Maintenance Inventory as listed above.   28   (i)    Service Reports/Data.    Itron and DLC will complete applicable installation, operation, and maintenance reports/data as documented and listed in Schedule B, relating to any/all services performed on Compliant System Components. Reports may be submitted in a machine-readable format via standard media or pre-determined file formats on a monthly basis.   (j)    Software Testing.    Upon Itron’s written request, DLC will provide Itron, at mutually agreeable times and during normal business hours, at no additional cost to Itron, with reasonable opportunity and cooperation to test any software on the Fixed Network that Itron is contemplating offering as a Software Release to be used in the Fixed Network in order to assess compatibility, effect on system speed and other effects of such software implementation on the Fixed Network.   (k)    Annual Meeting.    The Parties will meet at least once per calendar year to discuss, among other things, the status of the Fixed Network, the Compliant System Components and the Software and any potential changes or upgrades to any of the same. In advance of any annual meeting pursuant to this Section 5.2(k), each Party will submit to the other Party a proposed agenda for the annual meeting. If neither Party thinks a face-to-face meeting is necessary, then a telephone conference will suffice. If either Party requests a face-to-face meeting, then such meeting will be held in a mutually agreeable location. Each Party will absorb its own travel and other costs to participate in such a meeting. Any agreements reached by the Parties during such annual meeting may be reduced to a writing signed by the authorized representative of each Party and attached to this Agreement as an addendum hereto.   5.3    Obligations of DLC   In addition to the obligations of DLC set forth elsewhere in this Agreement, DLC   (a)    Software Releases.    Any Software Releases provided to DLC pursuant to this Agreement are exclusively for DLC’s operation of the Fixed Network. DLC, in accordance with the terms of this Agreement, shall install or permit Itron to install all fully tested and approved Critical Maintenance Releases and Mandatory Maintenance Releases made available by Itron; such testing and approval not to be unreasonably withheld or delayed. For avoidance of doubt, if a Mandatory Maintenance Release does not maintain materially acceptable performance consistent with past performance of the Fixed Network, DLC’s refusal to approve such Maintenance Release for installation shall be deemed reasonable. DLC, in accordance with the terms of this Agreement, may elect to install or permit Itron to install any Optional Maintenance Release or Custom Release in the manner and on a schedule as the Parties may agree from time to time.   29   (b)    Compliant System Components.    DLC shall maintain a database of all Equipment, Software, Software Releases and other Compliant System Components, including installed quantities, in a format that allows printing of a report similar to that set forth on Schedule C. The database information will initially be provided by Itron and will include manufacturer, model and serial numbers, equipment and software revision numbers, physical location, accessories, etc., and be maintained in machine-readable format with updated summaries prepared every thirty (30) days and made available to Itron upon request.   (c)    Operation Standards.    DLC agrees to operate the Fixed Network and Compliant System Components with appropriately trained personnel and in accordance with the standard operating practices that were in effect as of the Effective Date and modified from time to time thereafter pursuant to this Agreement as provided to DLC by Itron.   (d)    Leases, License and Permits.    DLC, with Itron’s cooperation as necessary, shall maintain all NCN site leases, City of Pittsburgh license fees and FCC licenses required to operate the Fixed Network, except such licenses as may be sub-licensed to DLC by Itron pursuant to the Radio Frequency Sharing Agreement, which licenses shall be maintained by Itron at its sole cost and expense throughout the Term of this Agreement.   (e)    Facilities.    At no cost to Itron, DLC shall make available to Itron in connection with Itron’s performance of its obligations hereunder warehouse space for the Itron Equipment as is currently provided as of the Effective Date. In addition, upon no less than ninety (90) days’ advance written notice, DLC will provide at no additional cost to Itron reasonable and appropriate office space for up to four (4) people as is reasonably necessary for Itron to perform the Services hereunder.   (f)    Troubleshooting.    Prior to initiating any request for Standard Service under Article II of this Agreement, DLC shall follow the standard operating procedures (as they exist on the Effective Date and as they may be modified thereafter) for the Fixed Network data center to qualify and correct operationally related Compliant System Component problems. These efforts include activities that can be performed by DLC as part of its Fixed Network data center operations. Examples of such procedures include, but are not limited to, normal execution of monitoring or diagnostic software, system tests, communications tests, electrical power checks, component reset or recovery routines. Once these efforts have been made, the Itron Customer Support Center will be contacted for routine issues. DLC may contact the Itron Service Administrator immediately for Critical Nonconformity issues to review other alternatives and to take such action as may be required by this Agreement.   30   (g)    System Data.    Upon receipt of a written request from Itron, DLC shall provide such up-to-date Fixed Network configuration and system performance data as is reasonably requested in writing by Itron in connection with its delivery of Services as outlined herein, provided that if a Critical Nonconformity exists, such request may be oral.   (h)    Test Environment.    DLC shall have and operate a Fixed Network test environment that mirrors a portion of the production Fixed Network environment for acceptance testing of Compliant System Components. DLC and Itron will each have the same responsibilities with respect to maintaining the test environment as they do with respect to maintenance of the production Fixed Network environment. DLC will provide Itron with assistance for Fixed Network testing of Compliant System Components as required prior to installation into the Fixed Network. All Itron proprietary software and Itron manufactured hardware comprising any of the test environment equipment is considered a Itron Proprietary Component.   (i)    DLC Contractors.    DLC shall require that all contractors who may perform DLC’s responsibilities as documented herein incorporate Itron’s published installation and/or operating procedures as a contractor requirement. Itron may consider any request for Service (including any Supplemental Service for which the charges pursuant to this Agreement will apply) initiated by a contractor identified by DLC to Itron in writing as an “authorized DLC contractor.”   (j)    Field Investigation.    DLC shall dispatch appropriate employee or contract personnel to investigate, and if necessary exchange, Nonconforming ERTs, Siris Devices, CCUs, telenetics equipment and meters. As part of its field investigation process, DLC shall make available all labor, materials, meters, equipment from the Maintenance Inventory, tools, and consumable supplies (meter seals, wire, equipment, etc.), necessary for de-installation and re-installation of ERTs, Siris Devices, CCUs and meters, as necessary to restore proper operation.   (k)    Third Party Hardware.    DLC shall, at its sole cost and expense, provide for corrective maintenance (including, without limitation, all parts, materials and labor necessary to complete such corrective maintenance) of all hardware used by DLC in any way connected with the Fixed Network that is not an Itron Proprietary Component. Without limiting the foregoing, DLC may request that Itron perform such corrective maintenance as Supplemental Services pursuant to Section 3.7.   (l)    Third Party Software.    Except as provided in Section 3.2(c), as of January 1, 2003, DLC has assumed all costs (including, without limitation, for license, maintenance and support obligations) for all software used by DLC that is in any way connected with the Fixed Network that is not an Itron Proprietary Component, and Itron shall have no obligation to provide any of the same to DLC.   31   (m)    Disposal.    DLC agrees to dispose of all DLC-owned materials removed from service in accordance with Applicable Laws and reasonable Itron recommendations. DLC agrees that any DLC-owned materials forwarded to Itron that require disposal, exclusive of units returned for repair or replacement at Itron’s request, may be returned to DLC at DLC’s expense.   (n)    Backup.    DLC shall follow standard operating practices to periodically check the operation of all Fixed Network backup Compliant System Components located in the DLC Operations Center and the DLC Disaster Recovery Center as of the Effective Date as modified thereafter pursuant to the Agreement.   (o)    Use of Compliant System Components.    DLC agrees to use all Compliant System Components solely for the purpose of operating, maintaining and expanding the Fixed Network pursuant to the Agreement.   Section 6.    Compensation; Conditions Precedent   6.1    Itron Payment to DLC Upon Effective Date   As part consideration for the amendments to the First Maintenance Agreement as set forth in this Agreement, Itron will pay to DLC the sum of four million dollars ($4,000,000.00) payable within two (2) Business Days after the Effective Date via wire transfer as instructed by DLC.   6.2    DLC Payment to Itron Upon Replacement Target Date   DLC will make a one-time payment to Itron in the sum of forty-five thousand dollars ($45,000.00) payable concurrently with the first quarterly payment in 2004.   6.3    Annual Fee for Standard Services   (a)    Annual Fee.    For each twelve (12) month period of the Term, DLC will pay Itron for the Standard Services a fee of six hundred and ninety five thousand five hundred dollars ($695,500.00), payable in four (4) equal installments due on the first day of each consecutive three (3) month period of the Term, beginning April 1, 2003. Undisputed payments not received within thirty (30) days after the date upon which such payment is due will bear interest at a rate equal to the lesser of one and one-half percent (1-1/2%) per month or the maximum rate permitted under Applicable Law. Payments to be made under this section are subject to offset and/or reduction pursuant to the   32   (b)    Increases in Annual Fee.    The fee payable pursuant to Section 6.3(a) is subject to increase from time to time, as agreed by the Parties, upon the addition of additional Compliant System Components to the Fixed Network pursuant to Supplemental Services.   6.4    Fees for Supplemental Services   For all Supplemental Services, unless otherwise provided in this Agreement, Itron will invoice DLC at the Preferred Price. Payment will be due within 30 days of submission. Undisputed invoices not paid within 30 days of receipt will per month or the maximum rate permitted under Applicable Law.   6.5    Letter of Credit   Itron shall, on or prior to the Effective Date, furnish and throughout the Term maintain for the benefit of DLC a standby letter of credit, issued by a Qualifying Bank acceptable to DLC (the “Letter of Credit”), containing the terms and conditions set forth in Section 6.6, and in the L/C Amount. The Letter of Credit shall be security for Itron’s performance of all Services and its other obligations hereunder during the Term of this Agreement. Itron shall be responsible for making sure the Letter of Credit does not expire (without renewal) prior to the expiration of the Term.   6.6    Conditions of Letter of Credit   (a)    Conditions of Draw.    DLC shall be entitled to draw any amounts up to the total amount available under the Letter of Credit established under Section 6.5 upon any of the following conditions:   (i)    an Event of Default has occurred under Section 7.1;   (ii)    a replacement Letter of Credit has not been delivered to DLC on or before thirty (30) days before the expiration of the Letter of Credit; or   (iii)    a draw on the Letter of Credit is permitted pursuant to Section 3.6 or Section 9.5.   (b)    Other Conditions.    The Letter of Credit shall provide (i) that DLC may draw on such Letter of Credit in any amount up to the total amount of the Letter of Credit by providing a certificate executed by two officers of DLC stating that DLC is entitled to draw on the Letter of Credit pursuant to Section 6.6(a) and specifying the amount of such draw; and (ii) that draws will be in immediately available funds no later than the next three (3) Business Days following delivery of the certificate.   33   Section 7.    Events of Default   7.1    Events of Default   (a)    To the extent not caused by a DLC Default, the following shall constitute events of default (each, an “Event of Default”), each of which shall entitle DLC to exercise the remedies set forth in Section 7.2 hereof:   (i)    Itron’s failure to perform its obligations pursuant to Section 3.8(a);   (ii)    Itron’s sale of all or substantially all of its assets or business to any Person and either (A) such Person does not specifically assume all of Itron’s obligations under this Agreement or (B) such Person is not acceptable to DLC in its reasonable discretion;   (iii)    Itron assigns this Agreement in violation of Section 11.3; and   (iv)    The appointment of a receiver, custodian, or trustee of Itron for all or substantially all of the property of Itron; Itron makes an assignment for the benefit of creditors other than an assignment for security or collateral extension or composition of its debts and thereafter is unable to obtain an agreement with such creditors for a moratorium upon or extension or composition of its debts; Itron shall have been adjudicated bankrupt or insolvent or all or substantially all of its property shall have been sequestered by an order of federal, state, foreign or other court of competent jurisdiction; there shall have been a filing of an involuntary petition against Itron seeking liquidation, under the Bankruptcy Code or under any other act or law pertaining to insolvency or debtor relief, whether state, federal or foreign, now or hereafter existing, which petition shall not be dismissed within sixty (60) days after such filing; Itron has commenced any bankruptcy, reorganization or insolvency proceeding or other proceeding under the Bankruptcy Code or under any other act or law pertaining to insolvency or debtor relief, whether federal, state or foreign, now or hereafter existing, or Itron has consented to the taking of any of the foregoing actions; or Itron voluntarily dissolves or terminates its corporate existence or is terminated or dissolved, liquidates or is liquidated.   (b)    In the event that Itron materially breaches or fails to perform any of its covenants, agreements or obligations under this Agreement, and such material breach or failure continues for a period of forty-five (45) days following Itron’s receipt of written notice from DLC of such material breach or failure to perform (the “Cure Period”), then for each day following such Cure Period that the material breach or failure continues,   34 DLC shall have the option, exercisable in its sole discretion, to withhold and deduct from the next scheduled fee payment under Section 6.3, an amount equal to the annual fee then payable under Section 6.3, divided by 365. If such material breach or failure to perform continues for a period of thirty (30) days beyond the end of the Cure Period, then DLC shall have the right, at its option, to terminate the Agreement pursuant to Section 8.2, and upon such termination, DLC may exercise any or all of the remedies in Section 7.2 (in addition to any other rights and remedies it may have at law, in equity or otherwise, including those under this Agreement, the Escrow Agreement and the Radio Frequency Sharing Agreement). If Itron has advised DLC in writing that the material breach or failure is not capable of being cured within the Cure Period through the exercise of Itron’s reasonable best efforts, and provided that (x) Itron has commenced and is continuing to use its reasonable best efforts to cure the material breach or failure, and (y) DLC is satisfied that such reasonable best efforts will result in a timely cure, then the Cure Period shall be extended for the additional time necessary to achieve such cure.   7.2    Remedies for Events of Defaults   Upon the occurrence of an Event of Default under Section 7.1(a), and as permitted by Section 7.1(b), DLC shall be entitled to exercise any or all of the following remedies in addition to any other rights and remedies it may have, at law, in equity or otherwise, including those under this Agreement, the Escrow Agreement and the Radio Frequency Sharing Agreement:   (a)    DLC may immediately draw down all or any portion of the Letter of Credit required to be maintained at that time to cover damages cause by such Event of Default;   (b)    DLC may cause all items held in escrow pursuant to the Escrow Agreement to be delivered to it; and   (c)    DLC may terminate this Agreement pursuant to Section 8.2 hereof and draw down all or any portion of the Letter of Credit required to be maintained at that time.   7.3    Change in Control   Upon the occurrence of a Change in Control, DLC may cause all items held in escrow pursuant to the Escrow Agreement to be delivered to it for its use, to the extent reasonably necessary, in connection with the Fixed Network.   35   Section 8.    Term and Termination   8.1    Term   The term of this Agreement will commence on the Effective Date, unless earlier terminated as provided elsewhere in this Agreement, and will automatically terminate at the end of December 31, 2013 (the “Term”); provided, however, that the Term shall be automatically extended for an additional two (2) year period at the end of the Term and at the end of each subsequent two (2) year extension period unless either (a) Itron has given DLC written notice of its intent not to renew at least two (2) years prior to the end of the Term or any extension period or (b) DLC has given Itron notice of its intent not to renew at least twelve (12) months prior to the end of the Term or any extension period. Each extension of Term shall be subject to a commercially reasonable adjustment to the compensation payable under Sections 6.2 and 6.3 hereof. The Term shall include each such additional extension period.   8.2    Termination by DLC   Without limiting any other rights or remedies (including, without limitation, any right to seek damages and other monetary relief) that DLC may have in law or otherwise, DLC may terminate this Agreement (a) upon the occurrence of an Event of Default, (b) as provided in Section 7.1(b), or (c) at any time at its convenience upon 120 days’ notice to Itron. In the event of such termination for convenience, Itron shall discontinue Services hereunder in accordance with the termination notice. Effective on the date of such termination, the Parties shall mutually agree on the procedures for termination and DLC shall make payment to Itron in the amount of (i) $1.0 million if the termination notice is given on or prior to March 30, 2005, (ii) $500,000 if the termination notice is given after March 30, 2005 but on or prior to March 30, 2010, and (iii) $250,000 if the termination notice is given after March 30, 2010. Upon making such payment, DLC shall receive from Itron all licenses and other rights necessary or appropriate to operate the Fixed Network and Compliant System Components.   8.3    Termination by Itron   any right to seek damages and other monetary relief) that Itron may have in law or otherwise, Itron may terminate this Agreement upon written notice if:   (a)    DLC breaches its obligations to make payments under Section 6 hereof, unless such failure to pay is covered by a bona fide, good faith dispute, provided that (i) Itron sends written notice to DLC describing the breach, and (ii) DLC does not cure the breach within thirty (30) days following its receipt of such notice;   36   (b)    Itron gives DLC no less than sixty (60) days prior written notice of a DLC Default (other than a failure to make payments as provided in Section 8.3(a)), which DLC Default remains uncured at the end of such 60-day period; or   (c)    There is an appointment of a receiver, custodian, or trustee of DLC for all or substantially all of the property of DLC; DLC makes an assignment for the purposes in connection with a financing; DLC convenes a meeting of its of its debts; DLC shall have been adjudicated bankrupt or insolvent or all or have been a filing of an involuntary petition against DLC seeking liquidation, DLC has commenced any bankruptcy, reorganization or insolvency proceeding or now or hereafter existing or DLC has consented to the taking of any of the foregoing actions; or DLC voluntarily dissolves or terminates its existence or is terminated or dissolved, liquidates or is liquidated.   Section 9.    Indemnification   9.1    Of DLC   Itron will indemnify, hold harmless and defend DLC, its directors, officers, employees and agents from and against any and all losses, damages, liabilities, claims, penalties, fines and other costs and expenses, including reasonable attorneys’ fees and costs of settlement (“Losses”) that DLC reasonably incurs arising from Itron’s performance of or failure to perform any Services required to be performed by Itron under this Agreement, including, without limitation, customer claims relating to Siris Device telephone line seizures. However, Itron will have no such obligation regarding any Losses to the extent they arise from DLC’s negligence or willful misconduct or DLC’s failure to meet its obligations under this Agreement.   9.2    Of Itron   DLC will indemnify, hold harmless and defend Itron, its directors, officers, employees and agents from and against any and all Losses that Itron reasonably incurs from DLC’s performance or failure to perform any obligation under this Agreement.   37 However, DLC will have no such obligation regarding any Losses to the extent they arise from Itron’s negligence or willful misconduct or Itron’s failure to meet its obligations under this Agreement.   9.3    Intellectual Property Indemnification   connection with any third party claim that any Compliant System Component, Software or Software Release provided by Itron under this Agreement infringes or misappropriates the U.S. copyright, trade secret or trademark rights of a third party (“Infringing Material”). If the use of any Infringing Material is enjoined by a court of competent jurisdiction, Itron shall, at Itron’s option and sole cost and expense, either (a) procure for DLC the right to continue use of the Infringing Material, (b) replace the Infringing Material with material that is substantially similar in functionality and performance, but noninfringing, (c) modify the Infringing Material to eliminate the infringement or misappropriation, or (d) terminate the enjoined activity with an appropriate reduction in the Annual Fee; provided, however, that such termination and reduction shall not excuse Itron from performance of its obligations pursuant to its Agreement. Itron will have no liability under this section for (i) any infringement or misappropriation due to any repair, maintenance, service modification to or alteration of the Fixed Network performed by any personnel other than Itron personnel (including its employees, agents and contractors) or after the Effective Date which has not been approved by Itron as required by the terms of this Agreement; or (ii) any combination of the Fixed Network in whole or in part with any material or software not included in the Fixed Network which has not been installed by Itron personnel or Itron-trained DLC personnel and which has not been approved by Itron as required by the terms of this Agreement.   9.4    Procedure   In connection with any claim or action described in this Section 9, the Party seeking indemnification will (a) give the indemnifying Party prompt written notice of the claim, (b) cooperate with the indemnifying Party (at the indemnifying Party’s expense) in connection with the defense and settlement of the claim, and (c) permit the indemnifying Party to control the defense and settlement of the claim, provided that the indemnifying Party must diligently defend the claim and may not settle the claim without the indemnified Party’s prior written consent (which will not be unreasonably withheld or delayed). Further, the indemnified Party (at its cost) may participate in the defense and   38   9.5    Payment of Indemnification Claims   Losses which are indemnified against hereunder shall be paid by the Indemnifying Party within 30 days after such Party’s receipt of notice of such Losses, which notice shall include such evidence as is reasonably necessary to establish the amount of the Losses and the Indemnifying Party’s liability therefor. If and to the extent Itron does not pay for any indemnified Losses within such 30 day period, then, in addition to any other rights and remedies it may have at law, in equity or otherwise, including those under the Agreement, the Escrow Agreement and the Radio Frequency Sharing Agreement, DLC may, at its option, (a) set off the full amount of such unpaid Losses against the next payment(s) due under Sections 6.3 and/or 6.4 hereof and/or (b) draw up to the full amount of such unpaid Losses under the Letter of Credit.     10.1    Disclaimer   EXCEPT AS OTHERWISE SET FORTH HEREIN, ITRON HEREBY DISCLAIMS ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF ITRON, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ALL SERVICES, EQUIPMENT, SOFTWARE, GOODS, AND OTHER ITEMS FURNISHED BY ITRON HEREUNDER OR ANY OTHER ITEMS SUBJECT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION: (A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE; AND (C) ANY IMPLIED WARRANTY OF NON-INFRINGEMENT.   10.2    Limitation on Liability   THE TOTAL CUMULATIVE LIABILITY OF ITRON WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OF THE SERVICES (INCLUDING, WITHOUT LIMITATION, AMOUNTS DRAWN AGAINST THE LETTER OF CREDIT), SHALL IN NO CASE EXCEED $30 MILLION, AND DLC HEREBY RELEASES ITRON FROM ANY LIABILITY IN EXCESS OF SUCH AMOUNT. THIS MONETARY LIMITATION SHALL SURVIVE THE FAILURE OF ANY EXCLUSIVE REMEDY.   ITRON SHALL NOT BE LIABLE, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR OTHERWISE, FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, EXEMPLARY,   39   PUNITIVE OR INCIDENTAL LOSS OR DAMAGE, LOSS BY REASON OF SERVICE INTERRUPTION, COSTS OF CAPITAL OR EXPENSES THEREOF, LOSS OF PROFITS OR REVENUES OR THE LOSS OF USE THEREOF, CLAIM OF ANY THIRD PARTY FOR LOSS CAUSED BY DELAYS IN MANUFACTURE OR OPERATION, AND DLC HEREBY RELEASES ITRON FROM ANY LIABILITY FOR ALL SUCH LOSSES AND DAMAGES.   THIS SECTION 10.2 SHALL NOT LIMIT OR RESTRICT THE AVAILABILITY OF SPECIFIC PERFORMANCE OR OTHER INJUNCTIVE RELIEF TO THE EXTENT OTHERWISE AVAILABLE UNDER APPLICABLE LAW.   Section 11.    Miscellaneous   11.1    Excusable Delay   (a)    Neither Party will be liable for, or be considered to be in breach of or default under this Agreement because of, a Force Majeure Event.   (b)    A Party affected by a Force Majeure Event shall notify the other Party promptly after becoming aware of the Force Majeure Event, giving details of the circumstances constituting the Force Majeure Event and the likely duration thereof, if reasonably known, and shall keep the other Party informed of any changes in circumstances, including when such Force Majeure Event ends. Each Party shall also notify the other Party of any events of which it is aware which may reasonably be expected, with the lapse of time or otherwise, to become a Force Majeure Event. Following the receipt of such notice, the Parties shall consult in good faith to assess the Force Majeure Event and any ways in which the same may be avoided or its effects mitigated.   (c)    A Party affected by a Force Majeure Event shall use reasonable best efforts to place itself in a position to fulfill its obligations hereunder, and if unable to fulfill any obligation by reason of a Force Majeure Event such Party shall exercise all reasonable best efforts to remove such disability at the earliest practicable time.   (d)    A Party’s performance shall be excused only for the minimum period necessary to return to performance hereunder through the exercise of all reasonable best efforts. To the extent a Force Majeure Event prevents Itron from performing any Services, DLC shall be relieved of the obligation to make payments for the pro rata period of time during which the Services are not performed only if Itron is not exercising all reasonable best efforts to perform the Services.   40   11.2    Nondisclosure   Each Party will protect the Confidential Information of the other Party from misappropriation and unauthorized use or disclosure, and at a minimum, will take precautions at least as great as those taken to protect its own confidential information of a similar nature. Without limiting the foregoing, the Receiving Party will: (a) use such Confidential Information solely for the purposes for which it has been disclosed; and (b) disclose such Confidential Information only to those of its employees, agents, consultants, and others who have a need to know the same for the purpose of performing this Agreement and who are informed of and agree to a duty of nondisclosure. The Receiving Party may also disclose Confidential Information of the Disclosing Party to the extent necessary to comply with Applicable Law or legal process, provided that the Receiving Party uses reasonable efforts to give the Disclosing Party prompt advance notice thereof. Subject to the rights of DLC under the Escrow Agreement and the Purchase Agreement, upon request of the other Party, or in any event upon any termination or expiration of the Term, each Party shall return to the other all materials, in any medium, which contain, embody, reflect or reference all or any part of any Confidential Information of the other Party.   11.3    Assignment   Neither Party will assign all or any part of this Agreement or any of its rights may be given or withheld in such other Party’s sole discretion. However (a) either Party may assign all of its rights, title, and interest in this Agreement, upon thirty (30) days’ prior written notice to the other Party, to an affiliate which controls, is controlled by or is under common control with, such Party, where such successor agrees in writing to be bound by all of the provisions of this Agreement and (b) DLC may assign all of its rights, title and interest in this Agreement with thirty (30) days’ prior written notice to Itron, to a non-affiliated Party which is not a competitor of Itron. No assignment, with or without the other Party’s consent, will relieve a Party from its obligations under this Agreement. Subject to the foregoing restriction on assignment, this Agreement will be fully binding upon, inure to the benefit of,   11.4    Notices   Any notice or other communication under this Agreement given by either Party to the other Party shall be either (a) in writing and delivered by first class, registered, or certified U.S. mail or overnight delivery service, return receipt requested, postage prepaid, or (b) sent by telex or facsimile and then acknowledged as received by return telex or facsimile by the intended recipient. Notices shall be deemed received only upon   41 actual receipt. Notices shall be directed to the intended recipient at the address or numbers specified below. Either Party may from time to time change such address or numbers by giving the other Party notice of such change in   Itron:    Itron, Inc.      2818 North Sullivan Road      Spokane, Washington 99215      Attn: General Counsel      Phone: (509) 924-9900      Fax: (509) 928-1465 DLC:    Duquesne Light Company      2101 Beaver Ave.      Pittsburgh, PA 15233      Mail Drop M-MT    Duquesne Light Company      411 Seventh Avenue      Pittsburgh, PA 15219           Fax: (412) 393-6645   11.5    Waiver   The failure of either Party to insist upon or enforce strict performance of any of the provisions of this Agreement or to exercise any rights or remedies under this Agreement will not be a waiver to any extent of such Party’s right to assert or rely upon any such provisions, rights, or remedies in that or any other instance; rather, the same will be and remain in full force and effect.   11.6    Independent Contractor   Each Party is engaged in an independent business and will perform its obligations under this Agreement as an independent contractor and not as an agent, partner, franchisee, or representative of any other Party. Neither Party will have any right or authority to create any obligation or make any representation or warranty in the name or on behalf of the other Party.   42   11.7    Counterparts   same instrument.   11.8    Headings   The headings of sections, paragraphs, and subsections of this Agreement are for convenience of reference only and are not intended to restrict, affect or be of any weight in the interpretation or construction of the provisions of this Agreement.   11.9    Governing Law   The laws of the Commonwealth of Pennsylvania will govern this Agreement without regard to any choice of law principles to the contrary.   11.10    Entire Agreement   This Agreement and the exhibits hereto constitute the entire agreement, and supersedes any and all prior agreements (including, without limitation, the First Maintenance Agreement), between the Parties with regard to the subject matter hereof. No amendment, modification or waiver of any of the provisions of this Agreement will be valid unless set forth in a written instrument signed by the Party to be bound thereby. Notwithstanding the foregoing, the License Agreement, the Escrow Agreement, and the Radio Frequency Sharing Agreement shall   11.11    Dispute Resolution   (a) Disputes.    Any dispute, controversy or claim arising out of or relating to this Agreement (including all schedules and exhibits that are related to or incorporated by the Agreement) or the breach, termination or validity thereof (a “Dispute”) shall be submitted to management of the Parties for resolution. In the event said Dispute is not resolved within fourteen (14) days, then either Party may choose to bring an action in a court of competent jurisdiction, or the Parties may, by mutual agreement, agree to proceed with mediation in accordance with Section 11.11(b).   (b) Mediation.    Any Dispute shall, at the option of any Party, and at such Party’s expense, be submitted in writing to mediation, using either the American Inc. (“JAMS”) within thirty (30) days of the date on which the alleged events occurred to form the basis of the Dispute. If mediation is not used, or if it fails to resolve the Dispute within 30 days from the date AAA or JAMS is engaged, then the Parties may, at their option, initiate legal action.   11.12    Consent   Whenever the consent or authorization of a Party is required hereunder, such consent or authorization shall not be unreasonably withheld or delayed, unless specifically provided otherwise herein. For avoidance of doubt, the Software License and the Radio Frequency Sharing Agreement were assigned from DataCom to DLC, effective as of the Effective Date, with the consent of Itron.   43   duly authorized representatives as of the Effective Date with the intent to be legally bound.   Itron:       DLC: ITRON, INC.       DUQUESNE LIGHT COMPANY By:         By:   /s/ Joseph G. Belechak     David G. Remington           Joseph G Belechak Senior Vice President, Operations and Customer Service By:   /s/ Michael Cantelme                 Michael Cantelme Vice President, Global Services               44

Exhibit 10.1 BioXcel Therapeutics, Inc.     Non-employee members of the board of directors (the “Board”) of BioXcel Therapeutics, Inc. (the “Company”) shall receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this is entitled to receive such cash or equity compensation, unless such by written notice to the Company and subject to any limits on non-employee director compensation set forth in the Equity Plan (as defined below).  This Board at any time in its sole discretion.  The terms and conditions of this Program shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors, except for equity compensation previously granted to a Cash Compensation The schedule of annual retainers (the “Annual Retainers”) for the Non-Employee     Position Amount Base Board Fee $60,000 Chair of the Board or Lead Independent Director $30,000 Chair of Audit Committee $20,000 Chair of Compensation Committee $10,000 Chair of Nominating and Corporate Governance Committee $7,000 Member of Audit Committee (non-Chair) $7,500 Member of Compensation Committee (non-Chair) $5,000 Member of Nominating and Corporate Governance Committee (non-Chair) $3,500   1 For the avoidance of doubt, the Annual Retainers in the table above are additive and a Non-Employee Director shall be eligible to earn an Annual Retainer for each position in which he or she serves. The Annual Retainers shall be earned on a quarterly basis based on a calendar quarter and shall be paid in cash by the Non-Employee Director, or in the applicable position, for an entire calendar or in such position, as applicable.       Equity Compensation  Each Non-Employee Director shall be granted options to purchase shares of the Company’s common stock (each, an “Option”) as set forth in this Program. Each Option shall be granted under and subject to the terms and provisions of the Company’s 2020 Incentive Award Plan or any other applicable Company equity subject to an award agreement, including attached exhibits, in substantially the form previously approved by the Board.   A.         Option Grant.  A Non-Employee Director who (i) is initially elected or appointed to the Board at an annual meeting of the Company’s stockholders or (ii) has been serving as a Non-Employee Director on the Board as of the date of any annual meeting of the Company’s stockholders and will continue to serve as a granted an Option to purchase 20,000 shares of the Company’s common stock on the date of such annual meeting.       B.         Terms of Options Granted to Non-Employee Directors. 1.         Exercise Price.  The per-share exercise price of each Option granted to a Non-Employee Director shall equal the Fair Market Value (as defined in the Equity Plan) of a share of the Company’s common stock on the date the Option is granted.  2.         Vesting.  Each Option shall vest and become exercisable on the earlier of the first anniversary of the date of grant or the day immediately prior to the date of the next annual meeting of the Company’s stockholders occurring after the date of grant, in either case, subject to the Non-Employee Director continuing in service as a Non-Employee Director through such vesting date.    3.         Forfeiture of Options.  Unless the Board otherwise determines, any portion of an Option which is unvested or unexercisable at the time of a Non-Employee Director’s termination of service on the Board as a Non-Employee Director shall be immediately forfeited upon such termination of service and shall not thereafter become vested and exercisable.  All of a Non-Employee Director’s Options shall vest in full immediately prior to the occurrence of a such time. 2 4.         Term.  The maximum term of each Option granted to a Non-Employee Director hereunder shall be ten (10) years from the date the Option is granted. 3

Exhibit 10.1 EXECUTION VERSION       AMENDMENT NO. 7 and REFINANCING FACILITY AGREEMENT dated as of February 6, 2020 relating to the among TRANSDIGM INC., TRANSDIGM GROUP INCORPORATED, THE LENDERS PARTY THERETO and CREDIT SUISSE AG,     BARCLAYS BANK PLC, and RBC CAPITAL MARKETS,       AMENDMENT NO. 7 AND REFINANCING FACILITY AGREEMENT dated as of February 6, 2020 of June 4, 2014 (as amended, restated, supplemented or otherwise modified from hereby, the “Amended Credit Agreement”), among TRANSDIGM INC., a Delaware corporation (“Holdings”), each subsidiary of the Borrower from time to time party thereto, the lenders party thereto and CREDIT SUISSE AG, as administrative hereto (the “Tranche E Refinancing Term Lenders”) make Refinancing Term Loans to the Borrower in an aggregate principal amount of $2,215,561,231.85 (the “Tranche E Refinancing Term Loans”) on the Amendment No. 7 Effective Date (as defined below), (ii) the Persons set forth on Schedule I hereto (the “Tranche F Refinancing Term Lenders”) make Refinancing Term Loans to the Borrower in an aggregate principal amount of $3,515,130,079.55 (the “Tranche F Refinancing Term Loans”) on the Amendment No. 7 Effective Date, (iii) the Persons set forth on Schedule I hereto (the “Tranche G Refinancing Term Lenders” and, together with the Tranche E Refinancing Term Lenders and the Tranche F Refinancing Term Lenders, the “2020 Refinancing Term Lenders”) make Refinancing Term Loans to the Borrower in an aggregate principal amount of $1,773,706,900.00 (the “Tranche G Refinancing Term Loans” and, together with the Tranche E Refinancing Term Loans and the Tranche F Refinancing Term Loans, the “2020 Refinancing Term Loans”) on the Amendment No. 7 Effective Date and (iv) certain provisions of the Credit B. The 2020 Refinancing Term Lenders are willing to make the 2020 Refinancing Term Loans to the Borrower on the Amendment No. 7 Effective Date, and the As used herein, the term “2020 Refinancing Transactions” means, collectively, Agreement, (b) the Borrowing of the 2020 Refinancing Term Loans hereunder and the use of the proceeds thereof in accordance with the terms of the Credit Agreement and this Agreement, (c) the repayment in full of the outstanding Tranche E Term Loans, together with all accrued and unpaid interest thereon (the “Tranche E Refinancing”), (d) the repayment in full of the outstanding Tranche F Term Loans, together with all accrued and unpaid interest thereon (the “Tranche F Refinancing”), (e) the repayment in full of the outstanding Tranche G Term Loans, together with all accrued and unpaid interest thereon (the “Tranche G Refinancing”), and (f) the payment of fees and expenses SECTION 2. Refinancing Term Loan Commitments. (a) Each Tranche E Refinancing Term Lender hereby agrees, severally and not jointly, on the terms set forth herein, to make Tranche E Refinancing Term Loans to the Borrower on the Amendment No. 7 Effective Date in an aggregate principal amount not to exceed the amount set forth opposite such Tranche E Refinancing Term Lender’s name on Schedule I hereto under the heading “Tranche E Refinancing Term Loan Commitment”. Amounts borrowed under this Section 2(a) and repaid or prepaid may not be reborrowed. (b) Each Tranche F Refinancing Term Lender hereby agrees, severally and not jointly, on the terms set forth herein and in the Credit Agreement and subject to the conditions set forth herein, to make Tranche F Refinancing Term Loans to the Borrower on the Amendment No. 7 Effective Date in an aggregate principal amount not to exceed the amount set forth opposite such Tranche F Refinancing Term Lender’s name on Schedule I hereto under the heading “Tranche F Refinancing Term Loan Commitment”. Amounts borrowed under this Section 2(b) and repaid or (c) Each Tranche G Refinancing Term Lender hereby agrees, severally and not to the conditions set forth herein, to make Tranche G Refinancing Term Loans to amount not to exceed the amount set forth opposite such Tranche G Refinancing Term Lender’s name on Schedule I hereto under the heading “Tranche G Refinancing Term Loan Commitment”. Amounts borrowed under this Section 2(c) and repaid or (d) Unless the context shall otherwise require, (i) the 2020 Refinancing Term Loans shall constitute “Refinancing Term Loans” and the 2020 Refinancing Term Lenders shall constitute “Refinancing Term Lenders” and “Lenders”, in each case (e) The proceeds of the Tranche E Refinancing Term Loans shall be used (i) to finance the Tranche E Refinancing and (ii) to pay Transaction Costs. (f) The proceeds of the Tranche F Refinancing Term Loans shall be used solely (i) to finance the Tranche F Refinancing and (ii) to pay Transaction Costs. (g) The proceeds of the Tranche G Refinancing Term Loans shall be used solely (i) to finance the Tranche G Refinancing and (ii) to pay Transaction Costs.   2 (h) Unless previously terminated, the commitments of the 2020 Refinancing Term Lenders pursuant to Sections 2(a), (b) and (c) shall terminate upon the making of the 2020 Refinancing Term Loans on the Amendment No. 7 Effective Date. (i) The initial Interest Period with respect to the Tranche E Refinancing Term Loans, Tranche F Refinancing Term Loans and Tranche G Refinancing Term Loans shall be the Interest Period set forth therefor in the applicable notice of borrowing delivered by the Borrower to the Administrative Agent pursuant to Effective Date, the Credit Agreement is hereby amended by deleting the stricken text) and adding the underlined text (indicated textually in the same manner as the following example: underlined text) as set forth on Exhibit A attached hereto. Agreement and the obligations of the 2020 Refinancing Term Lenders to make the 2020 Refinancing Term Loans shall be subject to the satisfaction or waiver of the following conditions precedent (the date on which such conditions precedent are so satisfied or waived, the “Amendment No. 7 Effective Date”): (ii) the Agent, (iii) the 2020 Refinancing Term Lenders and (iv) Lenders constituting the Required Lenders (immediately prior to giving effect to the making of the 2020 Refinancing Term Loans and the consummation of the Tranche E Refinancing, the Tranche F Refinancing and the Tranche G Refinancing); “2020 Refinancing Transactions” and the parenthetical in Section 3.13(a) of the (c) the Agent shall have received a certificate dated as of the Amendment No. 7 (d) the Agent shall have received a notice of borrowing with respect to each of (i) the Tranche E Refinancing Term Loans, (ii) the Tranche F Refinancing Term Loans and (iii) the Tranche G Refinancing Term Loans in accordance with   3 (e) the Agent shall have received a solvency certificate in form and substance Subsidiaries, on a consolidated basis after giving effect to the 2020 (f) the Agent shall have received legal opinions, board resolutions and other closing certificates consistent with those delivered on the Amendment No. 6 Effective Date; (g) the Agent shall have received, at least three Business Days prior to the Amendment No. 7 Effective Date, all documentation and other information required reasonably requested by the Agent or any 2020 Refinancing Term Lender at least five Business Days prior to the Amendment No. 7 Effective Date; and (h) the Agent shall have received payment of all fees and reimbursement of all 2020 Refinancing Term Loans or required by Section 9.03 of the Credit Agreement No. 7 Effective Date in connection with this Agreement and the transactions The Agent shall notify the Borrower and the Lenders of the Amendment No. 7 SECTION 5. Fees. On the Amendment No. 7 Effective Date, the Borrower shall pay to the Agent, for the account of each Tranche F Refinancing Term Lender, a fee (the “Tranche F Refinancing Upfront Fees”) in an amount equal to 0.25% of the aggregate principal amount of the Tranche F Refinancing Term Loans of such Lender on the Amendment No. 7 Effective Date (which fee may be payable in the form of original issue discount, at the option of the Agent). The Tranche F Refinancing Upfront Fees shall be payable on, and subject to, the Amendment No. 7 Effective Date in immediately available funds and, once paid, shall not be each of the Lenders (including the 2020 Refinancing Term Lenders) and the Agent Holdings, the Borrower and the Subsidiaries of the Borrower party hereto, and this Agreement constitutes a legal, valid and binding obligation of Holdings, the Borrower and the Subsidiaries of the Borrower party hereto, subject to conveyance or other similar laws affecting creditors’ rights   4 generally and to general principles of equity; (b) after giving effect to this Agreement, the representations and warranties set forth in Article III of the material respects on and as of the Amendment No. 7 Effective Date, except to the such earlier date; provided that, (i) in each case, such materiality qualifier “Amendment No. 7 Effective Date”, the words “Second Restatement Transactions” shall be deemed to be “2020 Refinancing Transactions” and the parenthetical in Amendment No. 7 Effective Date, after giving effect to this Agreement, no be expected to result from the borrowing of the 2020 Refinancing Term Loans and referred to herein. After the Amendment No. 7 Effective Date, any reference to and a “Refinancing Facility Agreement”, in each case for all purposes of the grant of a security interest in its assets as Collateral   5 to secure the Obligations, all as and to the extent provided in the Collateral Documents as originally executed, shall continue in full force and effect in respect of, and to secure, the Obligations (including the 2020 Refinancing Term Loans); and (c) all the representations and warranties made by or relating to it correct in all material respects on and as of the Amendment No. 7 Effective materiality qualifier shall not be applicable to any representation and warranty that already is qualified or modified by materiality in the text thereof. SECTION 14. New Lenders. Each 2020 Refinancing Term Lender that was not a Lender prior to the date hereof acknowledges and agrees that, upon its execution of this Agreement, such 2020 Refinancing Term Lender shall become a “Lender” under,   6 written.     TRANSDIGM INC.   TRANSDIGM GROUP INCORPORATED   ACME AEROSPACE, INC.   ADAMS RITE AEROSPACE, INC.   AEROCONTROLEX GROUP, INC.   AEROSONIC LLC   AIRBORNE ACQUISITION, INC.   AIRBORNE GLOBAL, INC.   AIRBORNE HOLDINGS, INC.   AIRBORNE SYSTEMS NA INC.   AIRBORNE SYSTEMS NORTH AMERICA INC.   AIRBORNE SYSTEMS NORTH AMERICA OF CA INC.   AMSAFE GLOBAL HOLDINGS, INC.   AMSAFE, INC.   ANGUS ELECTRONICS CO.   ARKWIN INDUSTRIES, INC.   ARMTEC COUNTERMEASURES CO.   ARMTEC COUNTERMEASURES TNO CO.   ARMTEC DEFENSE PRODUCTS CO.   AUXITROL WESTON USA, INC.   AVIATION TECHNOLOGIES, INC.   AVIONIC INSTRUMENTS LLC   AVIONICS SPECIALTIES, INC.   AVISTA, INCORPORATED   AVTECHTYEE, INC.   BETA TRANSFORMER TECHNOLOGY CORPORATION   BETA TRANSFORMER TECHNOLOGY LLC   BREEZE-EASTERN LLC   BRIDPORT HOLDINGS, INC.   BRIDPORT-AIR CARRIER, INC.   BRUCE AEROSPACE INC.   CDA INTERCORP LLC   CEF INDUSTRIES, LLC   CHAMPION AEROSPACE LLC   CMC ELECTRONICS AURORA LLC   DATA DEVICE CORPORATION   DUKES AEROSPACE, INC.   ELECTROMECH TECHNOLOGIES LLC   ESTERLINE EUROPE COMPANY LLC   ESTERLINE INTERNATIONAL COMPANY   ESTERLINE TECHNOLOGIES CORPORATION   ESTERLINE TECHNOLOGIES SGIP LLC   EXTANT COMPONENTS GROUP HOLDINGS, INC.   EXTANT COMPONENTS GROUP INTERMEDIATE, INC.   HARCOSEMCO LLC   HARTWELL CORPORATION   HYTEK FINISHES CO. [Signature Page to Amendment No. 7 and Refinancing Facility Agreement]   ILC HOLDINGS, INC.   JANCO CORPORATION   JOHNSON LIVERPOOL LLC   KIRKHILL INC.   KORRY ELECTRONICS CO.   LEACH HOLDING CORPORATION   LEACH INTERNATIONAL CORPORATION   LEACH TECHNOLOGY GROUP, INC.   MARATHONNORCO AEROSPACE, INC.   MASON ELECTRIC CO.   MCKECHNIE AEROSPACE DE, INC.   MCKECHNIE AEROSPACE HOLDINGS, INC.   MCKECHNIE AEROSPACE US LLC   NMC GROUP, INC.   NORTH HILLS SIGNAL PROCESSING CORP.   NORTH HILLS SIGNAL PROCESSING OVERSEAS CORP.   NORWICH AERO PRODUCTS, INC.   PALOMAR PRODUCTS, INC.   PEXCO AEROSPACE, INC.   PNEUDRAULICS, INC.   RACAL ACOUSTICS, INC.   SCHNELLER LLCSCIOTEQ LLC   SEMCO INSTRUMENTS, INC.   SHIELD RESTRAINT SYSTEMS, INC.   SKANDIA, INC.   SKURKA AEROSPACE INC.   SYMETRICS INDUSTRIES, LLC   SYMETRICS TECHNOLOGY GROUP, LLC   TA AEROSPACE CO.TACTAIR FLUID CONTROLS, INC.   TDG ESL HOLDINGS INC.   TEAC AEROSPACE HOLDINGS, INC.   TEAC AEROSPACE TECHNOLOGIES, INC.   TELAIR INTERNATIONAL LLC   TELAIR US LLC   TEXAS ROTRONICS, INC.   TRANSICOIL LLC   TREALITY SVS LLC   WHIPPANY ACTUATION SYSTEMS, LLC   YOUNG & FRANKLIN INC.   17111 WATERVIEW PKWY LLC   By:   /s/ Liza Sabol Name:   Liza Sabol Title:   Vice President and Treasurer AIRBORNE SYSTEMS NORTH AMERICA OF NJ INC. By:   Name:   Liza Sabol Title:   Vice President and Treasurer BRIDPORT ERIE AVIATION, INC. By:   Name:   Liza Sabol Title:   President TRANSDIGM UK HOLDINGS, PLC By:   Name:   Liza Sabol Title:   Director CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, individually as a Lender and as Agent by   Name:   Whitney Gaston Title:   Authorized Signatory by   [Signature Page to Amendment No. 7 Agreement and Refinancing Facility Agreement] GOLDMAN SACHS BANK USA, as a Lender and as a Tranche E Refinancing Term Lender, a Tranche F Refinancing Term Lender and a Tranche G Refinancing Term Lender by   Name:   Charles Johnston Title:   Authorized Signatory [LENDER SIGNATURE PAGE PROVIDED SEPARATELY] SCHEDULE I 2020 Refinancing Term Loans   Lender    Tranche E Refinancing Term Loan Commitment      Tranche F Refinancing Term Loan Commitment      Tranche G Refinancing Term Loan Commitment   Goldman Sachs Bank USA    $ 2,215,561,231.85      $ 3,515,130,079.55        1,773,706,900.00                              TOTAL                         SCHEDULE II Post Amendment No. 7 Effective Date Obligations Within 90 days after the Amendment No. 7 Effective Date (or such later date that Properties:     a. 320 S. Church Street, Addison, IL 60101-3750     b. 1230 Old Norris Road, Liberty, SC 29657     c.     d. 8575 Helms Avenue, Rancho Cucamonga, CA 91730     e. 2405 S. 3rd Ave., Union Gap, WA 98903     f. 40 Orville Drive and 105 Wilbur Place, Bohemia, NY 11716     g. 300 East Cypress Street, Brea, CA 92821     h. 85-901 Avenue 53, Coachella, CA 92236     i. 8127 South 216th Street, Kent, WA 98032     j. 28065 Franklin Parkway, Valencia, CA 91355 For the avoidance of doubt, delivery of the foregoing information, documentation and certifications shall satisfy any comparable obligations under any prior Loan Document to the extent such information, documentation and certifications also relate to the Obligations with respect to which such comparable obligations are owed. EXHIBIT A       Dated as of June 4, 2014 Among as the Lenders, and CREDIT SUISSE AG, and TRANSDIGM INC. and TRANSDIGM GROUP INCORPORATED and and as Joint Lead Arrangers UBS SECURITIES LLC, BARCLAYS BANK PLC, RBC CAPITAL MARKETS and as Joint Bookrunners as Syndication Agent and CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK. and MCS CAPITAL MARKETS as Co-Managers       TABLE OF CONTENTS            Page     ARTICLE I      Definitions    SECTION 1.01.   Defined Terms      2   SECTION 1.02.   Classification of Loans and Borrowings      69   SECTION 1.03.   Terms Generally      69   SECTION 1.04.   Effectuation of Transactions      6769   SECTION 1.05.   Accounting Terms; GAAP      6769   SECTION 1.06.   Designated Senior Debt      70   SECTION 1.07.   Pro Forma Calculations      70   SECTION 1.08.   Exchange Rates      6870     ARTICLE II      The Credits    SECTION 2.01.   Commitments      71   SECTION 2.02.   Loans and Borrowings      6971   SECTION 2.03.   Requests for Borrowing      7173   SECTION 2.04.   Funding of Borrowings      74   SECTION 2.05.   Type; Interest Elections      7375   SECTION 2.06.   Termination and Reduction of Commitments      7476   SECTION 2.07.   Repayment of Loans; Evidence of Debt      7577   SECTION 2.08.   Repayment of Term Borrowings      7678   SECTION 2.09.   Optional Prepayment of Loans      84   SECTION 2.10.   Mandatory Prepayment of Loans      86   SECTION 2.11.   Fees      89   SECTION 2.12.   Interest      8690   SECTION 2.13. SECTION 2.14.   Increased Costs      8896   SECTION 2.15.   Break Funding Payments      8998   SECTION 2.16.   Taxes      9098   SECTION 2.17.   Payments Generally; Allocation of Proceeds; Sharing of Set-offs      94102   SECTION 2.18.   Mitigation Obligations; Replacement of Lenders      95104   SECTION 2.19.   Illegality      96105   SECTION 2.20.   [Intentionally Omitted.]      96105   SECTION 2.21.   [Intentionally Omitted.]      97105   SECTION 2.22.   Swingline Loans      97105   SECTION 2.23.   Letters of Credit      99108   SECTION 2.24.   Increase in Commitments      104113   SECTION 2.25.   Loan Modification Offers      107115   SECTION 2.26.   Refinancing Facilities      108117   SECTION 2.27.   [Intentionally Omitted]      110119   SECTION 2.28.   Defaulting Lenders      110119     i SECTION 3.01.   Organization; Powers      112121   SECTION 3.02.   Authorization; Enforceability      112121   SECTION 3.03.   Governmental Approvals; No Conflicts      112121   SECTION 3.04.   Financial Condition; No Material Adverse Change      113121   SECTION 3.05.   Properties      113122   SECTION 3.06.   Litigation and Environmental Matters      114123   SECTION 3.07.   Compliance with Laws and Agreements; Licenses and Permits      114123   SECTION 3.08.   Investment Company Status      115123   SECTION 3.09.   Taxes      115123   SECTION 3.10.   ERISA      115123   SECTION 3.11.   Disclosure      115124   SECTION 3.12.   Material Agreements      116124   SECTION 3.13.   Solvency      116124   SECTION 3.14.   Insurance      116125   SECTION 3.15.   Capitalization and Subsidiaries      116125   SECTION 3.16.   Security Interest in Collateral      117125   SECTION 3.17.   Labor Disputes      117126   SECTION 3.18.   Federal Reserve Regulations      117126   SECTION 3.19.   Senior Debt      118126   SECTION 3.20.   USA PATRIOT Act and Other Regulations      118126     ARTICLE IV      Conditions    SECTION 4.01.   All Credit Events      118127   SECTION 4.02.   Second Restatement Date      119128     ARTICLE V      Affirmative Covenants    SECTION 5.01.   Financial Statements and Other Information      121129   SECTION 5.02.   Notices of Material Events      123132   SECTION 5.03.   Existence; Conduct of Business      124132   SECTION 5.04.   Payment of Taxes      124133   SECTION 5.05.   Maintenance of Properties      124133   SECTION 5.06.   Books and Records; Inspection Rights      124133   SECTION 5.07.   Maintenance of Ratings      125133   SECTION 5.08.   Compliance with Laws      125133   SECTION 5.09.   Use of Proceeds      125133   SECTION 5.10.   Insurance      125134   SECTION 5.11.   Additional Collateral; Further Assurances      125134   SECTION 5.12.   Certain Post-Closing Collateral Obligations      127136     ii     ARTICLE VI          Negative Covenants    SECTION 6.01.   Limitation on Incurrence of Additional Indebtedness      128137   SECTION 6.02.   Limitation on Restricted Payments      128137   SECTION 6.03.   Limitation on Asset Sales      132141   SECTION 6.04.      132142   SECTION 6.05.   Limitation on Preferred Stock of Restricted Subsidiaries      134143   SECTION 6.06.   Limitation on Liens      134143   SECTION 6.07.   Merger, Consolidation or Sale of All or Substantially All Assets      134144   SECTION 6.08.   Limitation on Transactions with Affiliates      135145   SECTION 6.09.   [Intentionally Omitted]      137146   SECTION 6.10.   Business of Borrower and Restricted Subsidiaries      137146   SECTION 6.11.   Limitations on Amendments to Subordination Provisions and Other Amendments      137146   SECTION 6.12.   Business of Holdings      137147   SECTION 6.13.   Impairment of Security Interest      137147   SECTION 6.14.   Financial Covenant      138147   SECTION 6.15.   Sale and Lease-Back Transactions      138147   SECTION 6.16.   Limitations on Investments      138147     ARTICLE VII      Events of Default      ARTICLE VIII      The Agent      ARTICLE IX      Miscellaneous    SECTION 9.01.   Notices      144155   SECTION 9.02.   Waivers; Amendments      147158   SECTION 9.03.   Expenses; Indemnity; Damage Waiver      150161   SECTION 9.04.   Successors and Assigns      152163   SECTION 9.05.   Survival      157168   SECTION 9.06.   Integration; Effectiveness      157168   SECTION 9.07.   Severability      157168   SECTION 9.08.   Right of Setoff      157168   SECTION 9.09.   Governing Law; Jurisdiction; Consent to Service of Process      158169   SECTION 9.10.   WAIVER OF JURY TRIAL      159170   SECTION 9.11.   Headings      159170   SECTION 9.12.   Confidentiality      159170   SECTION 9.13.   Several Obligations; Nonreliance; Violation of Law      160171   SECTION 9.14.   USA PATRIOT Act      160171   SECTION 9.15.   Disclosure      160171   SECTION 9.16.   Appointment for Perfection      160171     iii SECTION 9.17.   Interest Rate Limitation      160171   SECTION 9.18.   Effect of Restatement      161172   SECTION 9.19.   Conversion of Currencies      161172   SECTION 9.20.   Absence of Fiduciary Relationship      162172   SECTION 9.21.   SECTION 9.22.   Acknowledgement Regarding Any Supported QFCs      174   SCHEDULES: Commitment Schedule   Schedule 1.01(a)   —      Immaterial Subsidiaries Schedule 1.01(b)   —      Mortgaged Properties Schedule 1.01(c)   —      Existing Letters of Credit Schedule 1.01(d)   —      Existing Indebtedness Schedule 1.01(e)   —      Existing Liens Schedule 1.01(f)   —      Existing Investments Schedule 3.05(a)   —      Properties Schedule 3.05(f)   —           Intellectual Property Schedule 3.15   —      Capitalization and Subsidiaries Schedule 3.16   —      Mortgage Filing Offices Schedule 3.17   —      Labor Disputes Schedule 9.01   —      EXHIBITS:   Assignment and Assumption Exhibit C—   Form of Compliance Certificate Exhibit D—   Joinder Agreement Exhibit E—   Form of Borrowing Request Exhibit F—   Form of Promissory Notes Exhibit G—   Mandatory Cost   iv SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 4, 2014 (this Pursuant to the Amendment and Restatement Agreement dated as of the Restatement Date (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article I) (the “First Amendment and Restatement Agreement”), among the Borrower, Holdings, each subsidiary of the Borrower party thereto, the lenders party thereto and the Agent, (a) that certain Credit Agreement dated as of December 6, 2010, as as of October 9, 2012 (the “2010 Credit Agreement”) and (b) that certain Credit Agreement dated as of February 14, 2011, as amended by Amendment No. 1 and Incremental Term Loan Assumption Agreement dated as of February 15, 2012 and Amendment No. 2 and Incremental Term Loan Assumption Agreement dated as of October 9, 2012 (the “2011 Credit Agreement” and, together with the 2010 Credit Agreement, the “Existing Credit Agreements”), in each case, among the Borrower, Holdings, certain subsidiaries of the Borrower party thereto, certain lenders, the Agent and the other parties thereto, were amended and restated in their entirety and replaced by a single agreement in the form of the First Restated Credit Agreement. On the Restatement Date, certain lenders party to the First Restated Credit Agreement agreed to extend credit in the form of (a) Tranche B Term Loans (as defined in the First Restated Credit Agreement) in an aggregate principal amount of $500,000,000 and Tranche C Term Loans in an aggregate principal amount of $1,700,000,000, the proceeds of which were used to finance the Existing Bank Debt Refinancing and to pay the Transaction Costs and (b) Revolving Loans, Swingline Loans and Letters of Credit (in each case, as defined in the First Restated Credit Agreement) in an aggregate principal amount at any time outstanding not in excess of $310,000,000. On the First Amendment Effective Date (a) the Borrower, Holdings, the Agent and certain lenders party thereto entered into the First Amendment, pursuant to which certain terms of the First Restated Credit Agreement were amended as set forth therein and (b) the Borrower, Holdings, the subsidiaries of the Borrower party thereto, the lenders party thereto and the Agent entered into an Incremental Term Loan Assumption Agreement, pursuant to which the lenders party thereto made Incremental Term Loans to the Borrower in the form of additional Tranche C Term Loans in an aggregate principal amount of $900,000,000. Pursuant to the Amendment and Restatement Agreement dated as of the date hereof (the “Second Amendment and Restatement Agreement”), among the Borrower, Holdings, each subsidiary of the Borrower party thereto, the lenders party thereto and the Agent, and upon satisfaction of the conditions set forth therein, the First Restated Credit Agreement shall be amended and restated in The proceeds of the Tranche D Term Loans are to be used solely to (i) finance a portion of the Specified Dividend, (ii) repurchase or otherwise redeem the Senior Subordinated Notes described in clause (i) of the definition thereof (the “Subordinated Notes Refinancing”) and (iii) pay fees and expenses incurred in connection with the Second Restatement Transactions. The proceeds of the Revolving Loans, Swingline Loans and Letters of Credit are to be used solely for general corporate purposes. ARTICLE I Definitions “2013 Senior Subordinated Notes” means the Borrower’s 7.50% Senior Subordinated Notes due 2021 in an initial aggregate principal amount of $500,000,000. “2014 Senior Subordinated Notes” means (i) the Borrower’s 6.00% Senior Subordinated Notes due 2022 in an initial aggregate principal amount of $1,150,000,000 and (ii) the Borrower’s 6.50% Senior Subordinated Notes due 2024 in an initial aggregate principal amount of $1,200,000,000. “2015 Effective Date” has the meaning assigned to such term in Incremental Assumption Agreement No. 1. “2015 Senior Subordinated Notes” means the Borrower’s 6.50% Senior Subordinated Notes due 2025 in an initial aggregate principal amount of $450,000,000. “2016 Effective Date” has the meaning assigned to such term in Amendment No. 1. “2016 Senior Subordinated Notes” means the Borrower’s 6.375% Senior Subordinated Notes due 2026 in an initial aggregate principal amount of $950,000,000.   2 “Adjusted LIBO Rate” means, for any Interest Period, a rate per annum equal to (a) with respect to any Eurocurrency Borrowing denominated in Euro, the EURIBO Rate in effect for such Interest Period plus Mandatory Cost and (b) with respect to any other Eurocurrency Borrowing, the LIBO Rate in effect for such Interest Period multiplied by Statutory Reserves; provided, however, that if such Eurocurrency Borrowing is denominated in Pounds, then the “Adjusted LIBO Rate” shall be the LIBO Rate in effect for such Interest Period plus Mandatory Cost; provided, further, that the Adjusted LIBO Rate with respect to (i) any Loans Incremental Term Loan Assumption Agreement), Tranche E Term Loans, Tranche F Term Loans and Tranche G Term Loans) shall be deemed to be not less than 0.75% per annum and (ii) Tranche E Term Loans, Tranche F Term Loans and Tranche G Term Loans shall be deemed to be not less than 0.00% per annum. Agent. Investment. “Aggregate Dollar Revolving Credit Exposure” means the aggregate amount of the Lenders’ Dollar Revolving Credit Exposures.   3 “Aggregate Multicurrency Revolving Credit Exposure” means the aggregate amount of the Lenders’ Multicurrency Revolving Credit Exposures. Revolving Credit Exposures. of (a) (i) 1.75% per annum, with respect to any Loans (other than Other Term Loans (to the extent expressly provided in the related Incremental Term Loan Assumption Agreement), Tranche E Term Loans, Tranche F Term Loans and Tranche G Tranche F Term Loans and Tranche G Term Loans, (b) the Prime Rate in effect on 1% and (d) the Adjusted LIBO Rate for the applicable Loan on such day (or if deposit in Dollars with a maturity of three months plus 1%; provided that, be calculated using the LIBO Rate based on the rate per annum determined by the ICE Benchmark Administration Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Agent that has been nominated by the ICE Benchmark Administration Limited (or any Person which takes over the of displaying such rates) for a period equal to three months. If the Agent shall obtain sufficient quotations in accordance with the terms of the definition of Federal Funds Effective Rate, the Alternate Base Rate shall be determined “Alternative Currency” means, with respect to (a) Multicurrency Revolving Loans, Multicurrency Letters of Credit and Incremental Revolving Loans, Pounds, Euro or any other currency reasonably acceptable to the Agent, each Multicurrency Revolving Credit Lender or Incremental Revolving Credit Lender, as applicable, and, with respect to any Multicurrency Letter of Credit, the Issuing Bank and (b) any Swingline Loans, any currency reasonably acceptable to the Agent and the applicable Swingline Lender. “Alternative Currency Equivalent” means, on any date of determination, with respect to any amount denominated in Dollars in relation to any specified Alternative Currency, the equivalent in such specified Alternative Currency of such amount in Dollars, determined by the Agent pursuant to Section 1.08 using the applicable Exchange Rate then in effect.   4 “Alternative Currency Swingline Loan” means a Swingline Loan denominated in an Alternative Currency. “Amendment No. 1” means Amendment No. 1 dated as of June 9, 2016, relating to this Agreement. “Amendment No. 2” means Amendment No. 2 dated as of March 6, 2017, relating to this Agreement. “Amendment No. 5” means Amendment No. 5, Incremental Assumption Agreement and Refinancing Facility Agreement dated as of May 30, 2018, relating to this Agreement. “Amendment No. 6” means Amendment No. 6 and Incremental Revolving Credit Assumption Agreement dated as of March 14, 2019, relating to this Agreement. “Amendment No. 7” means Amendment No. 7 and Refinancing Facility Agreement dated as of February 6, 2020, relating to this Agreement.   5 (a) with respect to Revolving Loans, (i) for Eurocurrency Loans, 3.00% per annum, and (ii) for ABR Loans (including with respect to any Swingline Loan denominated in Dollars), 2.00% per annum; (b) with respect to Tranche E Term Loans, Tranche F Term Loans and Tranche G Term Loans, (i) for Eurocurrency Loans, 2.502.25%  per annum, and (ii) for ABR Loans, 1.501.25% per annum; and (c) with respect to the Commitment Fees, (i) if the Consolidated Leverage Ratio (x) at any time during which the Borrower has failed to deliver the financial Section 5.01(c), respectively, or (y) at any time after the occurrence and during the continuance of an Event of Default, the Consolidated Leverage Ratio shall be deemed to be greater than 4.00 to 1.00 for the purposes of determining the Applicable Rate. In the event that any financial statement or certificate delivered pursuant to Section 5.01(a) or (b) and Section 5.01(c), respectively, (i) the Borrower shall immediately deliver to the Agent a corrected certificate required by Section 5.01(c) for such Applicable Period, (ii) the Applicable Rate for such Applicable Period shall be determined by reference to the Consolidated Leverage Ratio set forth in the corrected certificate and (iii) the Borrower shall immediately pay to the Agent the accrued additional Commitment Fees owing payment shall be applied by the Agent to the affected Obligations. Person other than the Borrower or any Restricted Subsidiary Guarantor of:   6 not include: $5,000,000; business;   7 Back Transaction results in a Capitalized Lease Obligation, the amount of aggregate Unrestricted Cash of all Loan Parties and their Restricted Subsidiaries on such date, as the same would be reflected on a consolidated balance sheet prepared in accordance with GAAP as of such date, and (b) only if each of the conditions set forth in clauses (b) and (c) of Section 4.01 would be satisfied in connection with a Borrowing as of such date, the amount by which the aggregate Revolving Credit Commitments exceeds the aggregate Revolving Credit Exposures as of such date provided that if the condition set forth in clause (d) of Section 4.01 would not be satisfied in connection with a Borrowing as of such date, the amount described in clause (b) of this definition shall be limited to the amount of a Borrowing of Revolving Credit Loans that could actually be made on such date without satisfaction of such condition. States of America. Agreement. “Borrowing” means (a) any Loans of the same Class, Type and currency made, provided that until the Non-Extended Revolving Credit Maturity Date, (i) Non-Extended Multicurrency Revolving Loans and Extended Multicurrency Revolving Loans will be deemed to constitute a single Class and (ii) Non-Extended Dollar Revolving Loans and Extended Dollar Revolving Loans will be deemed to constitute a single Class, in each case for purposes of determining Borrowing Minimums and Borrowing Multiples and the Pro Rata Percentages of each Lender. “Borrowing Minimum” means $1,000,000, €1,000,000, £1,000,000 or, in the case of any other Alternative Currency, such amount as may be reasonably specified by the Agent.   8 “Borrowing Multiple” means $1,000,000, €1,000,000, £1,000,000 or, in the case of the Agent. close; provided that, (a) when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude (i) when used in connection with any Loan denominated in a currency other than Euro, any day on which banks are not open for dealings in the currency of such Loan in the London interbank market and (ii) when used in connection with any Loan denominated in Euro, any day that is not a TARGET Day and (b) when used in connection with any Calculation Date or Alternative Currency other than Euro, the term “Business Day” shall also exclude financial center in the country of such Alternative Currency. “Calculation Date” means (a) the date on which any Multicurrency Revolving Loan is made, (b) the date of issuance, extension or renewal of any Multicurrency Letter of Credit, (c) the date on which any Alternative Currency Swingline Loan is made, (d) the last Business Day of each quarter and (e) such additional dates on which the Exchange Rate is calculated as the Agent shall specify. Capitalized Lease Obligations incurred by the Borrower and its Restricted shall not include:   9 permitted hereunder.   10 (4) Holdings shall beneficially own and control less than 100% on a fully (5) any “change of control” (or similar event, however denominated) shall occur   11 Closing Date). such Loan, or the Loans comprising such Borrowing, are Non-Extended Dollar Revolving Loans, Extended Dollar Revolving Loans, Non-Extended Multicurrency Revolving Loans, Extended Multicurrency Revolving Loans, Tranche C Term Loans, Tranche D Term Loans, Tranche E Term Loans, Tranche F Term Loans, Tranche G Term Loans, Other Revolving Loans, Other Term Loans or Swingline Loans, and (b) when Non-Extended Dollar Revolving Credit Commitment, an Extended Dollar Revolving Credit Commitment, a Non-Extended Multicurrency Revolving Credit Commitment, an Extended Multicurrency Revolving Credit Commitment, a Tranche C Term Loan Commitment, a Tranche D Term Loan Commitment, a Tranche E Commitment, a Tranche F Term Loan Commitment, a Tranche G Term Loan Commitment, an Incremental Revolving Credit Commitment, an Incremental Term Loan Commitment, an L/C a Securitization Transaction. “Commitment” means (a) with respect to any Lender, such Lender’s Dollar Revolving Credit Commitment, Multicurrency Revolving Credit Commitment, Tranche C Term Loan Commitment, Tranche D Term Loan Commitment, Tranche E Term Loan Commitment, Tranche F Term Loan Commitment, Tranche G Term Loan Commitment and Swingline Commitment as set forth in the Commitment Schedule or in the most recent Assignment and Assumption executed by such Lender, as applicable, as such (ii) increased from time to time pursuant to   12 Section 2.24 and (iii) reduced or increased from time to time pursuant to Section 2.27 or pursuant to assignments by or to such Lender pursuant to to make Loans. for such period; acquisitions; (d) any extraordinary, unusual or nonrecurring gain, loss or charge (including fees, expenses and charges (or any amortization thereof) associated with any acquisition, merger or consolidation, in each case, whether or not completed), any severance, relocation, consolidation, closing, integration, facilities opening, business optimization, transition or restructuring costs, charges or expenses (including any costs or expenses associated with any expatriate), any signing, retention or completion bonuses, and any costs associated with or incurred in connection with special termination benefits, curtailment settlements or other similar actions with respect to pension and postretirement employee benefit plans;   13 Transactions, the Second Restatement Transactions and the 2016 Transactions (as defined in Amendment No. 1); (g) the amount of any expense related to, or loss attributable to, minority interests or investments; (h) any expenses related to, or attributed to, non-service related pensions; (i) the amount of any earn out payments or deferred purchase price in conjunction with acquisitions; (ij) any costs or expenses incurred by the Borrower or a Restricted Subsidiary (jk) any Dividend Equivalent Payments; (l) any costs or expenses incurred in connection with the start-up or extension of long-term arrangements with customers; and (m) the amount of net cost savings projected by the Borrower in good faith to be realized as the result of actions to be taken within 24 months of the initiation of any operational change or within 24 months of the consummation of any applicable acquisition or cessation of operations (in each case, calculated on a period from such actions; provided that the   14 aggregate amount of other cost savings added pursuant to this clause (m) shall not exceed 25.0% of Consolidated EBITDA for any Four-Quarter Period (calculated after giving effect to any adjustment pursuant to this clause (m)) (which adjustments may be incremental to any other pro forma adjustments made pursuant to the terms hereof); and this definition). according to GAAP; Indebtedness;   15 already included therein; Borrower;   16 Unrestricted Cash as of such date to (b) the Consolidated EBITDA (or, solely for purposes of determining the Consolidated Net Leverage Ratio under Section 6.14, the Financial Covenant Consolidated EBITDA) of the Borrower for the period of the most recently ended four full consecutive fiscal quarters for which internal “Consolidated Secured Net Debt Ratio”, as of any date of determination, means the ratio of (a) Consolidated Secured Debt as of such date minus Unrestricted Cash as of such date to (b) the Consolidated EBITDA of the Borrower and the Restricted Subsidiaries for the period of the most recently ended four full available on or immediately preceding such date. In any period of four consecutive fiscal quarters in which any Permitted Acquisition or Asset Sale occurs, the Consolidated Secured Net Debt Ratio shall be determined on a pro forma basis in accordance with Section 1.07. Subsidiaries   17 Disqualified Capital Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and Maximum Fixed Borrower and the Restricted Subsidiaries (excluding items eliminated in consolidation and only to the extent related to Indebtedness that would constitute “Consolidated Total Indebtedness” under clause (a) or (b)), with the amount of such guarantees or other contingent obligations deemed to be an amount equal to the maximum stated amount of the guarantee or contingent obligation or, if none, the stated or determinable amount of the primary Indebtedness in respect of which such guarantee or contingent obligation is made or, if there is no stated or determinable amount of the primary Indebtedness, the maximum reasonably anticipated liability in respect thereof (assuming the Borrower or such Restricted Subsidiary, as applicable, is required to perform thereunder) as determined by the Borrower in good faith and (d) Indebtedness that would constitute “Consolidated Total Indebtedness” under clause (a) or (b) which are secured by any Lien on any property or asset of the Borrower or any of the Restricted Subsidiaries (excluding items eliminated in consolidation), with the of such property or asset and the amount of the obligation so secured, in each this definition, the “Maximum Fixed Repurchase Price” of any Disqualified Capital Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock or Preferred Stock as if such Disqualified Capital Stock or Preferred based upon, or measured by, the fair market value of such Disqualified Capital Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Borrower. Collateral Agreement. currency values.   18 “Daily Rate”, when used in reference to any Loan or Borrowing, refers to whether rate determined by reference to the Alternate Base Rate or the Foreign Base Rate. portion of its Loans within three Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Agent and the specifically identified in writing) has not been satisfied or (ii) pay to the participation in Letters of Credit or Swingline Loans) within three Business Days of the date when due, (b) has notified the Agent, any Issuing Bank, any Swingline Lender or any Loan Party in writing that it does not intend to satisfy any such obligations or has made a public statement with respect to any such obligations hereunder or generally with respect to all agreements in which it specifically identified in such writing or public statement), (c) has become the become the subject of a Bail-In Action (as defined in Section 9.21); provided relating to a direct or indirect parent company of such Lender or solely because a Governmental Authority has been appointed as receiver, conservator, trustee or custodian for such Lender, such Lender shall not be a “Defaulting Lender” unless such Lender fails to confirm in writing, upon request by the Agent or the Borrower, that it will continue to comply with its obligations to make Loans required to be made by it hereunder and (ii) a Lender shall not be a “Defaulting Lender” solely by virtue of the ownership or acquisition of any equity interest Lender.   19 “Delayed Draw Term Commitment Termination Date” has the meaning assigned to such term in Amendment No. 1. “Delayed Draw Funding Date” has the meaning assigned to such term in Amendment No. 1. “Delayed Draw Tranche F Term Loans” means the Tranche F Term Loans made to the Borrower on the Delayed Draw Funding Date pursuant to Section 4(a)(ii) of right to require such Person to purchase or redeem   20 such Capital Stock upon the occurrence of an “asset sale”, “casualty event”, “fundamental change” or “change of control” occurring prior to the Latest Maturity Date shall not constitute Disqualified Capital Stock if: Subordinated Notes as in effect on the Second Restatement Date; and hereto. Holdings, which payment represents a dividend or distribution by Holdings that such holder would have received had such holder’s warrants, options or other rights to acquire been exercised on the date of such dividend or distribution. of such amount, determined by the Agent pursuant to Section 1.08 using the Exchange Rate with respect to such currency at the time in effect. “Dollar L/C Disbursement” means a payment or disbursement made by the Issuing Bank pursuant to a Dollar Letter of Credit. “Dollar L/C Exposure” means at any time the sum of (a) the aggregate undrawn and unexpired amount of all outstanding Dollar Letters of Credit at such time and (b) the aggregate principal amount of all Dollar L/C Disbursements that have not yet been reimbursed at such time. The Dollar L/C Exposure of any Dollar Revolving Credit Lender at any time shall equal its applicable Pro Rata Percentage of the aggregate Dollar L/C Exposure at such time. “Dollar Letter of Credit” means a Letter of Credit issued under the Dollar Revolving Credit Commitments.   21 “Dollar Revolving Borrowing” means a Borrowing comprised of Dollar Revolving Loans. “Dollar Revolving Credit Commitment” means a Non-Extended Dollar Revolving Credit Commitment or an Extended Dollar Revolving Credit Commitment, or both, as “Dollar Revolving Credit Exposure” means, with respect to any Revolving Credit of all outstanding Dollar Revolving Loans of such Lender and (b) the aggregate amount at such time of its Dollar L/C Exposure. “Dollar Revolving Credit Lender” means a Non-Extended Dollar Revolving Credit Lender or an Extended Dollar Revolving Credit Lender, or both, as the context may require. “Dollar Revolving Loans” means the Non-Extended Dollar Revolving Loans and the Extended Dollar Revolving Loans. “Dollar Swingline Loan” means a Swingline Loan denominated in Dollars. of making commercial loans) thereof (it being understood that that the Borrower shall be permitted to repurchase Term Loans pursuant to Section 2.09(e)(i)), (y) any Defaulting Lender or (z) any “creditor”, as defined in Regulation T, or “foreign branch of a broker-dealer”, within the meaning of Regulation X.   22 foregoing. Euro for any Interest Period, the rate per annum equal to the Banking Federation   23 of the European Union EURIBO Rate (“BFEA EURIBOR”), as published by Reuters (or another commercially available source providing quotations of BFEA EURIBOR as time, two TARGET Days prior to the commencement of such Interest Period, for term equivalent to such Interest Period; provided that if such rate is not available at such time for any reason, then the “EURIBO Rate” for such Interest Period shall be a comparable successor rate that is, at such time, broadly accepted by the syndicated loan market for loans denominated in Euro in lieu of the “EURIBO Rate” or, if no such broadly accepted comparable successor rate exists at such time, a successor index rate as the Agent may determine (giving due consideration to any evolving or then existing convention for similar Euro such proposed rate, a “EURIBO Successor Rate”)), and such EURIBO Successor Rate Day after the Agent shall have posted such proposed amendment to all Lenders and accept such amendment (provided that the foregoing proviso shall not apply with respect to the Non-Extended Revolving Loans); provided that to the extent that this definition, the “EURIBO Rate” shall be the interest rate per annum deposits in Euro are offered for such relevant Interest Period to major banks in the European interbank market by the Agent at approximately 11:00 a.m. (London time) on the date that is two TARGET Days prior to the beginning of such Interest Period.. “Euro” or “€” means the single lawful currency of the participating states of referred to in the legislative measures of the European Union for the states.   24 over Restricted Subsidiaries, such period),   25 fiscal quarters, any tax sharing agreement, such fiscal year to the extent added back to Consolidated EBITDA, and (xiv) solely with respect to the calculation of Excess Cash Flow for the fiscal year ending September 30, 2017, the aggregate amount of Restricted Payments made in cash by the Borrower to Holdings during such fiscal year in accordance with Section 6.02. “Exchange Rate” means, on any day, with respect to any Alternative Currency (for purposes of determining the Dollar Equivalent) or Dollars (for purposes of determining the Alternative Currency Equivalent), the rate at which such currency may be exchanged into   26 Dollars or the applicable Alternative Currency, as the case may be, as set forth Bloomberg Key Cross Currency Rates Page. In the event that any such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Exchange Rate displaying exchange rates as may be agreed upon by the Agent and the Borrower, arithmetic average of the spot rates of exchange of the Agent in the market purchase of Dollars or the applicable Alternative Currency, as the case may be, Agent, after consultation with the Borrower, may use any other reasonable method obligation of the Borrower or any other Loan Party hereunder, (a) Taxes imposed profits Taxes, in each case, imposed as a result of such recipient being any Lender, applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), (b) any Taxes attributable to such recipient’s failure to comply with Section 2.16(f), (c) except in the case of an assignee pursuant to a request by the Borrower under Section 2.18(b), any U.S. assignment), to receive additional amounts from the Borrower or any other Loan Party with respect to such withholding Tax pursuant to Section 2.16(a) and (d) any U.S. Federal withholding Taxes imposed by FATCA. or outstanding under, and the termination of, the 2011 Credit Agreement. Second Restatement Date that are issued under the First Restated Credit Agreement and set forth on Schedule 1.01(c). agreements in effect immediately prior to the Second Restatement Date made pursuant to the Existing Loan Documents by any Loan Party in favor of the Agent.   27 “Extended Dollar Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Extended Dollar Revolving Loans hereunder (and to acquire participations in Dollar Letters of Credit as provided for herein) as set forth in the Commitment Schedule or in the most recent Assignment and Assumption executed by such Lender, as applicable, as the same may be (i) reduced or increased from time to time pursuant to Section 2.06 or 2.24 and (ii) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The aggregate amount of the Extended Dollar Revolving Credit Commitments on the Amendment No. 6 Effective Date is $608,500,000.00. “Extended Dollar Revolving Credit Lender” means a Lender with an Extended Dollar Revolving Credit Commitment or outstanding Dollar Revolving Credit Exposure in respect of its Extended Dollar Revolving Credit Commitment. “Extended Dollar Revolving Loans” means the revolving loans made in respect of the Extended Dollar Revolving Credit Commitments by the Extended Dollar Revolving Credit Lenders to the Borrower pursuant to clause (a)(ii) of Section 2.01. “Extended Multicurrency Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Extended Multicurrency Revolving Loans hereunder (and to acquire participations in Swingline Loans and Multicurrency Letters of Credit as provided for herein) as set forth in the Commitment Schedule or in the most recent Assignment and Assumption executed by such Lender, as applicable, as the same may be (i) reduced or increased from time to time pursuant to Section 2.06 or 2.24 and (ii) reduced or increased from Section 9.04. The aggregate amount of the Extended Multicurrency Revolving Credit Commitments on the Amendment No. 6 Effective Date is $151,500,000.00. “Extended Multicurrency Revolving Credit Lender” means a Lender with an Extended Multicurrency Revolving Credit Commitment or outstanding Multicurrency Revolving Credit Exposure in respect of its Extended Multicurrency Revolving Credit Commitment. “Extended Multicurrency Revolving Loans” means the revolving loans made in respect of the Extended Multicurrency Revolving Credit Commitments by the Extended Multicurrency Revolving Credit Lenders to the Borrower pursuant to clause (a)(iii) of Section 2.01. “Extended Revolving Credit Commitments” means the Extended Dollar Revolving Credit Commitments and the Extended Multicurrency Revolving Credit Commitments. “Extended Revolving Credit Lenders” means the Extended Dollar Revolving Credit Lenders and the Extended Multicurrency Revolving Credit Lenders. “Extended Revolving Credit Maturity Date” means December 28, 2022, provided that if on any date prior to December 28, 2022 (any such date, a “Reference Date”), any of (x) the Borrower’s 5.50% Senior Subordinated Notes due 2020, (y) the 2014 Senior Subordinated Notes or (z) any Indebtedness (“Refinanced Indebtedness”) incurred to refinance or otherwise extend the maturity date of the Borrower’s 5.50% Senior Subordinated Notes due 2020, the 2014   28 Senior Subordinated Notes or other Refinanced Indebtedness, is outstanding and scheduled to mature or similarly become due on or prior to the date that is sixty days after the Reference Date, the Revolving Credit Maturity Date shall instead be the Reference Date; provided, further, that, in each case, if any such day is not a Business Day, the Revolving Credit Maturity Date shall be the Restatement Date (or any amended or successor version that is substantively “February 2018 Refinancing Facility Agreement” means the Refinancing Facility Agreement dated as of February 22, 2018, relating to this Agreement. “February 2018 Refinancing Facility Effective Date” has the meaning assigned to such term in the February 2018 Refinancing Facility Agreement. “Financial Covenant Consolidated EBITDA” means, with respect to any Person, for any period, the sum (without duplication) of such Person’s: for such period;   29 employee benefit plans; interests or investments; conjunction with acquisitions; (j) any Dividend Equivalent Payments; (k) a charge in any one period not to exceed $10,000,000 resulting from repurchases of inventory from distributors during such period;   30 of long-term arrangements with customers; (m) any costs or expenses incurred by the Borrower or a Restricted Subsidiary pursuant to or in connection with any incentive bonus plan or any similar compensation plan or arrangement; and (n) the amount of net cost savings projected by the Borrower in good faith to be period from such actions; and Consolidated Net Income in calculating Financial Covenant Consolidated EBITDA in accordance with this definition). Article VII. of the Borrower. “First Amendment” means Amendment No. 1 dated as of July 1, 2013, to the First Restated Credit Agreement. “First Amendment and Restatement Agreement” has the meaning assigned to such term in the introductory statement to this Agreement. First Amendment. “First Restated Credit Agreement” means the Amended and Restated Credit Agreement dated as of the Restatement Date, among the Borrower, Holdings, the subsidiaries of the Borrower party thereto, the lenders party thereto and the Agent. “Foreign Base Rate” means, with respect to any Alternative Currency, the rate of interest per annum determined by the Agent to be the rate of interest (in the absence of a Eurocurrency rate) charged by it to borrowers of similar credit quality as the Borrower for short-term loans in such Alternative Currency. Notwithstanding anything to the contrary contained herein, Loans may be made or maintained as Foreign Base Rate Loans only to the extent specified in Section 2.13, 2.19 or 2.22(d).   31 “Foreign Lender” means a Lender or Issuing Bank that is not a “United States any territory thereof. and Consolidated Secured Net Debt Ratio as in effect from time to time but subject to the proviso in Section 1.05. Bank).   32 “Guarantee” means the guarantee of the Obligations by Holdings and the Domestic Restricted Subsidiaries of the Borrower in accordance with the terms of the Loan Documents. 2010, as of February 14, 2011 and as of the Restatement Date, as further amended as of the First Amendment Effective Date, as of July 19, 2013 and as of the Second Restatement Date, and as further modified by the Joinder Agreements dated as of June 5, 2013, June 26, 2013 and December 19, 2013, among the Loan Parties and Credit Suisse AG, as collateral agent for the benefit of the Agent and the other Secured Parties, and as administrative agent hereunder. Transaction. speculation. Agreement. 5.0% or less of Consolidated EBITDA of the Borrower and the Restricted   33 determination and (ii) had consolidated assets representing 5.0% or less of Total Assets on the last day of the most recent fiscal quarter ended more than forty-five (45) days prior to the date of determination. The Immaterial Subsidiaries as of the Restatement Date are listed on Schedule 1.01(a). “Incremental Assumption Agreement No. 1” means the Incremental Assumption and Refinancing Facility Agreement dated as of May 14, 2015, relating to this Agreement. Borrower. Borrower. Assumption Agreement.   34 Term Loans. other similar instruments; (7) all obligations of any other Person of the type referred to in clauses market value of such property or asset and the amount of the obligation so secured; such Person; exclude post-closing   35 is paid within 60 days thereafter. For clarification purposes, the liability of the Borrower or any Restricted Subsidiary to make periodic payments to licensors in consideration for the license of patents and technical information under license agreements in existence on the Second Restatement Date and any amount thereunder shall not constitute Indebtedness. calculation. and Collateral Agreement. to the Agent. Dollar Swingline Loan), the last Business Day of each March, June, September and (including any Alternative Currency Swingline Loan), the last day of the calendar month, in which case, the next preceding Business Day).   36 (or, to the extent agreed to by each relevant Lender, twelve months or a period of less than one month) thereafter, as the Borrower may elect; provided, that of the last calendar month of such Interest Period and (iii) only Interest Periods of one month shall be available for Alternative Currency Swingline Loans. For purposes hereof, the date of a Borrowing initially shall be the date and similar agreements. “Issuing Bank” means, as the context may require, (a) PNC Bank, National Association, acting through any of its Affiliates, in its capacity as the issuer of Letters of Credit hereunder, and (b) any other Lender that may become an Credit issued by such Lender. The Issuing Bank may, in its discretion, arrange   37 “Joint Lead Arrangers” means (a) Credit Suisse Securities (USA) LLC, UBS Securities LLC, Morgan Stanley Senior Funding, Inc., Citigroup Global Markets Inc., Barclays Bank PLC and RBC Capital Markets1, as joint lead arrangers for the First Restated Credit Agreement and (b) Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers for this Agreement. to any Loan or Commitment hereunder at such time. Unless the context shall otherwise require, when used in reference to the incurrence of any Indebtedness or the issuance of any Equity Interests, the Latest Maturity Date shall mean the Latest Maturity Date applicable to any Loan or Commitment hereunder as of the date such Indebtedness is incurred or such Equity Interests are issued. “L/C Disbursements” means the Dollar L/C Disbursements and the Multicurrency L/C Disbursements. “L/C Exposures” means the Dollar L/C Exposures and the Multicurrency L/C Exposures. “Lender Presentation” means the Presentation to Public Lenders dated May 13, 2014, relating to the Borrower and the Second Restatement Transactions. reference to the ICE       1    38 Benchmark Administration Interest Settlement Rates for deposits in the applicable currency (as published by Reuters or any other service selected by the Agent that has been nominated by the ICE Benchmark Administration Limited as period equal to such Interest Period; provided that if such rate is not accepted by the syndicated loan market for loans denominated in the applicable currency in lieu of the “LIBO Rate” or, if no such broadly accepted comparable successor rate exists at such time, a successor index rate as the Agent may determine (giving due consideration to any evolving or then existing convention for similar syndicated credit facilities denominated in such currency for such alternative benchmarks (any such proposed rate, a “LIBO Successor Rate”)), and such LIBO Successor Rate shall become effective at 5:00 p.m. (New York City such Required Lenders do not accept such amendment (provided that the foregoing proviso shall not apply with respect to the Tranche G Term Loans and the Non-Extended Revolving Loans); provided that, to the extent that an interest the Agent to be the average of the rates per annum at which deposits in the applicable currency are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Agent at approximately “Limited Condition Acquisition” means any Permitted Acquisition that the consummate, the terms of which do not condition the Borrower’s or its Subsidiary’s, as applicable, obligations to close such Permitted Acquisition on “Loan Documents” means this Agreement, the First Amendment and Restatement Agreement, the Second Amendment and Restatement Agreement, any Incremental Revolving Credit Assumption Agreement, any Incremental Term Loan Assumption Agreement, any Refinancing Facility Agreement, any promissory notes issued pursuant to this Agreement and the Collateral Documents. Any reference in this   39 assigns. accordance with Exhibit G. by the Borrower or its Restricted Subsidiaries of assets comprising all or substantially all of an operating unit of a business or all or substantially all of the Capital Stock of a Person, including, for the avoidance of doubt, any Permitted Acquisition, for aggregate consideration in excess of $300,000,000. agency business.   40 Mortgages, as amended, modified and supplemented after the Second Restatement Date). “Multicurrency L/C Disbursement” means a payment or disbursement made by the “Multicurrency L/C Exposure” means, at any time, the sum of (a) the aggregate undrawn and unexpired amount of all outstanding Multicurrency Letters of Credit at such time denominated in Dollars, plus the Dollar Equivalent of the aggregate denominated in Alternative Currencies and (b) the aggregate principal amount of all Multicurrency L/C Disbursements denominated in Dollars, plus the Dollar Equivalent of the aggregate principal amount of all Multicurrency L/C Disbursements denominated in Alternative Currencies, in each case that have not yet been reimbursed at such time. The Multicurrency L/C Exposure of any Multicurrency Revolving Credit Lender at any time shall equal its applicable Pro Rata Percentage of the aggregate Multicurrency L/C Exposure at such time. “Multicurrency Letter of Credit” means a Letter of Credit issued under the Multicurrency Revolving Credit Commitments. “Multicurrency Revolving Credit Commitment” means a Non-Extended Multicurrency Revolving Credit Commitment or an Extended Multicurrency Revolving Credit Commitment, or both, as the context may require. “Multicurrency Revolving Credit Exposure” means, with respect to any Revolving time of all outstanding Multicurrency Revolving Loans of such Lender denominated in Dollars, plus the Dollar Equivalent of the aggregate principal amount at such in Alternative Currency, (b) the aggregate amount at such time of its Multicurrency L/C Exposure and (c) the aggregate amount at the time of its Swingline Exposure. “Multicurrency Revolving Credit Lender” means a Non-Extended Multicurrency Revolving Credit Lender or an Extended Multicurrency Revolving Credit Lender, or “Multicurrency Revolving Loans” means the Non-Extended Multicurrency Revolving Loans and the Extended Multicurrency Revolving Loans.   41 collecting the proceeds thereof (including, without limitation, legal, accounting and investment banking fees and sales commissions and title and recording tax expenses); Proceeds); “Non-Accepting Lender” has the meaning assigned to such term in Section 2.25(d). “Non-Extended Dollar Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Non-Extended Dollar Revolving Loans hereunder (and to acquire participations in Dollar Letters of Credit as provided for herein) as set forth in the Commitment Schedule or in the most same may be (i) reduced or increased from time to time   42 pursuant to Section 2.06 or 2.24 and (ii) reduced or increased from time to time aggregate amount of the Non-Extended Dollar Revolving Credit Commitments on the on the Amendment No. 5 Effective Date is $0.00. “Non-Extended Dollar Revolving Credit Lender” means a Lender with a Non-Extended Dollar Revolving Credit Commitment or outstanding Dollar Revolving Credit Exposure in respect of its Non-Extended Dollar Revolving Credit Commitment. “Non-Extended Dollar Revolving Loans” means the revolving loans made in respect of the Non-Extended Dollar Revolving Credit Commitments by the Non-Extended Dollar Revolving Credit Lenders to the Borrower pursuant to clause (a)(ii) of Section 2.01. “Non-Extended Multicurrency Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Non-Extended Multicurrency Revolving Loans hereunder (and to acquire participations in Swingline Loans and Section 9.04. The aggregate amount of the Non-Extended Multicurrency Revolving Credit Commitments on the Amendment No. 5 Effective Date is $0.00. “Non-Extended Multicurrency Revolving Credit Lender” means a Lender with a Non-Extended Multicurrency Revolving Credit Commitment or outstanding Multicurrency Revolving Credit Exposure in respect of its Non-Extended “Non-Extended Multicurrency Revolving Loans” means the revolving loans made in respect of the Non-Extended Multicurrency Revolving Credit Commitments by the Non-Extended Multicurrency Revolving Credit Lenders to the Borrower pursuant to “Non-Extended Revolving Credit Commitments” means the Non-Extended Dollar Revolving Credit Commitments and the Non-Extended Multicurrency Revolving Credit Commitments. “Non-Extended Revolving Credit Lenders” means the Non-Extended Dollar Revolving Credit Lenders and the Non-Extended Multicurrency Revolving Credit Lenders. “Non-Extended Revolving Credit Maturity Date” means February 28, 2020. and Collateral Agreement.   43 Borrower. Restricted Subsidiaries on the Second Restatement Date and/or activities that its Restricted Subsidiaries are engaged on the Second Restatement Date. provided   44 that the aggregate principal amount under the Senior Subordinated Notes Documents shall not exceed $4,800,000,000 at any time outstanding, along with Refinancing Indebtedness in respect thereof; provided, further, that solely during the 45-day period following the Second Restatement Date, additional Subordinated Notes described in clause (i) of the definition thereof in an aggregate principal amount not to exceed $390,747,000 shall be permitted under this clause (1) pending the repurchase or other redemption thereof during such period; respect thereof; Indebtedness; that: (a) if the Borrower or any other Guarantor is the obligor on such such Indebtedness is expressly subordinated on terms reasonably satisfactory to the Agent to the prior payment in full in cash of all Obligations and (b) (1) any subsequent issuance or transfer of Capital Stock that results in any to a Person that is not either the Borrower or a Restricted Subsidiary thereof in each case, to constitute an incurrence of such Indebtedness by the Borrower this clause (6); direct   45 purchase of assets or the Capital Stock of any person owning such assets), and Refinancing Indebtedness in respect thereof, in an aggregate principal amount outstanding not to exceed the greater of (a) $150,000,000250,000,000, and (b) 910.0% of the Consolidated EBITDA of the Borrower for the most recently not exceed the greater of (a) $150,000,000, and (b) 96.0% of the Consolidated EBITDA of the Borrower for the most recently ended period of four fiscal Section 5.01(a) or (b) at any time outstanding and (iv) neither the Borrower nor any Restricted Subsidiary (other than such Person or the Restricted Subsidiary with which such Person is merged or consolidated or that so assumes such Person’s Indebtedness) shall guarantee or otherwise become liable for the   46 shall be no earlier than the latest final maturity of the Term Loans (except in the case of customary bridge loans which automatically convert into Indebtedness satisfying the requirements of this paragraph (12)), (iii) the Weighted Average Life to Maturity of such Indebtedness at the time of incurrence thereof shall be Loans (except in the case of customary bridge loans which automatically convert into Indebtedness satisfying the requirements of this paragraph (12)), (iv) such guarantee) of any Subsidiary that is not (or, in the case of after-acquired Subsidiaries, is not required to become) a Loan Party hereunder and (v) the Holdings, the Borrower or any Subsidiary other than any asset constituting Collateral; provided further that, except in connection with any Refinancing Indebtedness, (x) at the time of the incurrence of any senior secured Indebtedness having the same lien priority as the Obligations and after giving effect thereto and to the use of the proceeds thereof, the Consolidated Secured Net Debt Ratio would not exceed 5.00 to 1.00, and (y) at the time of the Ratio would not exceed 7.25 to 1.00; provided further that Indebtedness in the form of letters of credit issued pursuant to a bilateral letter of credit facility in an aggregate face amount of up to the greater of (a) $35,000,000, and (b) 1.5% of the Consolidated EBITDA of the Borrower for the most recently delivered pursuant to Section 5.01(a) or (b) at any time outstanding may be incurred under this clause (12) regardless of whether the conditions set forth in clauses (ii) and (iii) of this clause (12) are satisfied with respect thereto;(13) additional Indebtedness of the Borrower and the Guarantors (which facility) in an aggregate principal amount that does not exceed $100,000,000the greater of (a) $250,000,000 and (b) 10.0% of the Consolidated EBITDA of the Borrower for the most recently ended period of four fiscal quarters for which the greater of (a) $250,000,000450,000,000, and (b) 1518.0% of the Consolidated Section 5.01(a) or (b) at any one time outstanding (which amount may, but need   47 business of the Borrower or such Restricted Subsidiary, including, without bonds and completion guarantees provided by the Borrower or any Restricted Subsidiary of the Borrower in the ordinary course of business; exceed 7.25 to 1.00 and (ii) no Default or Event of Default shall have occurred principal amount that does not exceed the greater of (a) $350,000,000500,000,000, and (b) 2120.0% of the Consolidated EBITDA of the any time outstanding in a Securitization Transaction that is non-recourse to the Borrower or any other Subsidiary of the Borrower (except for Standard Securitization Undertakings) and, for the avoidance of doubt, excluding any Purchase Money Notes. For purposes of determining compliance with Section 6.01, (x) in the event that covenant and (y) with respect to any Indebtedness incurred to finance a Limited Condition Acquisition, the determination of compliance with any provision requiring the calculation of the Consolidated Secured Net Debt Ratio or the Consolidated Net Leverage Ratio or that no Default or Event of Default shall have occurred and be continuing shall be made solely as of the date on which the definitive documentation with respect to such Limited Condition Acquisition is entered into. Accrual of interest, accretion or amortization of original issue   48 exceeding $50,000,000to exceed the greater of (x) $250,000,000 and (y) 10.0% of the Consolidated EBITDA of the Borrower for the most recently ended period of to Section 5.01(a) or (b) in the aggregate for all such Investments in Unrestricted Subsidiaries; good faith; constituting Permitted Indebtedness; with Section 6.03; (7) other Investments existing on the Restatement Date and set forth on Schedule 1.01(f); outstanding, not to exceed the greater of (A) $400,000,000500,000,000 and (B) 8.025.0% of the Borrower’s Total Assets;   49 value of any assets transferred to any such joint venture), do not exceed the greater of (x) $1,000,000,000, and (y) 40.0% of the Consolidated EBITDA of the long as at the time of such Investment and after giving pro forma effect thereto and to any financing therefor, (A) no Default or Event of Default has occurred and is continuing and (B) the Consolidated Net Leverage Ratio would not exceed 7.00 to 1.00; of business; a Restricted Subsidiary; be continuing (in the case of a Limited Condition Acquisition, determined solely as of the date on which the definitive documentation with respect to such Limited Condition Acquisition is entered into); (B) the Consolidated Net Leverage Ratio (in the case of a Limited Condition Acquisition, determined solely as of the date on which the definitive documentation with respect to such Limited Condition Acquisition is entered into) would not exceed 7.25 to 1.00; and (C) the Available Liquidity shall be no less than $100,000,000 (in the case of a Limited Condition Acquisition, determined solely as of the date on which the definitive documentation with respect to such Limited Condition Acquisition is entered into), and, for each acquisition with consideration in excess of $25,000,000, the Borrower shall have delivered a   50 certificate of a Financial Officer, certifying as to the foregoing clauses (A), (B) and (C) and setting forth reasonably detailed calculations in support thereof, in form and substance reasonably satisfactory to the Agent; and (iii) unless such Acquired Entity is not organized or existing under the laws of any territory thereof, the Borrower shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of Section 5.11 and the Loan Documents (any acquisition of an Acquired Entity meeting all the criteria of this clause (18) being referred to herein as a “Permitted Acquisition”); outstanding and (D) the aggregate Unrestricted Cash of all Loan Parties and their Restricted Subsidiaries at such time, as the same would be reported on a consolidated balance sheet prepared in accordance with GAAP as of such date, would not be less than $200,000,000.   51 such Person; secure on the Restatement Date and any Refinancings of such obligations permitted under Section 6.01 and (ii) such Liens may not extend to any other such acquisition;   52 Indebtedness; (r) Liens securing Indebtedness permitted to be incurred pursuant to clauses (7), (12) and (14) of the definition of “Permitted Indebtedness”; provided that (A) Liens securing Indebtedness permitted to be incurred pursuant to such clause (7) do not at any time encumber any property other than the property financed by Specified Secured Indebtedness do not encumber any asset other than any asset constituting Collateral and (C) Liens securing Indebtedness permitted to be incurred pursuant to such clause (14) extend only to the assets of Foreign Subsidiaries; carriers;   53 purposes; agreement; which obligations do not exceed the greater of (x) $50,000,000 and (y) 2.0% of to Section 5.01(a) or (b) at any one time outstanding; and prepayments with the   54 proceeds of, and exchanges for, Refinancing Indebtedness and (iii) customary acceleration rights after an event of default), (b) that do not constitute an obligation (including pursuant to a guarantee) of any Subsidiary that is not (or, in the case of after-acquired Subsidiaries, is not required to become) a Loan Party hereunder, (c) that has terms and conditions (other than economic terms, including redemption premiums), taken as a whole, that are not materially less favorable or materially more restrictive to the Borrower than the terms and conditions prevailing in the marketplace at the time for high-yield subordinated debt securities issued in a public offering (except to the extent otherwise approved by the Agent), as determined in good faith by the Borrower and evidenced by a certificate of an Officer of the Borrower, and (d) is to the Agent. does not exceed the greater of (a) $15,000,000 and (b) 0.5% of the Consolidated any ERISA Affiliate. “Pro Rata Percentage” means, with respect to any Dollar Revolving Credit Lender or Multicurrency Revolving Credit Lender at any time, the percentage of the aggregate amount of Dollar Revolving Credit Commitments or Multicurrency Revolving Credit Commitments, respectively, as in effect at such time represented by such Revolving Credit Lender’s Dollar Revolving Credit Commitment or Multicurrency Revolving Credit Commitment, respectively. In the event that the Dollar Revolving Credit Commitments or the Multicurrency Revolving Credit Commitments shall have expired or have terminated, the Pro Rata Percentages with respect thereto shall be determined on the basis of the Dollar Revolving Credit Commitments or Multicurrency Revolving Credit Commitments, as applicable, most   55 effect to any subsequent assignments. The Pro Rata Percentages shall be adjusted to disregard the Revolving Credit Commitments of Defaulting Lenders. For the avoidance of doubt, the Pro Rata Percentage of each Revolving Credit Lender shall be determined as set forth above, by reference to the percentage of all Dollar Revolving Credit Commitments or Multicurrency Revolving Credit Commitments represented by such Lender’s Dollar Revolving Credit Commitment or Multicurrency Revolving Credit Commitment, respectively, without regard to whether such Commitment or any other Revolving Credit Commitment is a Non-Extended Revolving Credit Commitment or an Extended Revolving Credit Commitment. behalf of Holdings, the Borrower or any of the Subsidiaries prior to the Second Restatement Date. Securitization Transactions. Capital Stock. correlative meanings.   56 event shall not: the Original Indebtedness, Refinancing Term Loans.   57 successor provision thereto. successor provision thereto. successor provision thereto. “Required Class Lenders” means at any time, with respect to any Class, Lenders have Loans (excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused Commitments of such Class at such time; provided that the Loans, L/C Exposure, Swingline Exposure and unused Commitments of any Defaulting Lender shall be disregarded in the determination of the Required Class Lenders at any time. “Required Lenders” means at any time, Lenders having Loans (excluding Swingline unused Revolving Credit Commitments and Term Loan Commitments at such time; provided that the Loans, L/C Exposure, Swingline Exposure and unused Revolving Credit Commitments and Term Loan Commitments of any Defaulting Lender shall be   58 subject. of this Agreement, and, as to any document delivered on the Second Restatement Date (but subject to the express requirements set forth in Section 4.02), shall “Restatement Date” means February 28, 2013, which was the date of effectiveness of the First Amended and Restated Credit Agreement. “Revolving Credit Borrowing” means a Borrowing comprised of Dollar Revolving Loans, Multicurrency Revolving Loans or Incremental Revolving Loans. “Revolving Credit Commitments” means the Dollar Revolving Credit Commitments and the Multicurrency Revolving Credit Commitments. “Revolving Credit Exposures” means, with respect to any Revolving Credit Lender at any time, such Lender’s Dollar Revolving Credit Exposure and Multicurrency Revolving Credit Exposure. “Revolving Credit Lenders” means the Dollar Revolving Credit Lenders and the Multicurrency Revolving Credit Lenders. “Revolving Credit Maturity Date” means the Non-Extended Revolving Credit Maturity Date or the Extended Revolving Credit Maturity Date, as applicable.   59 “Revolving Loans” means the Dollar Revolving Loans and the Multicurrency Revolving Loans. Unless the context shall otherwise require, the term “Revolving “S&P” means Standard & Poor’s Ratings Services, and any successor to its rating agency business. Borrower or any Restricted Subsidiary at the Restatement Date or later acquired, been or are to be advanced by such Person on the security of such property. “Second Amendment and Restatement Agreement” has the meaning assigned to such “Second Restatement Date” means June 4, 2014, which was the “Second Restatement Date” under and as defined in the Second Amendment and Restatement Agreement. “Second Restatement Transactions” means, collectively, (a) the execution, delivery and performance of the Second Amendment and Restatement Agreement and this Agreement, the Borrowing of the Tranche D Term Loans hereunder and the use of the proceeds thereof in accordance with the terms hereof, (b) the issuance of the 2014 Senior Subordinated Notes, (c) the payment of the Specified Dividend, (d) the consummation of the Subordinated Notes Refinancing and (e) the payment Collateral Agreement. property or   60 asset of the Borrower or any Restricted Subsidiary of the Borrower, directly or pursuant to Standard Securitization Undertakings; (ii) with which neither the Borrower nor any Restricted Subsidiary of the Borrower has any material contract, agreement, arrangement or understanding other than on terms, taken as a whole, no less favorable to the Borrower or such Restricted Subsidiary than the Borrower, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity, standard Securitization Undertakings and other terms, including Purchase Money Notes, typical in Securitization Transactions; and (iii) to which neither the Borrower nor any Restricted Subsidiary of the Borrower has any obligations to maintain or involving accounts receivable. Notes due 2018, (ii) the Borrower’s 5.50% Senior Subordinated Notes due 2020, (iii) the 2013 Senior Subordinated Notes, (iv) the 2014 Senior Subordinated Notes, (v) the 2015 Senior Subordinated Notes, and (vi) the 2016 Senior Subordinated Notes. respect thereof. Notes due 2018 were issued, (ii) the Indenture dated as of October 15, 2012, issued, (iii)   61 the Indenture dated as of July 1, 2013, among the Borrower, as issuer, Holdings, certain of its subsidiaries, as guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the 2013 Senior Subordinated Notes were issued, (iv) the Indenture dated as of the Second Restatement Date, guarantors, and the Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the 2014 Senior Subordinated Notes described in clause (i) of the definition thereof were issued, (v) the Indenture dated as of the Second Restatement Date, among the Borrower, as issuer, Holdings, certain of its subsidiaries, as guarantors, and the Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the 2014 Senior Subordinated Notes described in clause (ii) of the definition thereof were issued, (vi) the Indenture dated as of May 14, 2015, among the Borrower, as issuer, Holdings, certain of its N.A., as trustee, pursuant to which the 2015 Senior Subordinated Notes were issued, and (vii) the Indenture dated as of June 9, 2016, among the Borrower, as issuer, Holdings, certain of its subsidiaries, as guarantors, and the Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the 2016 Senior Subordinated Notes were issued. Act. Permitted Acquisition. “Specified Dividend” means the Restricted Payment in an amount not to exceed $1,700,000,000 by the Borrower to Holdings, funded solely by the Net Cash Proceeds of the Tranche D Term Loans and the 2014 Senior Subordinated Notes and unrestricted available cash. forth in Sections 3.01, 3.02, 3.03(a) and (b), 3.08, 3.13 (provided that such representation shall be deemed to refer to the date on which the applicable Borrowing is to be made and the consummation of the transactions to occur on such date), 3.16, 3.18 and 3.20.   62 accounts receivable. “Statutory Reserves” means a fraction (expressed as a decimal) the numerator of be maintained against “Eurocurrency liabilities” as specified in Regulation D (including any marginal, emergency, special or supplemental reserves). “Subordinated Notes Refinancing” has the meaning assigned to such term in the such Person; or Person. Borrower. a Loan Party and that executes this Agreement on the Second Restatement Date and is a party to the Guarantee and Collateral Agreement as a guarantor on the Second Restatement Date and each other Restricted Subsidiary of the Borrower that thereafter guarantees the Obligations pursuant to the terms of this Agreement and the Guarantee and Collateral Agreement; provided that upon the release and discharge of such Restricted Subsidiary from its Guarantee in accordance with this Agreement and the Guarantee and Collateral Agreement, such Restricted Subsidiary shall cease to be a Subsidiary Guarantor. amount at such time of all outstanding Dollar Swingline Loans, plus the Dollar Equivalent of the aggregate principal amount at such time of all outstanding Alternative Currency Swingline Loans. The Swingline Exposure of any Multicurrency Revolving Credit Lender at any time shall equal its Pro Rata   63 “Swingline Lender” means any Revolving Credit Lender that may become the Swingline Lender pursuant to Section 2.22(g), in its capacity as lender of Swingline Loans hereunder. Section 2.22. Settlement Express Transfer payment system, which utilizes a single shared platform and which was launched on November 19, 2007, is open for the settlement deductions, similar charges or withholdings (including backup withholding) Loans. outstanding Term Loan. Tranche C Term Loan Commitment, Tranche D Term Loan Commitment, Tranche E Term Loan Commitment, Tranche F Term Loan Commitment and Tranche G Term Loan Commitment and (b) any Incremental Term Loan Commitment. “Term Loan Maturity Date” means the Tranche C Maturity Date, the Tranche D Maturity Date, the Tranche E Maturity Date, the Tranche F Maturity Date or the Tranche G Maturity Date, as applicable. “Term Loans” means, collectively, the Tranche C Term Loans, the Tranche D Term Loans, Tranche E Term Loans, Tranche F Term Loans and Tranche G Term Loans. Incremental Term Loans. Insurance Policies.   64 amount of Dollar Revolving Credit Commitments, as in effect at such time. The Total Dollar Revolving Credit Commitment as of the Amendment No. 5 Effective Date is $500,616,709.19. aggregate amount of Multicurrency Revolving Credit Commitments, as in effect at such time. The Total Multicurrency Revolving Credit Commitment as of the Amendment No. 5 Effective Date is $99,383,290.82. Tranche C Term Loan Commitments were terminated in full upon the making of the Tranche C Term Loans on the Restatement Date or the First Amendment Effective Section 2.01. “Tranche D Maturity Date” means June 4, 2021. “Tranche D Term Lenders” means those Lenders that have a Tranche D Term Loan Commitment or an outstanding Tranche D Term Loan. “Tranche D Term Loan Commitment” means, with respect to each Lender, the commitment of such Lender to make Tranche D Term Loans hereunder as set forth in the Commitment Schedule or in the most recent Assignment and Assumption executed aggregate amount of the Term Lenders’ Tranche D Term Loan Commitments on the Second Restatement Date is $825,000,000. “Tranche D Term Loans” means the Term Loans made pursuant to clause (a)(i) of Section 2.01. “Tranche E Maturity Date” means May 30, 2025. “Tranche E Term Lenders” means those Lenders that have a Tranche E Term Loan Commitment or an outstanding Tranche E Term Loan.   65 “Tranche E Term Loan Commitments” means the New Tranche E Refinancing Term Loan Commitments in an aggregate principal amount of $2,255,024,154.582,215,561,231.85 established pursuant to (and as defined in) Amendment No. 57. pursuant to SectionsSection 2(a) and (b) of Amendment No. 57. “Tranche F Amortization Date” means the earlier to occur of (a) the Delayed Draw Funding Date and (b) the Delayed Draw Term Commitment Termination Date. “Tranche F Maturity Date” means JuneDecember 9, 20232025. “Tranche F Term Lenders” means those Lenders that have a Tranche F Term Loan Commitment or an outstanding Tranche F Term Loan. “Tranche F Term Loan Commitments” means the New Tranche F Refinancing Term Loan $3,577,740,539.003,515,130,079.55 established pursuant to (and as defined in) pursuant to Section 2(cb) of Amendment No. 57. “Tranche G Term Loan Commitments” means the New Tranche G Refinancing Term Loan $1,809,905,000.001,773,706,900.00 established pursuant to (and as defined in) the February 2018 Refinancing Facility AgreementAmendment No. 7. “Tranche G Term Loans” means the Term Loans made by the Lenders to the Borrower pursuant to Section 2(ac) of the February 2018 Refinancing Facility AgreementAmendment No. 7. Borrower and the Restricted Subsidiaries in connection with the Transactions and, if applicable, the Second Restatement Transactions.   66 the Foreign Base Rate. Holdings, the Borrower and its Restricted Subsidiaries and not controlled by or (other than Liens created by or pursuant to this Agreement and the Loan Documents, which may be shared ratably with the holders of any Specified Secured Indebtedness). that: occurred and be continuing. Any such   67 designation by the Board of Directors of the Borrower shall be evidenced by a Board Resolution giving effect to such designation and an Officers’ Certificate delivered to the Agent certifying (and setting forth reasonably detailed calculations demonstrating) that such designation complied with the foregoing provisions. “Voluntary Prepayment” means (a) a prepayment of principal of Term Loans pursuant to Section 2.09(a) in any fiscal year of the Borrower to the extent that such prepayment reduces the scheduled installments of principal due in respect of Term Loans as set forth in Section 2.08 in any subsequent fiscal year and (b) a repurchase of Term Loans pursuant to Section 2.09(e) in any fiscal year of the Borrower (it being understood that the amount of such repurchase shall be the aggregate purchase price paid for the Term Loans so repurchased (and not the aggregate principal amount thereof)), in each case, to the extent that such prepayment or repurchase did not occur in connection with a Refinancing of such Term Loans. respect thereof; by   68 (e.g., a “Eurocurrency Dollar Revolving Loan”). Borrowings may also be classified and referred to by Class (e.g., a “Dollar Revolving Borrowing”) or by occurring after the Second Restatement Date in GAAP or in the application withdrawn or such provision amended in accordance herewith; provided further, nowithstanding the foregoing   69 or anything else to the contrary in this Agreement, all leases of the Borrower and its Subsidiaries that were treated as “operating leases” prior to the adoption of ASC 842 shall continue to be accounted for as such for all purposes Leverage Ratio and Consolidated Secured Net Debt Ratio shall be calculated with period. SECTION 1.08. Exchange Rates. On each Calculation Date, the Agent shall (a) determine the Exchange Rate as of such Calculation Date and (b) give notice thereof to the Borrower and to any Lender that shall have requested a copy of such notice (it being understood that a Lender shall not have the right to independently request a determination of the Exchange Rates), in each case, with respect to each applicable Alternative Currency. The Exchange Rates so determined shall become effective on such Calculation Date and shall remain of this Agreement (other than Section 2.22(f) or any other provision expressly converting any amounts between Dollars and Alternative Currencies.   70 ARTICLE II The Credits Term Loan, in Dollars, to the Borrower on the Second Restatement Date, in a principal amount not to exceed its Tranche D Term Loan Commitment, (ii) to make Dollar Revolving Loans to the Borrower, in Dollars, at any time and from time to Revolving Credit Maturity Date with respect to the Dollar Revolving Credit Commitment of such Lender and the termination of the Dollar Revolving Credit Credit Lender’s Dollar Revolving Credit Exposure exceeding such Lender’s Dollar Revolving Credit Commitment and (iii) to make Multicurrency Revolving Loans to the Borrower, in Dollars or any Alternative Currency, at any time and from time Revolving Credit Maturity Date with respect to the Multicurrency Revolving Credit Commitment of such Lender and the termination of the Multicurrency in an aggregate principal amount at any time outstanding that would not result in such Revolving Credit Lender’s Multicurrency Revolving Credit Exposure exceeding such Lender’s Multicurrency Revolving Credit Commitment. Within the limits set forth in the preceding sentence and subject to the terms, conditions not be reborrowed. Commitments; provided that until the Non-Extended Revolving Credit Maturity Date, (x) each Borrowing of Dollar Revolving Loans shall consist of Dollar Revolving Loans (including both Non-Extended Revolving Loans and Extended Revolving Loans) made by all Dollar Revolving Credit Lenders (including both Non-Extended Dollar Revolving Credit Lenders and Extended Dollar Revolving Credit Lenders) ratably in accordance with their respective Dollar Revolving Credit Commitments (and, thereafter, each Borrowing of Dollar Revolving Loans shall consist of Extended Dollar Revolving Loans made by the Extended Dollar Revolving Credit Lenders in accordance with their respective Extended Dollar Revolving Credit Commitments) and (y) each   71 Borrowing of Multicurrency Revolving Loans shall consist of Multicurrency Revolving Loans (including both Non-Extended Multicurrency Revolving Loans and Extended Multicurrency Revolving Loans) made by all Multicurrency Revolving Credit Lenders (including both Non-Extended Revolving Credit Lenders and Extended Revolving Credit Lenders), ratably in accordance with their respective Multicurrency Revolving Credit Commitments (and, thereafter, each Borrowing of Multicurrency Revolving Loans shall consist of Extended Multicurrency Revolving Loans made by the Extended Multicurrency Revolving Credit Lenders ratably in accordance with their respective Extended Multicurrency Revolving Credit Commitments). The failure of any Lender to make any Loan required to be made by Borrowing Multiple and not less than the Borrowing Minimum (except with respect to any Incremental Revolving Credit Borrowing, to the extent otherwise provided in the related Incremental Revolving Credit Assumption Agreement) or (B) in the case of a Term Loan Borrowing, an integral multiple of $1,000,000 and not less than (x) $5,000,000 in the case of a Eurocurrency Borrowing or (y) $1,000,000, in the case of an ABR Borrowing (except, in each case, with respect to any Incremental Term Loan Assumption Agreement) or (ii) in the case of any Borrowing, equal to the remaining available balance of the applicable Commitments; provided that an ABR Borrowing may be maintained in a lesser amount equal to the difference between the aggregate principal amount of all other Borrowings and the total amount of Loans at such time outstanding. (b) Subject to Section 2.02(e), 2.13 and 2.19, (i) each Borrowing denominated in in an Alternative Currency shall be comprised entirely of Eurocurrency Loans. increase in the Eurocurrency Rate or increased costs to the Borrower resulting Interest Periods in effect for Eurocurrency Borrowings at any time outstanding.   72 and the Agent will promptly notify each applicable Revolving Credit Lender of Lender of the applicable Class shall pay by wire transfer of immediately available funds in Dollars or the applicable Alternative Currency, as applicable, to the Agent not later than 2:00 p.m., New York City time, on such understood that such amount shall be deemed to constitute an ABR Revolving Loan (in the case of a Dollar L/C Disbursement) or a Eurocurrency Revolving Loan with an Interest Period of one month (in the case of a Multicurrency L/C Disbursement), as the case may be, of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Agent will promptly pay to the Agent will promptly pay to the Issuing Bank any amounts received by it from the Lender makes any payment pursuant to this paragraph (e); any such amounts received by the Agent thereafter will be promptly remitted by the Agent to the Revolving Credit Lenders that shall have made such payments and to the Issuing Bank, as their interests may appear. If any Revolving Credit Lender shall not Agent as provided above, such Lender and the Borrower severally agree to pay such amount is paid, to the Agent for the account of the Issuing Bank at (i) in to Revolving Loans pursuant to Section 2.12(a), and (ii) in the case of such Lender, (x) for amounts denominated in Dollars, for the first such day, the Rate and (y) for amounts denominated in an Alternative Currency, for the first such day, a rate determined by the Agent to represent its cost of overnight or short-term funds in such Alternative Currency (which determination shall be conclusive absent manifest error), and for each day thereafter, the Foreign Base Rate applicable to such Alternative Currency. hand delivery or facsimile of written notice) not later than (x) 11:00 a.m., New York City time, (A) in the case of a Eurocurrency Borrowing denominated in Dollars, three (3) Business Days before a proposed Borrowing (or such later time as shall be acceptable to the Agent) and (B) in the case of a Eurocurrency Borrowing denominated in an Alternative Currency, not later than 11:00 a.m., New York City time, four Business Days before a proposed Borrowing (or such later time as shall be acceptable to the Agent) and (y) 11:00 a.m., New York City time, on the date of a proposed Borrowing (or such   73 later time as shall be acceptable to the Agent), in the case of an ABR Borrowing. Each such telephonic and written Borrowing Request shall be Section 2.01: (iii) whether the Borrowing then being requested is to be a Tranche C Term Borrowing, a Tranche D Term Borrowing, a Tranche E Term Borrowing, a Tranche F Term Borrowing, a Tranche G Term Borrowing, an Incremental Term Borrowing, a Dollar Revolving Borrowing, a Multicurrency Revolving Borrowing or an Incremental Revolving Credit Borrowing, and whether such Borrowing is to be an (v) in the case of a Multicurrency Revolving Borrowing, the currency in which such Borrowing is to be denominated; and disbursed; Borrowing, if denominated in Dollars, shall be an ABR Borrowing and if denominated in any other currency, shall be a Eurocurrency Borrowing with an any Eurocurrency Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If no currency is specified then the requested Borrowing shall be denominated in Dollars. Promptly following receipt immediately available funds by (i) 12:00 (noon), New York City time, in the case of Loans denominated in Dollars or (ii) 9:00 a.m., New York City time, in the case of Loans denominated in an Alternative Currency, in each case to the to the Lenders.   74 such share available on the date of such Borrowing in accordance with paragraph Lender, the greater of the rate determined by the Agent to represent its cost of overnight or short-term funds for the applicable currency and the applicable Daily Rate (which determination shall be conclusive absent manifest error) or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans, in the case of Loans denominated in Dollars, or the rate applicable to such Loan, in the case of Loans denominated in an Alternative Currency. If such Lender pays as part of such Borrowing for purposes of this Agreement. Nothing herein shall or to prejudice any rights which the Agent or the Borrower or any Loan Party may or continue as a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time, (x) three (3) Business Days before the date of the proposed conversion or continuation, in the case of any Borrowing denominated in Dollars or (y) four (4) Business Days before the date of the proposed conversion or continuation, in the case of any Borrowing denominated in an Alternative Currency or (ii) in the case of an election to convert to or continue as an ABR proposed conversion or continuation (or such later time as shall be acceptable to the Agent). Each such telephonic Interest Election Request shall be   75 Eurocurrency Borrowing; and resulting Borrowing. the end of such Interest Period (i) any such Borrowing denominated in Dollars shall be converted to an ABR Borrowing and (ii) any such Borrowing denominated in an Alternative Currency shall be continued as a Eurocurrency Borrowing with if an Event of Default of the type set forth in clauses (a) or (b) of Article VII (without giving effect to any grace period set forth therein) has occurred and is continuing and the Agent, at the request of the Required Lenders, so (x) (A) no outstanding Borrowing denominated in Dollars may be converted to or end of the then current Interest Period applicable thereto and (y) no Interest Period in excess of one month may be selected for any Borrowing denominated in an Alternative Currency. SECTION 2.06. Termination and Reduction of Commitments. (a) The Non-Extended Revolving Credit Commitments shall automatically terminate on the Non-Extended Revolving Credit Maturity Date. The Extended Revolving Credit Commitments (other than Incremental Revolving Credit Commitments, which shall automatically terminate as provided in the relevant Incremental Assumption Agreement) and the Swingline Commitment shall automatically terminate on the Extended Revolving Credit Maturity Date. The L/C Commitment shall automatically terminate on the earlier to occur of (i) the termination of the Extended Revolving Credit Commitments and (ii) the date that is 30 days prior to the Extended Revolving Credit Maturity Date.   76 Commitments or the Revolving Credit Commitments, in each case, of any Class (it being agreed that for purposes of this clause (b), the Initial Tranche F Term Loan Commitments (as defined in Amendment No. 1) and the Delayed Draw Term F Term Loan Commitments (as defined in Amendment No. 1) shall constitute separate Classes; provided, however, that (i) each partial reduction of the Term Loan Commitments or the Revolving Credit Commitments of any Class shall be in an Total Dollar Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Dollar Revolving Credit Exposure at the time, (iii) the Total Multicurrency Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Multicurrency Revolving Credit Exposure at the time, and (iv) the Borrower may condition a notice of termination of all of the Commitments upon the effectiveness of a replacement financing (or other transaction); provided further that (x) until the Non-Extended Dollar Revolving Credit Commitments shall have been terminated in full or expired, any reduction in the Dollar Revolving Credit Commitments shall be made ratably between the Non-Extended Dollar Revolving Credit Commitments and the Extended Dollar Revolving Credit Commitments and (y) until the Non-Extended Multicurrency Revolving Credit Commitments shall have been terminated in full or expired, any reduction in the Multicurrency Revolving Credit Commitments shall be made ratably between the Non-Extended Multicurrency Revolving Credit Commitments and the Extended Multicurrency Revolving Credit Commitments; provided, however, that prior to the Non-Extended Revolving Credit Maturity Date, the Borrower may terminate in full (but not in part) the Non-Extended Dollar Revolving Credit Commitments without any concurrent termination of the Extended Dollar Revolving Credit Commitments and the Borrower may terminate in full (but not in part) the Non-Extended Multicurrency Revolving Credit Commitments without any concurrent termination of the Extended Multicurrency Revolving Credit Commitments. Commitments of any Class hereunder shall be made ratably among the Lenders in termination or reduction of the Commitments of any Class, all accrued and unpaid termination or reduction. on the Revolving Credit Maturity Date with respect to the Revolving Credit Commitments of such Lender. The Borrower hereby promises to pay to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the Revolving Credit Maturity Date with respect to the Revolving Credit Commitments of such Lender.   77 hereunder. (c) The Agent shall maintain accounts (including the Register maintained Loan made hereunder, the Class, Type and currency thereof and the Interest assigns. the Agent, for the account of the Tranche C Term Lenders, on the dates set forth Day, a principal amount of the Tranche C Term Loans (as adjusted from time to amount set forth below for such date, together in each case with accrued and such payment:   DATE    SCHEDULED TRANCHE C TERM LOAN REPAYMENTS June 30, 2016 September 30, 2016 December 31, 2016    $3,190,411.13 $3,190,411.13 $3,190,411.13 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017    $3,190,411.13 $3,190,411.13 $3,190,411.13 $3,190,411.13   78 DATE    SCHEDULED TRANCHE C TERM LOAN REPAYMENTS March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018    $3,190,411.13 $3,190,411.13 $3,190,411.13 $3,190,411.13 March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019    $3,190,411.13 $3,190,411.13 $3,190,411.13 $3,190,411.13 Tranche C Maturity Date    Remainder (ii) The Borrower shall pay to the Agent, for the account of the Tranche D Term Day, on the next preceding Business Day, a principal amount of the Tranche D the aggregate principal amount of the Tranche D Term Loans outstanding on the Second Restatement Date, together in each case with accrued and unpaid interest   DATE    SCHEDULED TRANCHE D TERM LOAN REPAYMENTS September 30, 2014 December 31, 2014    0.25% 0.25% March 31, 2015 June 30, 2015 September 30, 2015 December 31, 2015    0.25% 0.25% 0.25% 0.25% March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016    0.25% 0.25% 0.25% 0.25% March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017    0.25% 0.25% 0.25% 0.25% March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018    0.25% 0.25% 0.25% 0.25% March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019    0.25% 0.25% 0.25% 0.25%   79 DATE    SCHEDULED TRANCHE D TERM LOAN REPAYMENTS March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020    0.25% 0.25% 0.25% 0.25% March 31, 2021    0.25% Tranche D Maturity Date    Remainder (iii) The Borrower shall pay to the Agent, for the account of the Tranche E Term   DATE    SCHEDULED TRANCHE E TERM LOAN REPAYMENTS March 31, 2020 June 30, 20182020 September 30, 20182020 December 31, 20182020    $5,637,560.395,538,903.08 $5,637,560.39 $5,637,560.39 $5,538,903.08 $5,538,903.08 $5,538,903.08 March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019    $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,637,560.39 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020    $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,637,560.39 March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021    $5,637,560.395,538,903.08 $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,538,903.08 $5,538,903.08 $5,538,903.08   80 DATE    SCHEDULED TRANCHE E TERM LOAN REPAYMENTS March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022    $5,637,560.395,538,903.08 $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,538,903.08 $5,538,903.08 $5,538,903.08 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023    $5,637,560.395,538,903.08 $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,538,903.08 $5,538,903.08 $5,538,903.08 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024    $5,637,560.395,538,903.08 $5,637,560.39 $5,637,560.39 $5,637,560.39 $5,538,903.08 $5,538,903.08 $5,538,903.08 March 31, 2025    $5,637,560.39$5,538,903.08 Tranche E Maturity Date    Remainder (iv) The Borrower shall pay to the Agent, for the account of the Tranche F Term   DATE    SCHEDULED TRANCHE F TERM LOAN REPAYMENTS June 30, 2018 September 30, 2018 December 31, 2018    $8,944,351.35 $8,944,351.35 $8,944,351.35 March 31, 20192020 June 30, 20192020 September 30, 20192020 December 31, 20192020    $8,944,351.358,787,825.20 $8,944,351.35 $8,944,351.35 $8,944,351.35 $8,787,825.20 $8,787,825.20 $8,787,825.20   81 DATE    SCHEDULED TRANCHE F TERM LOAN REPAYMENTS March 31, 20202021 June 30, 20202021 September 30, 20202021 December 31, 20202021    $8,944,351.358,787,825.20 $8,944,351.35 $8,944,351.35 $8,944,351.35 $8,787,825.20 $8,787,825.20 $8,787,825.20 March 31, 20212022 June 30, 20212022 September 30, 20212022 December 31, 20212022    $8,944,351.358,787,825.20 $8,944,351.35 $8,944,351.35 $8,944,351.35 $8,787,825.20 $8,787,825.20 $8,787,825.20 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022    $8,944,351.35 $8,944,351.35 $8,944,351.35 $8,944,351.35 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023    $8,944,351.35$8,787,825.20 $8,787,825.20 $8,787,825.20 $8,787,825.20 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024    $8,787,825.20 $8,787,825.20 $8,787,825.20 $8,787,825.20 March 31, 2025 June 30, 2025 September 30, 2025    $8,787,825.20 $8,787,825.20 $8,787,825.20 Tranche F Maturity Date    Remainder   82   DATE    SCHEDULED TRANCHE G TERM LOAN REPAYMENTS March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018    $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,524,762.50 March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019    $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,524,762.50 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020    $4,524,762.504,434,267.25 $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,434,267.25 $4,434,267.25 $4,434,267.25 March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021    $4,524,762.504,434,267.25 $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,434,267.25 $4,434,267.25 $4,434,267.25 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022    $4,524,762.504,434,267.25 $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,434,267.25 $4,434,267.25 $4,434,267.25 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023    $4,524,762.504,434,267.25 $4,524,762.50 $4,524,762.50 $4,524,762.50 $4,434,267.25 $4,434,267.25 $4,434,267.25 March 31, 2024 June 30, 2024    $4,524,762.50 $4,524,762.504,434,267.25 $4,434,267.25 Tranche G Maturity Date    Remainder   83 termination. that is an integral multiple of $100,000, €100,000 or £100,000 and not less than $500,000, €500,000 or £500,000 (or, with respect to any other Alternative Currency, such minimum and multiple amounts as are reasonably specified by the Agent), as applicable. prepayment. Each such notice shall be irrevocable (except that any such notice may be conditioned upon the effectiveness of a new financing or other transaction) and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and the Class(es) and Type(s) of Loans to be prepaid. Promptly following receipt of any such notice relating to a accrued interest as required by Section 2.12; provided, however, that in the case of a prepayment of an ABR Revolving Loan or a Swingline Loan that is not made in connection with a termination of the Revolving Credit Commitments, the accrued and unpaid interest on the principal amount prepaid shall be payable on the next scheduled Interest Payment Date with respect to such ABR Revolving Loan or Swingline Loan.   84 (d) If, (x) prior to the date that is six months after the February 2018 Refinancing Facility Effective Date, in the case of the Tranche G Term Loans or (y) prior to the date that is six months after the Amendment No. 57 Effective Date, in the case of the Tranche E Term Loans, the Tranche F Term Loans or the Tranche FG Term Loans, (i) all or any portion of such Term Loans is prepaid substantially concurrently with the proceeds of, or such Term Loans are (including any Incremental Term Loans incurred pursuant to Section 2.22) that has an effective interest rate or weighted average yield (to be determined in the reasonable discretion of the Agent consistent with generally accepted financial practices, after giving effect to margins, “LIBOR floors”, upfront or similar fees or original issue discount shared with all lenders or holders thereof, but excluding the effect of any arrangement, structuring, syndication lenders or holders thereof) less than the effective interest rate or weighted consistent with generally accepted financial practices, on the same basis as above) of such Term Loans being prepaid or converted, or (ii) a Non-Consenting Lender must assign its Term Loans of such Class pursuant to Section 9.02(e) or otherwise as a result of its failure to consent to an amendment that is passed and reduces the effective interest rate or weighted average yield (taking into account any “LIBOR floor”) then in effect with respect to such Term Loans, then in each case the aggregate principal amount so prepaid, converted, assigned or principal amount thereof. Borrower delivers to the Agent (for distribution to such Lenders) a notice of Days (or such shorter period as may be agreed to by the Agent) in advance of the such Offer may be accepted, (2) the maximum principal amount of the Offer Loans the Borrower is willing to repurchase in the Offer, (3) the Class of such Offer Loans, (4) the range of discounts to par at which the Borrower is willing to repurchase the Offer Loans and (5) the instructions, consistent with this Section 2.09(e) with respect to the Offer, that a Term Lender must follow in order to have its Offer Loans repurchased; (B) the maximum dollar amount of each Offer shall be no less than $10,000,000 or whole multiples of $1,000,000 in excess thereof; (C) the Borrower shall hold such Offer open for a minimum period of three Business Days; (D) a Term Lender who elects to participate in the Offer may choose to tender all or part of such Term Lender’s Offer Loans; (E) the proceeds of Revolving Loans may not be used to fund any repurchase under this   85 Term Lenders holding the Offer Loans on a pro rata basis in accordance with the of all the Revolving Credit Commitments of a Class, the Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Credit Borrowings of such Class and (solely in the case of a termination of all Multicurrency Revolving Credit Commitments) all outstanding Swingline Loans, and replace all (or make other arrangements, including providing cash collateral or a supporting letter of credit, acceptable to the Issuing Bank in its sole discretion, with respect thereto) outstanding Letters of Credit issued thereunder; provided that for purposes of the repayment of any Revolving Credit Borrowings pursuant to this paragraph in connection with the termination of all of the Non-Extended Dollar Revolving Credit Commitments or Non-Extended Multicurrency Revolving Credit Commitments, the Loans outstanding under the applicable Non-Extended Revolving Credit Commitments and the Loans outstanding under the applicable Extended Revolving Credit Commitments shall be deemed to comprise separate Borrowings. If as a result of any partial reduction of the Dollar Revolving Credit Commitments or the Multicurrency Revolving Credit Commitments, the Aggregate Dollar Revolving Credit Exposure or the Aggregate Multicurrency Revolving Credit Exposure, as applicable, would exceed the Total Dollar Revolving Credit Commitment or the Total Multicurrency Revolving Credit Commitment, as applicable, after giving effect thereto, then the Borrower shall, on the date of such reduction, repay or prepay Revolving Credit Borrowings in respect of the Dollar Revolving Credit Commitments or the Multicurrency Revolving Credit Commitments, as applicable (or, if applicable, Swingline Loans (or a combination thereof)) and/or replace outstanding (or make such other arrangement with respect to) Letters of Credit issued thereunder in an amount (b) Upon the consummation of an Asset Sale, the Borrower shall apply an amount equal to 100% of the Net Cash Proceeds relating to such Asset Sale within 545 days (or such lesser number of days that may be applicable to the Net Cash Proceeds of such Asset Sale under any agreement governing Specified Secured Indebtedness) of receipt thereof either (i) to prepay Term Loans in accordance with Section 2.10(g) (provided that, if at the time of such prepayment, any portion of such Net Cash Proceeds is also required to be used to prepay, or to make an offer to prepay, any Specified Secured Indebtedness, then the Borrower shall only be required to prepay the Term Loans under this Section 2.10(b) with such Net Cash Proceeds equally and ratably with such Specified Secured Indebtedness); or (ii) to reinvest in Productive Assets (provided that this requirement shall be deemed satisfied if the Borrower or such Restricted Subsidiary by the end of such 545-day period has entered into a binding agreement under which it is contractually committed to reinvest in Productive Assets and such investment is   86 entered into), or (iii) a combination of prepayment and investment permitted by the foregoing clauses (i) and (ii). (c) If as a result of any fluctuation of Exchange Rates, on any Calculation Date, the Aggregate Multicurrency Revolving Credit Exposure would exceed the Total Multicurrency Revolving Credit Commitment, then the Borrower shall, within three Business Days following such Calculation Date, repay or prepay Multicurrency Revolving Credit Borrowings or Swingline Loans (or a combination thereof) and/or replace outstanding (or make such other arrangement with respect to) Multicurrency Letters of Credit such that the Aggregate Multicurrency Revolving Credit Exposure does not exceed the Total Multicurrency Revolving Credit Commitment. Borrower. required by Section 2.12. All prepayments of Borrowings under this Section 2.10 shall be subject to Section 2.15, but shall otherwise be without premium or penalty.   87 be allocated ratably among the Tranche C Term Loans, the Tranche D Term Loans, Tranche E Term Loans, Tranche F Term Loans, the Tranche G Term Loans and the Other Term Loans, if any, and shall be applied against the remaining scheduled installments of principal due in respect of the Tranche C Term Loans, the Tranche D Term Loans, the Tranche E Term Loans, the Tranche F Term Loans, the Tranche G Term Loans and the Other Term Loans as directed by the Borrower; provided that, if at the time of any prepayment pursuant to this Section 2.10 there shall be Term Borrowings of different Types or Eurodollar Term Borrowings with different Interest Periods, and if some but not all Term Lenders shall have accepted such mandatory prepayment, then the aggregate amount of such mandatory prepayment shall be allocated ratably to each outstanding Term Borrowing of the accepting Term Lenders. If no Term Lenders exercise the right to waive a given mandatory prepayment of the Term Loans pursuant to Section 2.10(f), then, with thereof before application to Term Loans that are Eurodollar Loans in a manner Fees”). (c) The Borrower agrees to pay (i) to each Dollar Revolving Credit and Multicurrency Revolving Credit Lender through the Agent, on the last Business the applicable Revolving Credit Commitment of such Lender shall be terminated as Pro Rata Percentage of the daily aggregate Dollar L/C Exposure or Multicurrency L/C Exposure, respectively (excluding the portion thereof   89 shorter period commencing with the Closing Date or ending with the applicable Revolving Credit Maturity Date or the date on which all Letters of Credit issued under the applicable Class have been canceled or have expired and the Revolving Credit Commitments of all Lenders of the applicable Class shall have been applicable Class comprised of Eurocurrency Loans pursuant to Section 2.12, and days. (d) The Borrower agrees to pay to the Agent, for the account of each Tranche F Term Lender, a ticking fee (a “Delayed Draw Ticking Fee”) equal to the sum of (i) the Applicable Rate with respect to Eurocurrency Tranche F Term Loans and (ii) 0.75% per annum on the daily amount of the outstanding Delayed Draw Tranche F Term Loan Commitment of such Tranche F Term Lender during the period from and including the date that is 31 days after the 2016 Effective Date through and including the earliest of (x) the Delayed Draw Funding Date, (y) the Delayed Draw Term Commitment Termination Date and (z) the date on which the Tranche F Term Loan Commitment of such Lender shall otherwise expire or be terminated in full. The Delayed Draw Ticking Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Delayed Draw Ticking Fees shall be payable quarterly in arrears and on the earlier to occur of the Delayed Draw Funding Date and the date on which the Delayed Draw Tranche F Term Loan Commitments shall otherwise expire or be terminated as provided herein. each Dollar Swingline Loan, shall bear interest at the Alternate Base Rate plus the Applicable Rate. (b)(i) The Loans comprising each Eurocurrency Borrowing, including each Alternative Currency Swingline Loans, shall bear interest at the Adjusted LIBO Rate. (ii) Each Foreign Base Rate Loan shall bear interest at a rate per annum equal to the rate set forth in the definition of the term “Foreign Base Rate” plus the Applicable Rate for ABR Revolving Loans in effect from time to time.   90 (a) of this Section. Payment or acceptance of the increased rates of interest provided for in this Section 2.12(c) is not a permitted alternative to timely payable on the date of such repayment or prepayment (except in the case of a prepayment of an ABR Revolving Loan or a Swingline Loan that is not made in connection with a termination of the Revolving Credit Commitments) and (iii) in with respect to Eurocurrency Loans denominated in Pounds shall, in each case, be Foreign Base Rate, Adjusted LIBO Rate, LIBO Rate or EURIBO Rate shall be manifest error. Borrowing: (1) (a) the Agent determines (which determination shall be conclusive absent manifest error) that deposits in the applicable currency in the principal amount of the Loans comprising such Borrowing are not generally available in the applicable interbank market; (2) (b) the Agent determines (which determination shall be conclusive absent the Adjusted LIBO Rate, the LIBO Rate or the EURIBO Rate, as applicable, for (3) (c) the Agent is advised by the Required Lenders (or, with respect to any Eurocurrency Multicurrency Revolving Borrowing, the Required Class Lenders calculated as though the Non-Extended Revolving Credit Lenders and the Extended   91 Revolving Credit Lenders are one Class) that the Adjusted LIBO Rate, the LIBO Rate or the EURIBO Rate, as applicable, for such Interest Period will not Eurocurrency Borrowing in the applicable currency pursuant to Section 2.03 or 2.05 shall be deemed to be a request for a Daily Rate Borrowing in such currency. (b) Effect of Benchmark Transition Event: (1) Benchmark Replacement. Notwithstanding anything to the contrary herein or in an Early Opt-in Election, as applicable, the Agent and the Borrower may amend this Agreement to replace the LIBO Rate or the EURIBO Rate with a Benchmark respect to an Early Opt-in Election will become effective with respect to any Class of Loans on the date that Lenders comprising the Required Lenders of such Class have delivered to the Agent written notice that such Required Lenders accept such amendment. No replacement of the LIBO Rate or the EURIBO Rate with a Benchmark Replacement pursuant to this Section 2.13(b) will occur prior to the (2) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Agent, in consultation with the Borrower, will have the right to make Benchmark Replacement Conforming Changes of any other party to this Agreement, other than the Borrower. (3) Notices; Standards for Decisions and Determinations. The Agent will promptly that may be made by the Agent or Lenders pursuant to this Section 2.13(b) decision to   92 (4) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of ABR Loans. During any Benchmark Unavailability Period, the component of ABR based upon the LIBO Rate or the EURIBO Rate will not be used in any determination of ABR. (5) Certain Defined Terms. As used in this Section 2.13(b): determining a rate of interest as a replacement to the LIBO Rate or the EURIBO Rate for syndicated credit facilities denominated in the applicable currency and LIBO Rate or the EURIBO Rate with an Unadjusted Benchmark Replacement for each or zero) that has been selected by the Agent and the Borrower giving due replacement of the LIBO Rate or the EURIBO Rate with the applicable Unadjusted the LIBO Rate or the EURIBO Rate with the applicable Unadjusted Benchmark currency at such time.   93 administrative matters) that the Agent, in consultation with the Borrower, with respect to the LIBO Rate or the EURIBO Rate: the LIBO Rate or the EURIBO Rate permanently or indefinitely ceases to provide the LIBO Rate or the EURIBO Rate; or therein. following events with respect to the LIBO Rate or the EURIBO Rate: administrator of the LIBO Rate or the EURIBO Rate announcing that such administrator has ceased or will cease to provide the LIBO Rate or the EURIBO provide the LIBO Rate or the EURIBO Rate; supervisor for the administrator of the LIBO Rate or the EURIBO Rate, the U.S. administrator for the LIBO Rate or the EURIBO Rate, a resolution authority with jurisdiction over the administrator for the LIBO Rate or the EURIBO Rate or a administrator for the LIBO Rate or the EURIBO Rate, which states that the administrator of the LIBO Rate or the EURIBO Rate has ceased or will cease to provide the LIBO Rate or the EURIBO Rate permanently or indefinitely, provided administrator that will continue to provide the LIBO Rate or the EURIBO Rate; or   94 supervisor for the administrator of the LIBO Rate or the EURIBO Rate announcing that the LIBO Rate or the EURIBO Rate is no longer representative. or the EURIBO Rate and solely to the extent that the LIBO Rate or the EURIBO Rate has not been replaced with a Benchmark Replacement, the period at such time, no Benchmark Replacement has replaced the LIBO Rate or the EURIBO Rate for all purposes hereunder in accordance with Section 2.13(b) and or the EURIBO Rate for all purposes hereunder pursuant to the Section 2.13(b). Lenders to the Agent (with a copy to the Borrower) that the Required Lenders have determined that syndicated credit facilities denominated in the applicable currency being executed at such time, or that include language similar to that contained in this Section 2.13(b), are being executed or amended, as applicable, or the EURIBO Rate, and   95 applicable, by the Agent of written notice of such election to the Borrower and Agent. successor thereto. Benchmark Replacement Adjustment. any other condition (other than Taxes) affecting this Agreement or Eurocurrency   96 Lender, the Issuing Bank or the Agent of making, continuing, converting to or maintaining any Eurocurrency Loan or increase the cost to any Lender, the Issuing Bank or the Agent of issuing or maintaining any Letter of Credit or sum received or receivable by such Lender, the Issuing Bank or the Agent Borrower will pay to such Lender, the Issuing Bank or the Agent, as the case may Issuing Bank or the Agent for such additional costs incurred or reduction suffered. reduction suffered. receipt thereof. thereof.   97 similar authority) of the United States or foreign financial regulatory authorities, regardless of the date adopted, issued, promulgated or implemented. (b) the conversion of any Eurocurrency Loan or the conversion of the Interest Period with respect to any Eurocurrency Loan other than on the last day of the Lender shall not include loss of profit or margin and shall be deemed to be the basis therefor and setting forth in reasonable detail the manner in which such amount or amounts was determined shall be delivered to the Borrower and shall be applicable law; provided that if an applicable law (as determined in the good in accordance with applicable law and, if such tax is an Indemnified Tax or an as necessary so that after making all such required deductions or withholdings (including such deductions or withholdings applicable to additional sums payable under this Section), the Agent, Lender or the Issuing Bank (as applicable) deductions or withholdings been made. If at any time a Loan Party is required by applicable law to make any deduction or withholding from any sum payable hereunder, such Loan Party shall promptly notify the relevant Lender, Agent or the Issuing Bank upon becoming aware of the same. In   98 addition, each Lender, Agent or the Issuing Bank shall promptly notify a Loan payable hereunder. of such payment or liability delivered to a Lender by the Agent shall be Agent. (f)(i) Any Lender or Issuing Bank that is entitled to an exemption from or reduction of withholding Tax with respect to payments under any Loan Document applicable law or as reasonably requested by the Borrower or the Agent, such   99 (ii) Without limiting the generality of the foregoing, any Lender or Issuing Agent, on or prior to the date on which such Lender or Issuing Bank becomes a party hereto, two duly signed, properly completed copies of whichever of the following is applicable: (A) in the case of a Lender or Issuing Bank that is not a Foreign Lender, IRS Form W-9;   100 (F) if a payment made to a Lender or Issuing Bank under any Loan Document would be subject to any withholding Taxes as a result of such Lender’s or Issuing Bank’s failure to comply with the requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), at the time determine that such Lender or Issuing Bank has or has not complied with such deduct and withhold from such payment, it being understood that, solely for purposes of this clause (F), “FATCA” shall include any amendments made to FATCA after the Second Restatement Date; or reduction. Issuing Bank   101 the Agent, such Lender, or the Issuing Bank in good faith in its sole Governmental Authority) to the Agent, such Lender or the Issuing Bank in the confidential) to such Loan Party or any other Person. Notwithstanding anything to the contrary in this paragraph (g), in no event will the Agent, any Lender or the Issuing Bank be required to pay any amount to any Loan Party pursuant to this paragraph (g) the payment of which would place the Agent, such Lender or the Issuing Bank, as applicable, in a less favorable net after-Tax position than never been paid. (i) For purposes of this Section 2.16, the term “applicable law” includes FATCA. otherwise) (i) with respect to payments of amounts denominated in Dollars, prior to 12:00 (noon), New York City time, and (ii) with respect to payments of amounts denominated in an Alternative Currency, prior to 9:00 a.m., New York City time, in each case on the date when due, in immediately available funds, such payments (other than (i) Issuing Bank Fees, which shall be paid directly to payable for the period of such extension. All payments   102 hereunder in respect of any Loan denominated in an Alternative Currency shall be made in such Alternative Currency, and all payments hereunder in respect of any Loan denominated in Dollars shall be made in Dollars. Unless otherwise agreed by the Borrower and each applicable Lender with respect to such payment, all other assignment of or sale of a participation in any of its Loans or L/C Borrower or any subsidiary thereof (as to which the provisions of this paragraph shall apply, except as otherwise contemplated by Section 2.09(e)). The Borrower interbank compensation.   103 are fully paid. is required to indemnify or pay any additional amount to any Lender or the Issuing Bank pursuant to Section 2.16, then such Lender or the Issuing Bank or booking its Loans or issuing Letters of Credit hereunder or to assign its affiliates, if, in the reasonable judgment of such Lender or the Issuing Bank, pursuant to Section 2.14 or 2.16, as applicable, in the future and (ii) would not subject such Lender or the Issuing Bank to any material unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the Issuing Bank in any material respect. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the Issuing Bank in connection with Section 2.14, (ii) the Borrower is required to indemnify or pay any additional amount to any Lender or the Issuing Bank or any Governmental Authority for the account of any Lender or the Issuing Bank pursuant to Section 2.16 or (iii) any and effort, upon notice to such Lender or the Issuing Bank and the Agent, replace such Lender or the Issuing Bank by requiring such Lender or the Issuing Bank to assign and delegate (and such Lender or the Issuing Bank shall be rights and obligations under this Agreement of the applicable Class to an outstanding principal of its Loans and L/C Disbursements of the applicable Class, accrued interest thereon, accrued fees and all other amounts payable to compensation under Section 2.14 or   104 such Lender to the Borrower through the Agent, any obligations of such Lender to make or continue Eurocurrency Loans or to convert ABR Borrowings to Eurocurrency Borrowings shall be suspended until such Lender notifies the Agent and the Lender (with a copy to the Agent), either convert all Eurocurrency Loans of such Lender to Daily Rate Loans, either on the last day of the Interest Period otherwise be disadvantageous to it. Lender agrees to make loans to the Borrower in Dollars and Alternative Currencies at any time and from time to time on and after the Closing Date and until the earlier of the Extended Revolving Credit Maturity Date and the termination of the Multicurrency Revolving Credit Commitments in accordance with will not result in (i) the aggregate principal amount of all Swingline Loans exceeding $25,000,000 (or the Alternative Currency Equivalent thereof) in the aggregate or (ii) the Aggregate Multicurrency Revolving Credit Exposure, after giving effect to any Swingline Loan, exceeding the Total Multicurrency Revolving Credit Commitment. Each Swingline Loan shall be in a principal amount that is an integral multiple of $100,000 and not less than $100,000, in the case of a Dollar Swingline Loans, or in such minimum and multiple amounts as the Swingline Lender shall reasonably specify with respect to any Alternative Currency, in the case of an Alternative Currency Swingline Loan. The Swingline Commitment may be terminated or reduced from time to time as provided herein. Within the foregoing limits, the Borrower may borrow, pay or prepay and reborrow Swingline Loans hereunder, subject to the terms, conditions and limitations set forth herein. (confirmed by fax), not later than (i) 12:00 (noon), New York City time, on the day of a proposed Dollar Swingline Loan or (ii) 12:00 (noon), New York City time, three Business Days   105 before a proposed Alternative Currency Swingline Loan. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount and currency of such Swingline Loan, the Interest Period for any requested Alternative Currency Swingline Loan and the wire transfer instructions for the account of the Borrower to which the proceeds of such Swingline Loan should be transferred. The Swingline Lender shall promptly make each Swingline Loan by wire transfer to the account specified by the Borrower in such request. in its Administrative Questionnaire. Any payment of a Alternative Currency Swingline Loan on a day other than the last day of the Interest Period therefor (d) Each Dollar Swingline Loan shall be an ABR Loan and, subject to the provisions of Section 2.12(c), shall bear interest at the rate provided for the ABR Revolving Loans as provided in Section 2.12(a). Each Alternative Currency Swingline Loan shall be a Eurocurrency Loan and, subject to the provisions of Section 2.12(c), shall bear interest as provided in Section 2.12(b); provided that any Alternative Currency Swingline Loan that cannot be made or continued as a Eurocurrency Loan by virtue of Section 2.02(d) shall be a Foreign Base Rate Loan. the Multicurrency Revolving Credit Commitments made pursuant to Section 2.06 which reduces the Total Multicurrency Revolving Credit Commitment to an amount less than the then current amount of the Swingline Commitment shall result in an automatic corresponding reduction of the Swingline Commitment such that the amount thereof equals the amount of the Revolving Credit Commitment, as so reduced, without any further action on the part of the Borrower, the Agent or the Swingline Lender. or a portion of the Swingline Loans outstanding; provided that any such participations shall be allocated ratably to each Multicurrency Revolving Credit Lender according to the Pro Rata Percentages of such Multicurrency Revolving Credit Lender. In order to effectuate the foregoing, on the date of such notice, all outstanding Multicurrency Swingline Loans shall be converted to Dollar Swingline Loans at the Exchange Rate in effect on such date. Such notice shall specify the aggregate amount of Swingline Loans in which the Multicurrency Revolving Credit Lenders will participate. The Agent will, promptly upon receipt of such notice, give notice to each Multicurrency Revolving Credit Lender, Loan or Loans. In furtherance of the foregoing, each Multicurrency Revolving Credit Lender hereby absolutely and unconditionally agrees, upon receipt of Lender, such Revolving Credit Lender’s Pro Rata Percentage of such Swingline Loan or Loans in   106 Dollars. Each Revolving Credit Lender acknowledges and agrees that its offset, abatement, withholding or reduction whatsoever. Each Multicurrency Section 2.04(a) with respect to Loans made by such Lender (and Section 2.04(a) shall apply, mutatis mutandis, to the payment obligations of the Lenders) and the Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph and thereafter payments in respect of such Swingline Loan shall be made in Dollars to the Agent the Borrower (or other party liable for obligations of the Borrower) of any Credit Lender, designate one or more Revolving Credit Lenders to act as the swingline lender under the terms of this Agreement. Any Revolving Credit Lender designated as the swingline lender pursuant to this paragraph (g) shall be Credit Lender. (h) On the Non-Extended Revolving Credit Maturity Date or on such earlier date on which the Non-Extended Multicurrency Revolving Credit Commitments are terminated in full, the participations in each Swingline Loan granted to and acquired by the Non-Extended Multicurrency Revolving Credit Lenders shall be reallocated to the Extended Multicurrency Revolving Credit Lenders in accordance with such Extended Multicurrency Revolving Credit Lenders’ respective Pro Rata Percentages (determined after giving effect to the termination of the Non-Extended Multicurrency Revolving Credit Commitments); provided that, in each would be satisfied as of the date of such reallocation. If, on the date on which the Non-Extended Multicurrency Revolving Credit Commitments are terminated, the conditions set forth in paragraphs (b), (c) and (d) of Section 4.01 would not be satisfied, then on the date of such termination, the Borrower shall, to the extent there are any Swingline Loans outstanding immediately prior to such termination, prepay such Swingline Loans, which prepayment shall be accompanied by accrued interest on the Swingline Loans being prepaid and any costs incurred by any Revolving Credit Lender in accordance with Section 2.15 of the Credit Agreement.   107 Section 2.06(a). Any Dollar Letter of Credit shall be denominated in Dollars, and any Multicurrency Letter of Credit shall be denominated in Dollars or an Alternative Currency. This Section shall not be construed to impose an obligation upon (i) the Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement or (ii) Credit Suisse AG or any of its Affiliates to issue documentary or “trade” Letters of Credit (as opposed to “standby” Letters of Credit). Notwithstanding any provision of this Agreement to the contrary, on the Second Restatement Date, all Existing Letters of Credit shall be deemed to be Dollar Letters of Credit issued under this Agreement as of the Second Restatement Date. of the beneficiary thereof, whether such Letter of Credit is to be a Dollar Letter of Credit or a Multicurrency Letter of Credit and such other information as shall be necessary to prepare such Letter of Credit. The Issuing Bank shall promptly (i) notify the Agent in writing of the amount and expiry date of each Letter of Credit issued by it and (ii) provide a copy of each such Letter of Credit (and any amendments, renewals or extensions thereof) to the Agent. A issuance, amendment, renewal or extension (x) in the case of any Dollar Letter of Credit, (A) the Dollar L/C Exposure shall not exceed $100,000,000 and (B) the aggregate Dollar Revolving Credit Exposure shall not exceed the Total Dollar Revolving Credit Commitment and (y) in the case of any Multicurrency Letter of Credit, (A) the Multicurrency L/C Exposure shall not exceed $25,000,000 and (B) the Aggregate Multicurrency Revolving Credit Exposure shall not exceed the Total Multicurrency Revolving Credit Commitment. The Issuing Bank shall promptly notify each Revolving Credit Lender of each applicable Class of the issuance, amendment, renewal, expiration or termination of any Letter of Credit thereunder and, upon request by such Revolving Credit Lender, furnish to such Lender details of such Letter of Credit and the amount of such Lender’s participation therein. the date that is five Business Days prior to the Extended Revolving Credit date; provided that a Letter of Credit may, upon the request of the Borrower, that is five Business Days prior to the Extended Revolving Credit Maturity Date) unless the Issuing Bank notifies the beneficiary thereof at least 30 days prior renewed.   108 (d) By the issuance of a Dollar Letter of Credit and without any further action to each Dollar Revolving Credit Lender, and each such Lender hereby acquires from the Issuing Bank, a participation in such Dollar Letter of Credit equal to such Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Dollar Letter of Credit, effective upon the issuance of such Dollar Letter of Credit. By the issuance of a Multicurrency Letter of Credit and Issuing Bank hereby grants to each Multicurrency Revolving Credit Lender, and Multicurrency Letter of Credit, payable in the applicable currency, equal to under such Multicurrency Letter of Credit, effective upon the issuance of such Dollar Revolving Credit Lender and each Multicurrency Revolving Credit Lender account of the Issuing Bank, such Lender’s Pro Rata Percentage of each Dollar L/C Disbursement or Multicurrency L/C Disbursement, as applicable, made by the Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.02(e). The participations provided for in this Section 2.23(d) and the reimbursements provided for in Section 2.23(e) shall be allocated ratably to each Revolving Credit Lender of the applicable Class according to the Pro Rata Percentages of each such Revolving Credit Lender. Each Revolving Credit Lender acknowledges and agrees that its obligation with concurrent notice to the Agent) an amount equal to such L/C Disbursement on or prior to the Business Day following the day on which the Borrower shall have received notice from the Issuing Bank that payment of such draft will be made. agreement or transaction;   109 Credit; and Borrower’s obligations hereunder. shall promptly give each applicable Revolving Credit Lender notice thereof.   110 amount if such amount were a Daily Rate Revolving Loan. Upon the acceptance of any appointment as the Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such successor shall the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder. At the time accrued and unpaid fees pursuant to Section 2.11(c)(ii). The acceptance of any appointment as the Issuing Bank hereunder by a successor Lender shall be to the Borrower and the Agent, and, from and after the effective date of such Credit. Collateral Agent, such deposits shall not bear interest. Interest   111 in such account shall (i) automatically be applied by the Agent to reimburse the or waived. (m)(i) On the Non-Extended Revolving Credit Maturity Date or on such earlier date on which the Non-Extended Dollar Revolving Credit Commitments are terminated in full, the participations in each Dollar Letter of Credit granted to and acquired by the Non-Extended Dollar Revolving Credit Lenders shall be reallocated to the Extended Dollar Revolving Credit Lenders in accordance with such Extended Dollar Revolving Credit Lenders’ respective Pro Rata Percentages (determined after giving effect to the termination of the Non-Extended Dollar Revolving Credit Commitments) and (ii) on the Non-Extended Revolving Credit Maturity Date or on such earlier date on which the Non-Extended Multicurrency Revolving Credit Commitments are terminated in full, the participations in each Multicurrency Letter of Credit granted to and acquired by the Non-Extended Multicurrency Revolving Credit Lenders shall be reallocated to the Extended Multicurrency Revolving Credit Lenders in accordance with such Extended Multicurrency Revolving Credit Lenders’ respective Pro Rata Percentages Multicurrency Revolving Credit Commitments); provided that, in each case, the satisfied as of the date of such reallocation. If, on the date on which the Non-Extended Dollar Revolving Credit Commitments or Non-Extended Multicurrency Revolving Credit Commitments, as the case may be, are terminated, the conditions then on the date of such termination, the Borrower shall deposit an amount in cash equal to the L/C Exposure attributable to the Revolving Credit Commitments terminated on such date in accordance with the provisions of Section 2.23(j).   112 Incremental Revolving Credit Commitments in amounts that would not cause the limitations set forth in clauses (iii) or (iv) of Section 2.24(c) to be exceeded, from one or more Incremental Term Lenders or Incremental Revolving $10,000,000), (ii) the date on which such Incremental Term Loan Commitments or Credit Commitments are to be Extended Dollar Revolving Credit Commitments, Extended Multicurrency Revolving Credit Commitments or commitments to make revolving loans with terms different from the Revolving Loans made pursuant to both such Classes (“Other Revolving Loans”). Incremental Term Lender. The Borrower and each Incremental Revolving Credit Assumption Agreement and such other documentation as the Agent shall reasonably specify to evidence the Incremental Revolving Credit Commitment of such Incremental Revolving Credit Lender. Each Incremental Term Loan Assumption Agreement and Incremental Revolving Credit Assumption Agreement shall specify the terms of the Incremental Term Loans or Incremental Revolving Loans, as applicable, to be made thereunder; provided that, without the prior written Loans shall be no earlier than the Latest Maturity Date with respect to any Term Loans and the final maturity date of any Other Revolving Loans shall be no earlier than the Latest Maturity Date with respect to Revolving Credit Commitments and (ii) the average life to maturity of any Other Term Loans shall be no shorter than the average life to maturity of any Class of Term Loans; and provided further that, if the initial yield on such Other Term Loans (as determined by the Agent to be equal to the sum of (x) the margin above the Adjusted LIBO Rate on such Other Term Loans (which shall be increased by the amount that any “LIBOR floor” applicable to such Other Term Loans on the date such Other Term Loans are made would exceed the Adjusted LIBO Rate (without giving effect to clause (a) in the definition thereof) that would be in effect   113 of (A) the margin then in effect for Eurocurrency Term Loans of any Class (which, with respect to the Term Loans of any such Class, shall be the sum of the Applicable Rate then in effect for such Eurocurrency Term Loans of such Eurocurrency Term Loans of such Class on the date such Other Term Loans are made would exceed the Adjusted LIBO Rate (without giving effect to clause (a) in the definition thereof) that would be in effect for a three-month Interest Period commencing on such date) plus (B) one-quarter of the amount of OID initially paid in respect of the Term Loans of such Class (the amount of such excess above Applicable Rate then in effect for each such affected Class of Term Loans shall of the Other Term Loans and (b) the Applicable Rate with respect to any Other Revolving Loans shall be equal to the Applicable Rate for the Revolving Loans; provided that the Applicable Rate of the Revolving Loans may be increased to equal the Applicable Rate for such Other Revolving Loans to satisfy the requirements of this clause (b). The other terms of the Incremental Term Loans or the Incremental Revolving Loans, as applicable, and the Incremental Loan Assumption Agreement or the Incremental Revolving Credit Assumption Agreement, as applicable, to the extent not consistent with the terms applicable to the Term Loans and Revolving Loans hereunder, shall otherwise be reasonably satisfactory to the Agent and, to the extent that such Incremental Term Loan Assumption Agreement or Incremental Revolving Credit Assumption Agreement, as applicable, contains any covenants, events of default, representations or warranties or other rights or provisions that place greater restrictions on Holdings, the Borrower or the Restricted Subsidiaries or are more favorable to the Lenders making such Other Term Loans or Other Revolving Loans, as applicable, the existing Lenders shall be entitled to the benefit of such rights and provisions so long as such Other Term Loans or Other Revolving Loans, as applicable, remain outstanding and such additional rights and provisions shall be deemed automatically incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein, without any further action required on the part of any Person effective as of the date of such Incremental Term Loan applicable. The Agent shall promptly notify each Lender as to the effectiveness of each Incremental Term Loan Assumption Agreement and Incremental Revolving Credit Assumption Agreement. Each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan Assumption Agreement or Incremental Revolving Credit Assumption Agreement, this Agreement shall be Revolving Credit Commitment, as applicable, evidenced thereby as provided for in   114 a Financial Officer of the Borrower, provided that if the proceeds thereof are being used to finance a Limited Condition Acquisition, then (x) the condition set forth in paragraph (c) of Section 4.01 shall be required to be satisfied as of the date on which the definitive documentation with respect to such Limited Condition Acquisition is entered into and (y) to the extent agreed by the applicable Incremental Term Lenders or Incremental Revolving Credit Lenders, (A) the representations and warranties referred to in paragraph (b) of Section 4.01 may be limited to the Specified Representations and (B) the Defaults and Events of Default referred to in paragraph (c) of Section 4.01 may be limited to those under paragraphs (a), (b), (f) and (g) of Article VII, (ii) the Agent shall have received legal opinions, board resolutions and other closing certificates and documentation consistent with those delivered on the Second Restatement Date, (iii) the Consolidated Net Leverage Ratio would be no greater than 7.25 to 1.00 and (iv) the Consolidated Secured Net Debt Ratio would be no greater than 5.00 to 1.00, in the case of each of clauses (iii) and (iv), after giving effect to such Incremental Term Loan Commitment or Incremental Revolving Credit Commitment and the Incremental Term Loans or Incremental Revolving Loans to be made thereunder and the application of the proceeds therefrom as if made and applied on such date (and, if such proceeds are being used to finance a Limited Condition Acquisition, with such determinations under clauses (iii) and (iv) above solely being made on the date on which the entered into). Borrowing of outstanding Term Loans of the applicable Class on a pro rata basis, and the Borrower agrees that Section 2.15 shall apply to any conversion of Eurocurrency Term Loans to ABR Term Loans reasonably required by the Agent to not Other Term Loans, the scheduled amortization percentages under Section 2.08(a) shall be deemed to apply to the aggregate principal amount of such Incremental Term Loans on the date such Loans are made and, in connection therewith, Section 2.08(a) may be amended as necessary to modify the amount of such amortization payments (solely to the extent that such amendment does not decrease the amount of any such payment that any existing Term Lender would have received prior to giving effect to such amendment) in order to provide for the appropriate ratable distribution of such amortization payments among the existing Term Lenders of the applicable Class and the Incremental Term Lenders of such Incremental Term Loans of such Class. respect to the Loans and/or Commitments of the   115 Lender, only with respect to such Lender’s Loans and/or Commitments of such allocation of the participation exposure with respect to any then existing or Revolving Credit Lenders of the Affected Class shall be made on a ratable basis as between the commitments of such new “Class” and the Commitments of the then existing Revolving Credit Lenders of such Affected Class and (B) the L/C Commitment and Swingline Commitment may not be extended without the prior written consent of the Issuing Bank or the Swingline Lender, as applicable. (d) In connection with any Loan Modification Offer with respect to any Class of Revolving Credit Commitments, the Borrower may, concurrently with or at any time following the effectiveness of such Loan Modification Offer, elect to replace any Revolving Credit Lender of the Affected Class that does not become an Accepting Lender with respect to such Loan Modification Offer (any such Lender, a “Non-Accepting Lender”), provided that, concurrently with such replacement by   116 date, to purchase for cash the Revolving Credit Commitments and Revolving Loans of the Affected Class held by such Non-Accepting Lender pursuant to an Agreement and to assume all obligations of the Non-Accepting Lender to be Section 9.04, (ii) the replacement Lender shall become an Accepting Lender with respect to the applicable Loan Modification Offer and (iii) the Borrower shall pay to such Non-Accepting Lender in same day funds on the day of such such Non-Accepting Lender by the Borrower hereunder to and including the date of termination, including, without limitation, payments due to such Non-Accepting payment which would have been due to such Non-Accepting Lender on the day of such replacement under Section 2.15 had the Loans of such Non-Accepting Lender Lender agrees that if the Agent or the Borrower, as the case may be, exercises its option hereunder, it shall promptly execute and deliver all agreements and Section 9.04. The Agent or the Borrower shall be entitled (but not obligated) to Non-Accepting Lender and any such agreement and/or documentation so executed by the Agent or the Borrower shall be effective for purposes of documenting an Refinancing Lender. Such Refinancing Facility Agreement shall set forth, with applicable: (i) the designation of such Refinancing Commitments and Refinancing Loans as a new “Class” of loans and/or commitments hereunder, (ii) the stated Refinancing   117 Loans of such Class; provided that such stated termination and maturity dates shall not be earlier than (x) the Maturity Date then in effect with respect to the applicable Class of Revolving Credit Commitments being so refinanced (in the (y) the Maturity Date then in effect with respect to the applicable Class of Term Loans being so refinanced (in the case of Refinancing Term Loan Commitments and Refinancing Term Loans), (iii) in the case of any Refinancing Term Loans, any amortization applicable thereto and the effect thereon of any prepayment of Commitment or Refinancing Loans of such Class, (vi) in the case of any Refinancing Term Loans, any original issue discount applicable thereto, (vii) the initial Interest Period or Interest Periods applicable to Refinancing Loans of such Class, (viii) any voluntary or mandatory commitment reduction or participate in any mandatory prepayment on a pro rata basis with the Term Loans, Lenders holding such Refinancing Term Loans than to the Lenders holding Term Loans) and any restrictions on the voluntary or mandatory reductions or (ix) in the case of any Refinancing Revolving Commitments, the Alternative Currencies, if any, available thereunder. Except as contemplated by the substantially the same as the Revolving Credit Commitments and Revolving Loans and other extensions of credit thereunder, and the terms of the Refinancing Term the terms of the Tranche C Term Loan Commitments and the Tranche C Term Loans. Date, (iii) in the case of any Refinancing Revolving Commitments, substantially of any Refinancing Term Loan Commitments, substantially   118 concurrently with the effectiveness thereof, the Borrower shall obtain Term Borrowings of any Class in an aggregate principal amount equal to the aggregate amount of such Refinancing Term Loan Commitments (less the aggregate amount of accrued and unpaid interest with respect to such outstanding Term Borrowings and any reasonable fees, premium and expenses relating to such refinancing) (and any such prepayment of Term Borrowings of any Class shall be applied to reduce the subsequent scheduled repayments of Term Borrowings of such Class to be made pursuant to Section 2.08 on a pro rata basis). Lender: Lenders, Required Revolving Lenders or Required Class Lenders have taken or may each Lender affected thereby if such amendment, waiver or modification would adversely affect such Defaulting Lender compared to other similarly affected Lenders; provided further that no amendment, waiver or modification that would require the consent of a Defaulting Lender under clause (A), (B) or (C) of the second proviso of Section 9.02(b) may be made without the consent of such Defaulting Lender; Defaulting Lender shall be reallocated among the non-Defaulting Lenders of the applicable Class in accordance with their respective Pro Rata Percentages but only to the extent (A) the sum of all non-Defaulting Lenders’ Dollar Revolving Credit Exposure or Multicurrency Revolving Credit Exposure, as applicable, plus such Defaulting Lender’s Swingline Exposure and L/C Exposure in respect of the applicable Class does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments of such Class and (B) the Revolving Credit Exposure of each non-Defaulting Lender after giving effect to such reallocation does not exceed the Revolving Credit Commitment of such non-Defaulting Lender; cash collateralize for the   119 benefit of each applicable Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s L/C Exposure (after giving effect to Exposure is outstanding; collateralized; and (d) so long as such Lender is a Defaulting Lender, (i) if such Lender is a Multicurrency Revolving Credit Lender, the Swingline Lender shall not be required to fund any Swingline Loan and (ii) no Issuing Bank shall be required to issue, amend or increase any Letter of Credit under the applicable Class of Revolving Credit Commitments, unless it is reasonably satisfied that the related covered by the Revolving Credit Commitments of the non-Defaulting Lenders of such Class and/or cash collateral will be provided by the Borrower in accordance with Section 2.28(c), and participating interests in any newly made Swingline such non-Defaulting Lenders in a manner consistent with Section 2.28(c) (and purchase at par such of the Loans of the other applicable Lenders (other than Swingline Loans), if any, as the Agent shall determine may be necessary in order and such Lender shall then cease to be a Defaulting Lender with respect to subsequent periods unless such Lender shall thereafter become a Defaulting Lender.   120 ARTICLE III Representations and Warranties of and for the fiscal years ended September 30, 2011, 2012 and 2013, reported on fiscal quarters ended December 31, 2013 and March 31, 2014, certified by its chief financial officer (collectively, the “Historical Financial Statements”). Such Historical Financial Statements present fairly, in all material respects, its consolidated Subsidiaries, as of such dates and for such periods in adjustments in the case of the statements referred to in clause (ii) above.   121 be expected to have, a Material Adverse Effect since September 30, 2013. property.   122 Effect. continuing or is   123 accumulated benefit obligations under all Plans (based on the assumptions used for purposes of Financial Accounting Standards Board Accounting Standards of such Plans, in the aggregate. concerning Holdings, the Borrower, the Subsidiaries, the Second Restatement Lender Presentation or otherwise prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Agent in connection with the Second Restatement Transactions on or before the Second Information was furnished to the Lenders (but taking into account supplements thereto made available to the Agent and the Lenders prior to the Second Restatement Date) and as of the Second Restatement Date, did not contain any were made. Second Restatement Transactions on or before the Second Restatement Date (the understood that actual results may vary materially from the Other Information), and (ii) as of the Second Restatement Date, have not been modified in any SECTION 3.13. Solvency. (a) Immediately after the consummation of the Second Restatement Transactions to occur on the Second Restatement Date (assuming for purposes hereof that the Specified Dividend is made, and the aggregate amount thereof is applied by Holdings to the payment of a distribution or dividend to its equityholders, in each case on the Second Restatement Date), (i) the fair value of the assets of the Loan Parties on a consolidated basis, at a fair contingent or otherwise, of the Loan Parties on a consolidated basis; (ii) the such debts and other   124 liabilities become absolute and matured; (iii) the Loan Parties on a conducted following the Second Restatement Date. industry practice. authorized and issued and are fully paid and non-assessable free and clear of   125 Subordinated Notes Documents. relating thereto, and (b) the USA PATRIOT Act and (c) Anti-Corruption Laws. No part of the proceeds of the Loans by any Loan Party will be used, directly or Foreign Corrupt Practices Act of 1977, as amended, or other Anti-Corruption Laws. None of the Borrower, any of its Subsidiaries or, to the knowledge of the Borrower, any director, officer or Affiliate of the Borrower or any of its Subsidiaries (i) is currently subject to any economic sanctions or trade embargoes administered or imposed by the Office of Foreign Assets Control of the Nations Security Council, the European Union, Her Majesty’s Treasury or any   126 other relevant Governmental Authority (collectively, “Sanctions”) or or territory that is currently the subject of Sanctions; and the Borrower will not directly or, to its knowledge, indirectly use the proceeds of the Loans hereunder, or lend, contribute or otherwise make available such proceeds to or for the benefit of any Person, for the purpose of financing or supporting, directly or indirectly, the activities of any Person that is currently the subject of Sanctions. ARTICLE IV Conditions conditions: SECTION 4.01. All Credit Events. On the date of each Borrowing (other than (i) a conversion or a continuation of a Borrowing or (ii) as set forth in Section 2.24(c) with respect to Incremental Term Loan Commitments and Incremental Revolving Credit Commitments), including each Borrowing of a Swingline Loan, and on the date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being called a “Credit Event”): (d) If such Credit Event constitutes the making of a Loan or the issuance or amendment of a Letter of Credit and after giving effect to such Credit Event, the aggregate Revolving Credit Exposure (excluding any Revolving Credit Exposure in respect of any Letter of Credit which has been cash collateralized in an amount equal to 103% or more of the maximum stated amount of such Letter of Credit) would exceed an amount equal to 25% of the aggregate Revolving Credit Commitments, the Consolidated Net Leverage Ratio as of the end of the most available (calculated on an actual basis as of the end of such fiscal quarter) shall not exceed the ratio set forth in Section 6.14 with respect to such fiscal quarter (regardless of whether or not compliance with such ratio was in fact required as of the end of such fiscal quarter pursuant to Section 6.14).   127 specified in paragraphs (b) and (c) and, if applicable, (d) of this Section 4.01. SECTION 4.02. Second Restatement Date. On the Second Restatement Date: received (i) from each party thereto either (A) a counterpart of the Second Amendment and Restatement Agreement signed on behalf of such party or signed a counterpart thereof and (ii) duly executed copies of such other by a Lender pursuant to Section 2.07. Lenders and the Issuing Bank on the Second Restatement Date, a favorable written counsel reasonably satisfactory to the Agent with respect to the other Loan Parties, in each case (A) dated the Second Restatement Date, (B) addressed to the Agent, the Lenders and the Issuing Bank and (C) in form and substance reasonably satisfactory to the Agent and covering such matters relating to the Loan Documents and the Second Restatement Transactions as the Agent shall reasonably request. prior to the Second Restatement Date, all documentation and other information Party, dated the Second Restatement Date and executed by its Secretary or Assistant Secretary or an Officer, which shall (A) certify the resolutions of and any other officers of such Loan Party authorized to sign the Loan Documents or partnership agreement, and (ii) a good standing certificate dated a recent date prior to the Second Restatement Date for each Loan Party from its jurisdiction of organization.   128 (e) Termination of Commitments. The Agent shall have received a notice of termination with respect to the Revolving A Credit Commitments (as defined in the First Restated Credit Agreement) pursuant to Section 2.06(b) of the First Restated Credit Agreement. (f) Representations and Warranties; No Defaults. At the time of and immediately after giving effect to the making of the Tranche D Term Loans and the application of the proceeds thereof, each of the conditions set forth in Section 4.01(b) and Section 4.01(c) shall be satisfied and the Agent shall have received a certificate dated as of the Second Restatement Effective Date and executed by a Financial Officer of the Borrower with respect to the foregoing. (g) Fees. The Lenders and the Agent shall have received all fees required to be Second Restatement Date (including fees and expenses required to be paid under the Second Amendment and Restatement Agreement). (h) Solvency Opinion. The Agent, on behalf of itself, the arrangers of the Tranche D Term Loans, the Lenders and the Issuing Bank, shall have received a solvency opinion in form and substance and from an independent investment bank or valuation firm reasonably satisfactory to the Agent to the effect that the Second Restatement Transactions, are solvent. The Agent shall notify the Borrower and the Lenders of the Second Restatement ARTICLE V Affirmative Covenants Lenders):   129 than 7.5% of Total Assets of the Borrower and the Restricted Subsidiaries at the a contribution basis) less than 7.5% of Consolidated EBITDA for the period to examination of such financial statements of any Default or Event of Default guidelines and may be provided by the Chief Financial Officer of the Borrower if such accounting firm generally is not providing such certificates); with respect thereto;   130 pursuant to this clause (g) or Section 5.11; provided, however, that so long as no Event of Default exists, Agent shall not request more than one (1) updated Perfection Certificate per fiscal year; be; statements of Holdings or (B) the Borrower’s or Holdings’, as applicable, Form Holdings, such information is accompanied by summary consolidating information (which may be included in notes to the financial statements) that explains in reasonable detail the material differences between the information relating to such information is in lieu of information required to be provided under clause (a) of this Section 5.01, such materials are accompanied by a report and opinion of independent public accountants of recognized national standing and reasonably   131 the Borrower shall deliver paper copies of such documents to the Agent for paper copies is given by the Agent and (ii) the Borrower shall notify (which may Agent. (i) other than with respect to Holdings’ or the Borrower’s existence, to the   132 Adverse Effect. applicable Incremental Term   133 Loan Assumption Agreement or Incremental Revolving Credit Assumption Agreement. or facilitating any activities, business or transaction of or with any Person that is currently subject to Sanctions, or in any country or territory that is the subject of Sanctions, except to the extent permitted for a Person required SECTION 5.11. Additional Collateral; Further Assurances. (a) (a) Subject to Second Restatement Date and (ii) any such Domestic Subsidiary that was an quarter of the Borrower has ceased to qualify as an Immaterial Subsidiary, to become a Loan Party within 20 Business Days (or such later date as agreed to by the Administrative Agent in its sole discretion) by executing a Joinder automatically become a Loan Party hereunder and thereupon shall have all of the the Guarantee and Collateral Agreement to the extent required by the terms Party which constitutes Collateral, on such terms as may be required pursuant to   134 Subsidiaries (or, in the case of (A) any Domestic Subsidiary treated as a disregarded entity for U.S. federal income tax purposes (any such Domestic Subsidiary, a “DRE”) that holds more than 65% of the Capital Stock of (x) a Foreign Subsidiary, (y) another DRE that holds more than 65% of the Capital Stock of a Foreign Subsidiary and/or (z) any Domestic Subsidiary described in clause (B), or (B) any Domestic Subsidiary all or substantially all the assets of which consist of Equity Interests of one or more (x) Foreign Subsidiaries and/or (y) other Domestic Subsidiaries described in this clause (B), 65% of the Section 1.956-2(c)(2)) of such Domestic Subsidiary) and (ii) 65% of the issued Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the Borrower or any Subsidiary that is a Loan Party to be subject at all times to a first priority perfected Lien in favor of the Agent pursuant to the terms and reasonably request; provided, however, this paragraph (b) shall not require the Borrower or any Subsidiary to grant a security interest in (i) any Equity Interests of a Subsidiary to the extent a pledge of such Equity Interests in favor of the Agent or to secure any debt securities of the Borrower or any regulation or (ii) the Equity Interests of any Unrestricted Subsidiary. Loan Party after the Second Restatement Date (other than assets constituting the Lien in favor of the Agent upon acquisition thereof), the Borrower will notify the Agent and the Lenders thereof, and, if requested by the Agent or the securing the Obligations and will take, and cause the Loan Parties that are   135 (e) If, at any time and from time to time after the Second Restatement Date, Domestic Restricted Subsidiaries that are not Loan Parties because they are Immaterial Subsidiaries comprise in the aggregate more than 7.5% of Total Assets as of the end of the most recently ended fiscal quarter of the Borrower and the Restricted Subsidiaries or more than 7.5% of Consolidated EBITDA of the Borrower Borrower, then the Borrower shall, not later than 45 days after the date by which financial statements for such quarter are required to be delivered pursuant to this Agreement (or such later date as agreed to by the Administrative Agent in its sole discretion), cause one or more such Domestic Restricted Subsidiaries to become additional Loan Parties (notwithstanding that such Domestic Restricted Subsidiaries are, individually, Immaterial Subsidiaries) such that the foregoing condition ceases to be true. practicable, and in any event within 90 days following the Second Restatement Date or such later date as the Agent agrees to in its reasonable discretion, the Borrower and each other Loan Party will deliver to the Agent, with respect to each Mortgaged Property as of the Second Restatement Date, each of the (i) an amendment to the Mortgage on such Mortgaged Property in form and (ii) evidence that a counterpart of the amendment to such Mortgage has been recorded or delivered to the appropriate Title Insurance Company subject to arrangements reasonably satisfactory to the Agent for recording in the place Secured Parties; (iii) a “date-down” endorsement to the existing title policy, which shall amend the description therein of the insured Mortgage to include the amendment of such Mortgage in form and substance reasonably satisfactory to the Agent; Agent; and (v) such other information, documentation, and certifications (including   136 ARTICLE VI Negative Covenants Indebtedness). indirectly: Indebtedness”, (y) the redemption, pursuant to the terms of thea special partial mandatory redemption feature thereof, of the 2016 Senior Subordinated Notes in an aggregate principal amount not to exceed $450,000,000 in the event that the DDC Acquisition (as defined in the Senior Subordinated Notes Indenture with respect to the 2016 Senior Subordinated Notes) isany such Indebtedness incurred in whole or in part to finance a specified transaction or   137 Permitted Investment and such transaction or Permitted Investment was not consummated on or prior to the date specified thereinextent required pursuant to the terms of such Indebtedness and (z) the purchase, defeasance or other acquisition of such Indebtedness purchased in anticipation of satisfying a due within one year of such purchase, defeasance or other acquisition) (each of the foregoing actions set forth in clauses (a), (b) and (c) being referred to as a “Restricted Payment”), except the foregoing provisions do not prohibit: Borrower or a Subsidiary of the Borrower or an employee stock ownership plan or to a trust established by the Borrower or any of its Subsidiaries for the benefit of their employees); clause (4) shall not exceed in any fiscal year the sum of (a) the lesser of (x)(i) the greater of (A) $50,000,000 and (B) 2.0% of the Consolidated EBITDA of the Borrower for the most recently ended period of four fiscal quarters for (b), plus (ii) any unused amounts under clause (x)(i) above (which unused amounts shall be deemed to constitute $93,650,000 as of the Amendment No. 4 Effective Date) from prior fiscal years, and (y) the greater of (i) $100,000,000, and (ii) 4.0% of the Consolidated EBITDA of the Borrower for the most recently ended period of four fiscal quarters for which financial statements have been delivered pursuant to Section 5.01(a) or (b), plus (b) the amount of any net cash proceeds received from the sale since the Closing Date of Equity Interests (other than Disqualified Capital Stock) to members of the Borrower’s management team that have not otherwise been applied to the payment of Restricted Payments pursuant to the terms of clause (2)   138 of this paragraph and the cash proceeds of any “key-man” life insurance policies which are used to make such redemptions or repurchases; provided further that corporate existence, Subsidiaries, in amounts required to pay such Taxes to the extent attributable to the income of such Unrestricted Subsidiaries; provided, however, that the amount of such payments in any fiscal year do not exceed the amount that the Borrower and its consolidated Subsidiaries would be required to pay in respect of Federal, state and local Taxes for such fiscal year were the Borrower and its consolidated Subsidiaries to pay such Taxes as a stand-alone taxpayer, Restricted Subsidiaries, and Transaction Costs; thereof; (7) additional Restricted Payments in an aggregate amount not to exceed the greater of (a) $75,000,000 and (b) 3.0% of the Consolidated EBITDA of the continuing;   139 (9) the Specified Dividend; provided that such Specified Dividend is declared and paid or otherwise consummated on or prior to the date that is 60 days after the Second Restatement Date; provided, further that a portion of the Specified Dividend in an amount not to exceed $500,000,000 may be made at any time after the Second Restatement Date solely to the extent that the proceeds thereof are used by Holdings to repurchase shares of its Common Stock; (10) Restricted Payments made on or after the Amendment No. 3 Effective Date in an aggregate amount not to exceed $1,500,000,000, solely to the extent the proceeds thereof are used by Holdings to repurchase shares of its Capital Stock or to pay dividends or other distributions on or in respect of its Capital Stock; provided that (i) any such Restricted Payment is declared and paid or otherwise consummated on or prior to December 31, 2018 and (ii) at the time any such Restricted Payment is declared and paid or otherwise consummated and after giving pro forma effect thereto, (A) no Revolving Loans or Swingline Loans are outstanding, (B) if the proceeds thereof are to be used by Holdings to repurchase shares of its Capital Stock, the Borrower’s Consolidated Secured Net Debt Ratio does not exceed 4.00 to 1.00 and (C) if the proceeds thereof are to be used by Holdings to pay dividends or other distributions on or in respect of its Capital Stock, the Borrower’s Consolidated Net Leverage Ratio does not exceed 6.75 to 1.00; provided, further that, subject to compliance with the immediately preceding clause (ii) (but not clause (i)), an amount not to exceed $500,000,000 may be made at any time after the Amendment No. 3 Effective Date (including after December 31, 2018) solely to the extent that the proceeds thereof are used by Holdings to repurchase shares of its Common Stock; provided, further, that on each date that any such Restricted Payment is made pursuant to this clause (10), Holdings and the Borrower shall be deemed to have made the representation and warranty set forth in Section 3.13(a) (with the words “Second Restatement Date” in each place set forth therein being deemed to refer to the date on which such Restricted Payment is made, the words “Second Restatement Transactions” therein being deemed to refer to such Restricted Payment and the parenthetical set forth therein being disregarded) on and as of such date; and result therefrom;   140 Ratio would not exceed 6.75 to 1.00; thereto, the aggregate Unrestricted Cash of all Loan Parties and their Restricted Subsidiaries on such date, as the same would be reflected on a shall be no less than $200,000,000. (2) if the fair market value of all assets sold or otherwise disposed in any Asset Sale exceeds $50,000,000, then at least 75% of the consideration received Asset Sale shall constitute cash or Cash Equivalents; provided that Designated Non-Cash Consideration received in respect of such disposition shall be deemed to constitute cash for purposes of this Section 6.03(2) so long as the aggregate fair market value of all such Designated Non-Cash Consideration, as determined by a Responsible Officer of the Borrower in good faith, taken together with all other Designated Non-Cash Consideration received pursuant to this Section 6.03(2) that is then outstanding, does not exceed $300,000,000 as of the date any such Designated Non-Cash Consideration is received, with the fair the time received and without giving effect to subsequent changes in value; (y) $50,000,000;[Intentionally Omitted.]; such Subsidiary owned by Holdings, the Borrower and all Restricted Subsidiaries[Intentionally Omitted.]; and   141 Capital Stock; (f) agreements existing on the Second Restatement Date to the extent and in the manner such agreements are in effect on the Second Restatement Date;   142 Entity; the Second Restatement Date or permitted to be issued or incurred under this Agreement; provided that any such restrictions are ordinary and customary with respect to the type of Indebtedness being incurred or Preferred Stock being issued (under the relevant circumstances); refinancings are, in the good faith judgment of the Borrower’s Board of Directors (evidenced by a Board Resolution) whose judgment shall be conclusively binding, not materially more restrictive with respect to such dividend and other Section 6.01. (a) such   143 intended to be created in favor of the Agent for the Secured Parties pursuant to the Collateral Documents; or (b) such Initial Lien is a Permitted Lien.   144 and apply to: (3) any agreement as in effect as of the Second Restatement Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) or by any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Second Restatement Date as determined in good faith by the Borrower; hereunder; Section 6.07; the Borrower; and   145 its Restricted Subsidiaries are engaged on the Second Restatement Date (which Senior Subordinated Notes;   146 its function as a holding company, including its liabilities hereunder, under the Senior Subordinated Notes Indentures and under any guaranty of Indebtedness permitted by Section 6.01, and pursuant to the Guarantee and Collateral Agreement and any other Loan Document or Senior Subordinated Notes Document. Leverage Ratio of the Borrower at the end of any fiscal quarter to exceed 7.25 to 1.00 (or, solely with respect to the first two fiscal quarters ending after the consummation of a Material Acquisition, 7.75 to 1.00) if the Aggregate any Letter of Credit which has been cash collateralized in an amount equal to 103% or more of the maximum stated amount of such Letter of Credit) outstanding as of the last day of such fiscal quarter exceeds an amount equal to 35% of the aggregate Revolving Credit Commitments as of such day. Notwithstanding anything to the contrary contained in Section 9.02, the case may be. ARTICLE VII Events of Default   147 (b) the Borrower shall fail to pay (i) any interest on any Loan or L/C Disbursement, any Fee or any other fee payable under this Agreement or any other thereof or waiver thereunder, or in connection with the borrowings or issuances of Letters of Credit, or in any report or other certificate, financial statement any Loan Document, shall prove to have been materially incorrect when made or deemed made and shall remain material at the time tested; 5.03 (with respect to Holdings and the Borrower only) and 5.09 and in Article VI) in this Agreement or any Loan Document;   148 together would constitute a Significant Subsidiary) or for a substantial part of benefit of creditors; invalid or unenforceable; outstanding   149 with respect to the Revolving Loans or Swingline Loans to be immediately due and payable in accordance with this Agreement as a result of a Financial Covenant Event of Default and only for so long as such declaration has not been rescinded; be validly subordinated to the Obligations as provided in the Senior Subordinated Notes Documents or the agreements evidencing such other Subordinated Indebtedness, as applicable (or any Loan Party or an Affiliate of any Loan Party shall assert the foregoing); or Commitments and the L/C Commitments, and thereupon the Commitments and the L/C Commitments shall terminate immediately and (ii) declare the Loans and L/C described in clause (f) or (g) of this Article, the Commitments and the L/C Commitments shall automatically terminate and the principal of the Loans and L/C Exposure then outstanding, together with accrued interest thereon and all fees any kind, all of which are hereby waived by the Borrower, without further action of the Agent or any Lender; provided, further, that upon the occurrence of a Financial Covenant Event of Default, and at any time thereafter during the Revolving Lenders, shall, by notice to the Borrower, take any of the following actions, at the same or different times: (x) terminate the Revolving Credit Commitments, the L/C Commitment and the Swingline Commitment, and thereupon the Revolving Credit Commitments, the L/C Commitment and the Swingline Commitment shall terminate immediately and (y) declare the Revolving Loans, L/C Exposure and Swingline Exposure then outstanding to be due and payable in whole (or in the Revolving Loans, L/C Exposure and Swingline Exposure so declared to be due obligations relating thereto of the Borrower accrued hereunder, shall become due and the   150 Required Lenders (or in the event of a Financial Covenant Event of Default, the Required Revolving Lenders) shall, exercise any rights and remedies provided to ARTICLE VIII The Agent discretionary powers, except, subject to the last paragraph of this Article VIII, discretionary rights and powers expressly contemplated by the Loan representation made in or   151 additional Swingline   152 resignation. Upon the acceptance of its appointment as Agent hereunder by a as Agent. Lender   153 benefit of, the Agent and each Joint Lead Arranger and their respective warranty and covenant as may be agreed in writing between the Agent, in its sole Agent and each Joint Lead Arranger and their respective Affiliates, and not, for Party, that: (i) none of the Agent or any Joint Lead Arranger or any of their or thereto), (ii) the Person making the investment decision on behalf of such (iii) the Person   154 Obligations), (iv) the Person making the investment decision on behalf of such The Agent and each Joint Lead Arranger hereby informs the Lenders that each such ARTICLE IX Miscellaneous The Tower at Erieview Cleveland, OH 44114 Attention: Sean P. MaroneyMike Lisman Facsimile No: (216) 706-2572   155 Eleven Madison Avenue for the recipient. securities) (each,   156 a “Public Lender”). Holdings and the Borrower hereby agree that (1) all Borrower the Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Holdings and the Borrower or their securities for purposes of foreign, United States Federal and state Investor”; and (4) the Agent shall be entitled to treat any Borrower Materials the Platform not marked as “Public Investor”. Notwithstanding the foregoing, the Holdings or the Borrower notifies the Agent promptly that any such document securities laws. WILFUL MISCONDUCT.   157   158 the rights or duties of the Agent hereunder without the prior written consent of the Agent. The Agent may without the consent of any Lender also amend the Commitment Schedule to reflect assignments entered into pursuant to Section 9.04. Upon the request of the Borrower, the Agent shall enter into such amendments (and may do so without the consent of any Lender, other agent, or the Issuing Bank) to the Collateral Documents (or enter into additional Collateral Documents or intercreditor agreements) to secure on a pari passu basis or junior basis, as the case may be, on terms reasonably acceptable to the Agent all obligations (including obligations comparable in scope to the Obligations) of all Specified Secured Indebtedness having the same lien priority as, or a junior lien priority to, the Obligations permitted to be incurred under Section 6.01 and secured by Liens permitted to be incurred under Section 6.06 on all or a portion of the Collateral. Notwithstanding the foregoing, with the consent of Holdings, the Borrower and the Required Lenders, this Agreement (including Sections 2.09(c), 2.10(g), 2.17(c) and 2.17(f)) may be amended (x) to allow the Borrower to prepay Loans of a Class on a non-pro rata basis in connection with offers made to all the Lenders of such Class pursuant to procedures approved by the Agent and (y) to allow the Borrower to make loan modification offers to all the Lenders of one or more Classes of Loans that, if accepted, would (A) allow the maturity and scheduled amortization of the Loans of the accepting Lenders to to the Loans and Commitments of the accepting Lenders and (C) treat the modified Loans and Commitments of the accepting Lenders as a new Class of Loans and   159 Loan Documents.   160 changes that are not adverse to any Lender; provided, however, that no such amendment shall become effective until the fifth Business Day after it has been posted to the Lenders, and then only if the Required Lenders have not objected in writing thereto within such five Business Day period. the Loan Documents. Expenses reimbursable by the Borrower under this Section include, without limiting the generality of the foregoing, subject to any other applicable provision of any Loan Document, reasonable documented out-of-pocket Indemnitee harmless from, any   161 but excluding Taxes (other than Taxes referred to in Section 9.03(a)) which shall be dealt with exclusively pursuant to Section 2.16 above, incurred by or or any other transactions contemplated hereby (including the use of proceeds of any Loan or Letter of Credit), (ii) any Environmental Liability related in any severally agrees to pay to the Agent such Lender’s pro rata share (based upon its share of the sum of the Aggregate Revolving Credit Exposure, Term Loans and unused Commitments, determined as of the time that the applicable unreimbursed to any third party. No Indemnitee referred to in paragraph (b) above shall be thereby, except to the extent such use was found by a final, nonappealable judgment of a court of competent jurisdiction to arise from such Indemnitee’s willful misconduct, bad faith or gross negligence. demand therefor.   162 the Agent to the Borrower on or prior to the Second Restatement Date and reasonably acceptable to the Borrower; (C) the Swingline Lender, in the case of any assignment of a Multicurrency Revolving Credit Commitment, and the Issuing Bank, in the case of any assignment of a Revolving Credit Commitment. to such assignment is   163 minimum amount of at least $5,000,000 in the case of Revolving Credit Commitments or Revolving Loans and in a minimum amount of at least of $1,000,000 in the case of Term Loan Commitments or Term Loans unless each of the Borrower and the Agent otherwise consent; form or other documentation (such as Form W-8BEN or W-8ECI or any successor form applicable law and to the extent a Lender would be required to provide such form or other documentation under Section 2.16(f) supporting such assignee’s position that no withholding by any Borrower or the Agent for United States income tax payable by such assignee in respect of amounts received by it hereunder is required. to the benefits of Sections 2.14, 2.15, 2.16 (subject to the requirements of Section 2.16) and 9.03 with respect to facts and circumstances occurring on or Lender of rights   164 this Section. notice. such Assignment and Assumption; (iv) such assignee confirms   165 recent financial statements referred to in Section 3.04(a) or delivered pursuant (c)(i) Any Lender may, without the consent of the Borrower, the Agent, the Swingline Lender or the Issuing Bank, sell participations to one or more banks Commitment or the Loans owing to it); provided that (A) such Lender’s such obligations, (C) the Borrower, the Agent, and the other Lenders shall Lender’s rights and obligations under this Agreement and (D) no such Participant broker-dealer” within the meaning of Regulation X. Any agreement or instrument Section 2.17(b) as though it were a Lender. Each Lender that sells a Borrower, shall maintain at one of its offices a register for the recordation of the names and addresses of each Participant and the principal amounts of, and stated interest on, each participant’s interest in the Loans or other Participant Register to the Borrower, the Agent or any other Person (including interest in the Commitments, Loans or other Obligations) except to the extent that such disclosure is necessary to establish that such Commitments, Loans or other Obligations are in registered form under Section 5f.103-1(c) of the United   166   167 and Restatement Agreement. OF THE   168 Document shall affect any right that the Agent, the Issuing Bank or any Lender such court. requested) directed to it at its address   169 for notices as provided for in Section 9.01. Nothing in this Agreement or any SECTION. (including self-regulatory), governmental or administrative authority, (c) to under this Agreement, including, without limitation, any SPC, (ii) any pledgee the Borrower. In addition, the Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to the CUSIP Service CUSIP numbers with respect to the credit facilities hereunder and to market data providers to the Agent in connection with the administration and management of this Agreement and the Loan Documents. For the purposes of this Section,   170 “Information” means all information received from any Loan Party relating to the Loan Parties or their businesses, or the Transactions other than any such information that is available to the Agent, the Issuing Bank or any Lender on a hereby acknowledges that (a) it is not relying on or looking to any Margin Stock respect of such   171 expressly set forth herein, supersede the First Restated Credit Agreement from and after the Second Restatement Date with respect to the transactions hereunder and with respect to the Loans and Letters of Credit outstanding under the First Restated Credit Agreement as of the Second Restatement Date. The parties hereto and reborrowing or termination of the Obligations under the First Restated Credit Agreement and the other Loan Documents as in effect prior to the Second SECTION 9.19. Conversion of Currencies. (a) If, for the purpose of obtaining (b) The obligations of each party in respect of any sum due to any other party Creditor against such loss. The obligations of the Loan Parties contained in this Section 9.19 shall survive the termination of this Agreement and the SECTION 9.20. Absence of Fiduciary Relationship. Each of Holdings, the Borrower and the other Loan Parties hereby acknowledges and agrees that (a) no fiduciary, advisory or agency relationship between the Loan Parties and their respective Affiliates, on the   172 one hand, and the Agent, the Joint Lead Arrangers, the Lenders, the Issuing Bank and their respective Affiliates, on the other hand, is intended to be or has Agreement and the other Loan Documents, (b) the Agent, the Joint Lead Arrangers, the Lenders and the Issuing Bank, on the one hand, and the Loan Parties, on the indirectly give rise to, nor do any of the Loan Parties rely on, any advisory or fiduciary duty on the part of the Agent, the Joint Lead Arrangers, the Lenders or the Issuing Bank, (c) it is capable of evaluating and understanding, and contemplated by this Agreement and the other Loan Documents, (d) it has been advised that each of the Agent, the Joint Lead Arrangers, the Lenders, the Issuing Bank and their respective Affiliates is engaged in a broad range of Loan Parties and that none of the Agent, the Joint Lead Arrangers, the Lenders, the Issuing Bank or their respective Affiliates has any obligation to disclose such interests and transactions to any of the Loan Parties by virtue of any fiduciary, advisory or agency relationship, and (e) none of the Agent, the Joint Lead Arrangers, the Lenders or the Issuing Bank has any obligation to the Loan Parties or their Affiliates with respect to the transactions contemplated by the Loan Documents, except those obligations expressly set forth therein or in any other express writing executed and delivered by the Agent, such Joint Lead Arranger, such Lender or such Issuing Bank, on the one hand, and such Loan Party or such Affiliate, on the other hand. SECTION 9.21. Acknowledgement and Consent to Bail-In of EEA Financial be bound by: applicable:   173 Authority. forth below: Financial Institution. Liechtenstein and Norway. Financial Institution. Legislation Schedule. SECTION 9.22. Acknowledgement Regarding Any Supported QFCs. To the extent that and Title II of the Dodd-Frank Wall   174 QFC Credit Support. meaning: applicable.   175

Exhibit 10.1 EXECUTION COPY STOCK REPURCHASE AGREEMENT THIS STOCK REPURCHASE AGREEMENT (this “Agreement”) is made as of September 13, 2006, between TESSCO Technologies Incorporated, a Delaware corporation (the “Buyer”), and Advisory Research Microcap Value Fund, L.P., an Illinois limited WHEREAS, the Seller is the record and beneficial holder of 629,575 shares of WHEREAS, the Buyer desires to purchase the Shares from the Seller and the Seller desires to sell the Shares to the Buyer; ARTICLE I PURCHASE AND SALE OF SHARES; CONSIDERATION 1.1.          Purchase and Sale of Shares. liens, claims, charges, assessments, options, security interests and other legal and equitable encumbrances. pay to the Seller $15,739,375. ARTICLE II CLOSING 2.1.          Closing Date.  The purchase and sale of the Shares (the “Closing”) shall take place on September 13, 2006 at the offices of the Buyer at 11126 McCormick Road, Hunt Valley, Maryland 21031-1494 or at such other location or locations as the Buyer and the Seller may agree.  The time and date on which the agrees that it shall take all necessary actions and make all necessary arrangements to transfer the Shares to the Company directly, or to or through a designated agent of the Company, so that the transfer of the Shares to the Company is properly reflected on the books and records of the Company.  At the Closing, the Buyer shall pay to the Seller the cash amount set forth in Section 1.2, by wire transfer of immediately available funds to an account designated by Seller. ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PARTIES 3.1.          Representations, Warranties and Agreements of the Seller. (A)  AUTHORITY OF SELLER.  THE SELLER HAS THE REQUISITE LIMITED PARTNERSHIP POWER AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM THIS AGREEMENT.  THIS AGREEMENT HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY SELLER AND IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE SELLER ENFORCEABLE IN ACCORDANCE WITH ITS TERMS. (B)  NO CONFLICT.  NEITHER THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY NOR COMPLIANCE WITH OR FULFILLMENT OF THE TERMS, CONDITIONS AND PROVISIONS HEREOF WILL CONFLICT WITH, RESULT IN A BREACH OF THE TERMS, CONDITIONS OR PROVISIONS OF, OR CONSTITUTE A DEFAULT, AN EVENT OF DEFAULT OR AN EVENT CREATING RIGHTS OF ACCELERATION, TERMINATION OR CANCELLATION OR A LOSS OF RIGHTS UNDER, OR RESULT IN THE CREATION OR IMPOSITION OF ANY ENCUMBRANCE UPON ANY OF THE SHARES, UNDER (A) THE CERTIFICATE OF LIMITED PARTNERSHIP OR LIMITED PARTNERSHIP AGREEMENT OF THE SELLER, (B) ANY MATERIAL NOTE, INSTRUMENT, AGREEMENT, MORTGAGE, LEASE, OBLIGATION TO WHICH THE SELLER IS A PARTY OR THE SHARES ARE SUBJECT OR BY WHICH THE SELLER IS BOUND, (C) ANY COURT ORDER TO WHICH THE SELLER IS A PARTY OR ANY OF THE SHARES ARE SUBJECT OR BY WHICH THE SELLER IS BOUND, OR (D) ANY REQUIREMENTS OF LAWS, RULES OR REGULATIONS AFFECTING THE SELLER OR THE SHARES OR OTHERWISE APPLICABLE TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. (C)  TITLE TO SHARES.  THE SELLER REPRESENTS AND WARRANTS TO THE BUYER THAT THE SELLER IS THE SOLE RECORD AND BENEFICIAL OWNER OF THE SHARES, FREE AND CLEAR OF ALL ENCUMBRANCES, AND THAT THE DELIVERY AND/OR RELEASE, AS APPLICABLE, OF THE SHARES TO THE BUYER PURSUANT TO THIS AGREEMENT WILL TRANSFER AND CONVEY GOOD AND VALID TITLE THERETO TO THE BUYER, FREE AND CLEAR OF ALL ENCUMBRANCES.  THE SELLER REPRESENTS AND WARRANTS TO THE BUYER THAT THE SHARES CONSTITUTE ALL OF THE EQUITY INTERESTS OF THE BUYER OWNED BY THE SELLER. (D)  ECONOMIC RISK; SOPHISTICATION.  (I)  THE SELLER REPRESENTS AND WARRANTS THAT IT HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT IT IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROPOSED SALE OF THE SHARES TO THE BUYER AND THAT IT HAS MADE AN INDEPENDENT DECISION TO SELL THE SHARES TO BUYER BASED ON THE SELLER’S KNOWLEDGE ABOUT THE BUYER AND ITS BUSINESS AND OTHER INFORMATION AVAILABLE TO THE SELLER, WHICH IT HAS DETERMINED IS ADEQUATE FOR THAT PURPOSE.  THE SELLER REPRESENTS AND WARRANTS THAT IT (A) HAS NOT RELIED ON ANY INFORMATION (IN ANY FORM, WHETHER WRITTEN OR ORAL) FURNISHED BY BUYER OR ON BEHALF OF THE BUYER IN MAKING THAT DECISION, OR (B) REQUESTED ANY SUCH INFORMATION FROM THE BUYER WHICH THE BUYER HAS NOT FURNISHED TO THE SELLER. (II)  THE SELLER REPRESENTS, WARRANTS, ACKNOWLEDGES AND AGREES THAT THE BUYER AND ITS AFFILIATES, OFFICERS AND DIRECTORS,  MAY POSSESS MATERIAL NON-PUBLIC INFORMATION NOT KNOWN TO THE SELLER REGARDING OR RELATING TO THE BUYER, INCLUDING, BUT NOT LIMITED TO, INFORMATION CONCERNING THE BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, PROSPECTS OR RESTRUCTURING PLANS OF THE BUYER, AND THE SELLER REPRESENTS, WARRANTS, ACKNOWLEDGES AND AGREES THAT THE SELLER HAS NOT REQUESTED ANY SUCH INFORMATION AND AGREES THAT NEITHER THE BUYER NOR ITS AFFILIATES, OFFICERS OR DIRECTORS SHALL HAVE ANY LIABILITY WHATSOEVER WITH RESPECT TO THE NONDISCLOSURE OF ANY SUCH INFORMATION, WHETHER BEFORE OR AFTER THE DATE OF THIS LETTER. 2 (E)  VALUE OF THE SHARES.  THE SELLER ACKNOWLEDGES AND CONFIRMS THAT IT IS AWARE THAT (I) THE BUYER HAS REPORTED IMPROVEMENTS IN ITS SALES TO COMMERCIAL AND GOVERNMENT CUSTOMERS OVER THE PAST NINE QUARTERS AND THAT THE SELLER ACHIEVED RECORD OPERATING PROFITABILITY IN THE FISCAL QUARTER ENDED JUNE 25, 2006, AND (II) THE CLOSING SALE PRICE OF THE BUYER’S COMMON STOCK HAS INCREASED FROM $13.08 PER SHARE AT SEPTEMBER 30, 2005 TO $24.03 PER SHARE AT SEPTEMBER 8, 2006. THE SELLER FURTHER ACKNOWLEDGES AND CONFIRMS THAT IT IS AWARE THAT FUTURE CHANGES AND DEVELOPMENTS IN (A) THE BUYER’S BUSINESS AND FINANCIAL CONDITION AND OPERATING RESULTS, (B) THE INDUSTRIES IN WHICH THE BUYER COMPETES AND (C) OVERALL MARKET AND ECONOMIC CONDITIONS, MAY CONTINUE TO HAVE A FAVORABLE IMPACT ON THE VALUE OF THE COMMON STOCK AFTER THE SALE BY THE SELLER OF THE SHARES TO THE BUYER PURSUANT TO THIS AGREEMENT. (F)  THE SELLER REPRESENTS AND WARRANTS THAT THEY ARE NOT RELYING ON ANY REPRESENTATION OR WARRANTY BY THE BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. 3.2.          Representations, Warranties and Agreements of the Buyer. (A)  AUTHORITY OF BUYER.  THE BUYER HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM THIS AGREEMENT.  THIS AGREEMENT HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY THE BUYER AND IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE BUYER ENFORCEABLE IN ACCORDANCE WITH ITS TERMS. ACCELERATION, TERMINATION OR CANCELLATION OR A LOSS OF RIGHTS UNDER (A) THE CERTIFICATE OF INCORPORATION OR BY-LAWS OF THE BUYER, (B) ANY MATERIAL NOTE, INSTRUMENT, AGREEMENT, MORTGAGE, LEASE, LICENSE, FRANCHISE, PERMIT OR OTHER AUTHORIZATION, RIGHT, RESTRICTION OR OBLIGATION TO WHICH THE BUYER IS A PARTY OR BY WHICH THE BUYER IS BOUND, (C) ANY COURT ORDER TO WHICH THE BUYER IS A PARTY OR BY WHICH THE BUYER IS BOUND, OR (D) ANY REQUIREMENTS OF LAWS, RULES OR REGULATIONS AFFECTING THE BUYER OR OTHERWISE APPLICABLE TO THE TRANSACTIONS ARTICLE IV MUTUAL RELEASES 4.1           Seller Release.  The Seller, and anyone claiming through it or on its behalf, as the case may be, agrees to irrevocably and unconditionally release, waive and forever discharge the Buyer and its respective Affiliates (as hereinafter defined), officers, directors, stockholders and employees and past, present or future Affiliated Persons (as hereinafter defined) from, and covenants not to sue the Buyer Released Parties (as hereinafter defined) with equity, whether now known or unknown, that such Seller now has, has ever had, or Buyer, arising from or related to the purchase by the Buyer of the Shares from the Sellers as contemplated by this Agreement. 3 4.2           Buyer Release.  The Buyer, and anyone claiming through it or on release, waive and forever discharge the Seller and its respective Affiliates, officers, directors, partners and employees and past, present or future Affiliated Persons from, and covenants not to sue the Seller Released Parties (as hereinafter defined) with respect to, any and all actions, causes of action, claims, demands, rights, remedies, expenses and liabilities of whatever kind or character, at law or in equity, whether now known or unknown, that such Seller now has, has ever had, or may ever have against any of the Seller Released Parties with respect to the Seller, arising from or related to the sale by the Seller of the Shares to the Buyer as contemplated by this Agreement. 4.3           Definitions.  As used in this Article IV, the terms set forth (a)           “Affiliates” shall mean an entity or other business organization control with Buyer, as the case may be. (b)           “Affiliated Persons” shall mean such entity’s directors, partners, members, officers, managers, shareholders, principals, administrators, other management personnel, employees or similar persons; provided, that “Affiliated Persons” shall only include individuals and not legal entities. (c)           “Buyer Released Parties” shall mean the Buyer and its Affiliates and Affiliated Persons. (d)           “Seller Released Parties” shall mean the Seller and its Affiliates and Affiliated Persons. ARTICLE V MISCELLANEOUS 5.1.          Confidentiality.  The Seller agrees that he will treat in required by law, the Seller agrees that it shall not disclose the terms or the nature of this Agreement or the transactions or consents being effected hereby.  Seller acknowledges that Buyer may disclose the terms or nature of this Agreement or the transaction or consents being effected hereby. shall inure to the benefit of, the parties hereto, their legal representatives, heirs, executors, administrators, successors, assigns and transferees. 5.4.          Counterparts.  This Agreement may be executed in two counterparts, shall constitute one and the same instrument; and shall become binding when both counterparts have been signed by the parties hereto and delivered to both of the parties hereto. 5.5.          Amendment.  This Agreement may not be amended, modified or 4 5.6.          Entire Agreement.  This Agreement constitutes the entire agreement 5.7.          Severability.  Wherever possible, each provision hereof shall be be unreasonable. 5.8.          Third Parties.  Except as set forth in Article IV, nothing party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person or entity that is not a party hereto or a successor or permitted assign of such a party. 5 TESSCO TECHNOLOGIES INCORPORATED               By: /s/ David M. Young     Name: David M. Young     Title:               ADVISORY RESEARCH MICROCAP VALUE FUND, L.P.         By: ADVISORY RESEARCH, INC.               By:     Name: David Heller     Title: Chairman   6

Explanations of vote Oral explanations of vote (ET) Over the years, the scope of European Union consumer protection policy has developed very much to reflect changes in people's needs and expectations. Above all, owing to the rapid development of e-commerce, the cross-border dimension of consumer markets in the European Union has grown significantly, making it even more important to have consumer protection and, specifically, high-level consumer protection. In my opinion, stronger supervision of the market and mechanisms of enforcement, and their effective and comprehensive implementation, are essential for increasing consumer confidence. Therefore, I supported the adoption of the report, and I supported its proposals for change. Madam President, I supported this report. Effective consumer enforcement policy is central to the functioning of the single market. We need to have a real and well-functioning internal market with a high level of consumer protection, which, unfortunately, is not the case today. We have the legislation in place, but it is not enforced properly in the Member States. Most importantly, our consumers do not feel safe because they do not know the rules and, in many cases, the compensation mechanisms are not working in the way they should. The Commission should increase its efforts, ensuring that Member States apply directives correctly and that citizens are informed about their rights and, most importantly, that they are able to exercise those rights in practice. (LT) Rapporteur, ladies and gentlemen, I definitely agree with this initiative. In particular, I agree with the strengthening of the SOLVIT network and the broadening of its activities. No expense should be spared in having information about this European structure's activities and opportunities spread in the national media, on the Internet or on television programmes. However, I can tell you all that there are double standards, the legislation is not applied in a uniform manner and there are even different penalties for the same activities. Thank you, that is exactly what I wanted to underline. (IT) Mr President, ladies and gentlemen, I voted in favour of the Buşoi report because I believe that the service provided by SOLVIT is of fundamental importance in terms of a clear and transparent link between the institutions, citizens and businesses, which is one of the cornerstones of the European Union. SOLVIT has proven to be an important tool for resolving the problems of citizens and businesses that want to make full use of the possibilities offered by the internal market. Many countries in the European Union still have barriers in their national legislation, which must be removed. I therefore feel that we should support the allocation of further funds, the recruitment of further specialised staff and improvement of the visibility of this service, including at local authority level, where it could be very useful. (CS) As the shadow rapporteur, I would like to thank all Members for the fact that our report on the SOLVIT network has been passed by Parliament with such an absolute majority. It gives a clear signal to the Council and the Commission to take our recommendations seriously, which should ensure that this useful instrument for citizens and entrepreneurs is better exploited. All that is required is for entrepreneurs and citizens actually to know about this instrument. I would like to believe that next year, the Commission will present Parliament with a fully-fledged annual report where the public will learn about complaints concerning the denial of rights that are otherwise supposed to be guaranteed by European legislation. (PL) Madam President, I would like to give reasons for the way I voted on Mrs de Brún's report. Thank you very much for drawing up this document. Having requirements for the transport of animals means that we are not only protecting animals but, above all, that we are caring for the safety and health of people. I would like to express support for measures intended to prolong the transitional regime and, as a result, to end the problem of rabies in the European Union. Of course, we should be careful and reasonable on the question of the free flow of pets in the Union, and should also take into account the opinions of experts from research institutes. (CS) I voted for an extension of the transitional period during which some states can apply exemptions, because these states have undertaken not to apply in the future for a further extension of exemptions in relation to veterinary conditions. I understand the concerns of Ireland, Malta, Sweden and the United Kingdom, because they have stricter requirements regarding documentation for pets travelling with their owners to their home countries. The main risks are rabies, echinococcosis and diseases transmitted by ticks. It must be said, of course, that the inconsistency of allowing some states to have a transitional period is something we must eliminate in the future and that it is essential for us to act jointly and to have harmonised legislation. (DE) Madam President, on the one hand, I can understand it being in the interests of the individual Member States to insist on an extension of the special arrangements in connection with the import of pets. On the other, however, we must always be careful to ensure that the expenditure is proportional to the benefits. In this case, we have not managed to do that to a satisfactory extent. This is why I have abstained from voting. What we particularly need is, on the one hand, suitably effective external protection with regard to imports within the European Union, but also, increasingly, on the other hand, harmonisation within the European Union, because that is also in the interests of consumers who, after a certain point, can get rather lost if different conditions apply to importing into country A than to importing into country B. Madam President, I voted against the proposal, mainly because I come from the United Kingdom. I think we have good laws in place to deal with this already and we do not want the threat of rabies hitting our island. I am also rather perplexed as to why this proposal only refers to dogs, cats and ferrets, and I would also make the observation that a certain Screaming Lord Sutch proposed this 25 years ago and he must be looking down very pleased today. But then, many of my electors in the West Midlands of the United Kingdom will think that many of the policies coming from this House are Monster Raving Loony policies. Madam President, it is a pleasure to see you back in the chair. We occasionally get these messages coming out of the Commission that the EU is doing enough. It should do less, but do it better, concentrate on the really big things. And then we have all these motions on things like what pets we are allowed to take where. I think there is an issue of proportionality here is there not? Countries have different national conditions. Our country is an island without land borders and we are perfectly capable of reaching sensible proportionate bilateral or multilateral agreements with each other. Do we really think that we would be better off creating a new administrative bureaucracy in the hands of the same geniuses who brought us the common agricultural policy, the common fisheries policy, the unaudited budgets and all of the rest of the apparatus of acquired EU law? Surely this is something that could be left to the Member States. (ET) The objective of the Schengen area is freedom of movement. It is illogical that many holders of long-stay visas have considerably less freedom of movement in the Schengen area than those who have short-term visas. The Union's Visa Code should take effect in a month's time, although, as the analysis of the actions taken by Member States on long-stay visas and the awarding of residence permits shows, various versions and implementations are in place, with the consequence that citizens' fundamental rights have been violated. With the help of the Commission's proposals, practical problems and delays with the awarding of residency permits would be avoided, which - as I have mentioned - have thus far been observed in many Member States. This is a very pressing matter: the Visa Code should be coming into effect very soon, and I supported the proposals in the report. (CS) I have supported this regulation, which will facilitate the movement of persons with long-stay visas in the Schengen area. It is logical that students, research workers and entrepreneurs from third countries should have the right to move around the entire Union if they have acquired a visa in any Member State. However, I would like to appeal again to other countries to show solidarity with the Czech Republic, which is fighting in vain against the introduction of visa requirements by Canada. This amounts to an unprecedented disparity between citizens of the European Union. Canada is now considering the introduction of visas for other countries, for example, Hungary, and we cannot take this lying down. It is the over-generous and therefore tempting conditions for asylum seekers that are to blame for this. They literally provoke abuse of the system. Canada has promised to amend them, but is doing nothing. I would like to apologise for again taking the opportunity to draw attention to this issue. (HU) As we heard during the debate, the proposal is to facilitate travel within the European Union for third-country nationals holding a long-stay D visa issued by a Member State. This is to provide a solution to situations when, for one reason or another, some Member States are unable or unwilling to issue a residence permit for third-country nationals in time, or they do not apply the framework provided by the Schengen regulations properly. The Hungarian Fidesz delegation abstained from final voting on this law because so far, Hungary has been able to transpose legislation correctly, there were no problems, and by using the opportunities provided by Schengen, we were able to provide this more efficiently. At the same time, we would like to emphasise that it is in the interest of Hungarian minorities living as third-country nationals in the neighbourhood of the European Union to be able to reside legally in EU Member State territories without any excessive administrative burdens. This requires laws both at Community and Member State level which do not counteract each other but reinforce our objectives. Madam President, there are a lot of good things in this report but I simply cannot support paragraph 35 which calls for the introduction of a common consolidated corporate tax base (CCCTB). One of the things we are told about CCCTB is that it will be more efficient and that it will simplify matters. But, given that, as it now stands, companies can opt in or opt out, we would end up with 28 tax bases instead of the current 27, and that is hardly simplification. Also, as it is currently proposed, CCCTB would mean the redistribution of European profits across the EU, so a country like my own, Ireland, which exports a lot of what it produces, would be penalised because the profits, of course, would be at the point of sale. It does seem a little bit strange since at the core of the EU, we have the free movement of goods, so therefore we would end up, if we use CCCTB, by penalising exporting countries. Finally, I also believe that its introduction would damage Europe's capacity to attract foreign direct investment, because the rules as such would not apply to the Member State in which it was located but would be by some reference to a complicated formula which can only be calculated in retrospect, so I believe that would certainly damage our capacity to attract foreign direct investment. (PL) Madam President, at the outset, I would like to thank my colleague for preparing this report, a report which is significant for economic growth. I fully endorse the author's observations and remarks about introducing and enforcing Community law in the Member States. An efficiently functioning single internal market is an indispensable element of a stable economy, something which is very much needed in times of crisis. Effective use of the potential of this market depends on effective cooperation between the institutions at national and European level. Reducing the administrative burden, efficient communication between the appropriate offices, simplification of procedures and harmonisation of legislation will result in the rapid and effective transposition of directives in the Member States. Furthermore, publication of current data and effectively informing citizens and business people about their rights and the situation in the market will help improve the market's function and will improve transparency of its principles, ensuring equal conditions for competition. (LT) Madam President, rapporteur, ladies and gentlemen, I agree with the initiative and trust that it can help people and companies at national level. However, without clear and strictly regulated monitoring of the situation of the internal market and legal system, I doubt whether it will be possible to effectively save these market players, regardless of their size and the services used. Strict penalties must be laid down if, following an analysis, obvious violations are found. Practices absolutely must be observed when investigating complaints at international level and to lay down criteria. Unfortunately, the sad statistics in my state show that in eight out of ten international cases currently being investigated, State institutions or courts are found to have acted improperly. Therefore, I think that without the clear regulation of penalties, it will be impossible to achieve the desired result. I would like attention to be drawn to this. (ET) In order to create a stable and innovative economic environment, it is absolutely necessary to have a properly working internal market. The internal market will not work properly, however, unless the provisions of the Union affecting its operation are adopted by all its Member States. Their adoption can, in turn, only be successful if the parliaments of the Member States are involved in the process of adopting the legislation. Their adoption is also essential from the point of view of parliamentary supervision. Since these positions were also reflected in the report, I wholeheartedly supported the adoption of the report. (CS) Parliament has, as expected, approved all three reports on the functioning of the internal market. In the case of the report of Countess von Thun Und Hohenstein, however, the Socialists and the Greens have taken exception to the proposal for the performance of regular checks into the functioning of the internal market. They argue that it would damage the agreed social and environmental standards. We all know, however, that these standards come at a price, and we also know that they make possible a higher quality of life in the European Union. The left have not explained in today's debate why they are so afraid of this value being quantified. I have voted in favour of everything. Written explanations of vote The Commission's proposal relates to the allocation of the financial intermediation services indirectly measured (FISIM) for the establishment of the gross national income (GNI) of the Member States used for the purposes of the European Union's budget and its own resources. The FISIM represent a part of the product of financial institutions which does not come from direct sales of services at a fixed price, but rather by charging an interest rate on the loans which is higher than that applied to deposits. The Commission proposes to proceed to the allocation of FISIM for the establishment of GNI and considers that this should be effected retroactively from 1 January 2005, the date of the entry into force of Regulation (EC) No 1889/2002. However, the proposed retroactive implementation from 1 January 2005 poses problems for the precise extent of this retroactivity. Therefore, we agree with the rapporteur's position, advocating that the allocation of the FISIM for establishing the GNI should not begin until 1 January 2010. This ensures that the allocation of the FISIM is properly carried out from 2010, resulting in a more accurate calculation of the GNI. The allocation of financial intermediation services indirectly measured (FISIM) for the establishment of the gross national income (GNI) of Member States used for the purposes of the European Union's budget and its own resources is an old issue, and one that should have been implemented in 2005. However, the need to test this method in order to assess its accuracy and gauge whether it has actually been providing reliable results for the correct assessment of the economic activity in question has delayed its implementation. I agree that the implementation of this method should not have any retroactive effect, so as to avoid conflict between Member States and possible legal action. Using the Globalisation Adjustment Fund as a useful instrument to tackle the consequences of the economic and financial crisis is a very worthy initiative that makes a practical response in terms of financial aid. It is important to point out that mobilisation of this fund should be an incentive for redeploying redundant workers. I hope that the requests of other countries, such as Italy, which need to ask for intervention of this special fund to support employees of those companies that are paying the price of the crisis and which are forced to make cuts, are also upheld. In this regard, I would nevertheless like to ask the Commission for more flexibility in assessing admissibility criteria for the fund, which should also be activated in the case of structural problems in small and medium-sized local industrial zones. The European Globalisation Adjustment Fund (EGF) was set up to provide additional assistance to workers affected by the consequences of major changes in the structure of international trade. The remit of the EGF was increased for potential recipients nominated from 1 May 2009, so that it now includes, and correctly so, assistance to workers made redundant as a direct result of the global financial and economic crisis. I support the present proposal to mobilise the sum of EUR 6 199 341 to assist Germany, in response to the German request made on 13 August 2009, with the intention of providing assistance to workers made redundant within the Karmann Group, an automotive firm. In 2008, the three institutions confirmed the importance of guaranteeing that there would be a quick procedure to approve decisions to mobilise the fund, with the aim of being able to help people within a useful time period. Seven months were required to adopt this decision. I hope that the procedure to activate the Solidarity Fund will be undertaken more quickly, in order to make it possible to confront calamitous situations which require an immediate response, such as the recent tragic case of Madeira. The German Karmann Group, once a prosperous and competitive firm, has been grappling with the crisis in the automotive sector and has filed for bankruptcy, having recently undergone a partial purchase by Volkswagen. The mobilisation of EUR 6 199 341 from the European Globalisation Adjustment Fund is needed to support and assist 1 793 redundant workers from that group. According to the Commission, the eligibility criteria for the mobilisation of this fund have been met, which means that the European Union is fully justified in quickly assisting workers who are experiencing difficulties. I hope that this difficult period in the lives of the redundant workers will allow them to improve their abilities and qualifications, and that these improvements will allow them to be reintegrated into the labour market swiftly. The European Globalisation Adjustment Fund (EGF) was set up to provide additional assistance to workers made redundant as a consequence of significant changes in the structure of international trade. In this way, solutions are being sought for their reintegration into the labour market. The interinstitutional agreement of 17 May 2006 allows the mobilisation of the EGF within the annual ceiling of EUR 500 million. The present proposal relates to the mobilisation of a total sum of EUR 6 199 341 from the EGF to assist Germany, with the intention of providing assistance to workers made redundant within the Karmann Group, an automotive firm. According to Article 6 of the EGF regulations, we must ensure that this fund supports the individual reintegration of workers made redundant in new firms. The EGF is not a replacement for actions that are the responsibility of firms under national legislation or collective agreements, nor does it finance the restructuring of firms or sectors. It needs to be emphasised again that, within the context of mobilising the EGF, the Commission must not systematically transfer subsidies for payments from the European Social Fund, as the EGF was created as a specifically separate instrument, with its own objectives and prerogatives. The requests for action by this fund have been successful. This instance involved responding to a request for assistance by Germany as a result of redundancies in the car industry, within the Karmann Group. Before saying anything else, it is important to note that this fund can only partially alleviate some of the consequences of the serious economic and financial crisis, in view of the imposed budgetary restrictions (which limit it to EUR 500 million per year) and the restrictive eligibility criteria with which it operates. It has already been some time since the number of workers made redundant as a result of the so-called 'restructurings' significantly exceeded the initial estimates of the Commission regarding the number of workers who would come to benefit from the fund. What is needed is a clear break with the neoliberal policies that are causing an economic and social disaster within the countries of the European Union before our very eyes. Obviously, responses to this disaster also need to be more than merely palliative. Neither can we omit to point out the injustice of a regulation which benefits countries with higher incomes to a greater extent, particularly those with higher levels of salaries and unemployment support. We emphasise the urgent need for a real plan to support the production and creation of jobs with rights in the countries of the European Union. I am very pleased that the European Parliament has today decided to grant EUR 6.2 million in assistance to workers made redundant from the automotive supplier Karmann. The European Union is thus contributing 65% of the EUR 9 million available in total. These funds are to be used to offer around 1 800 people additional re-education and training measures to enable them to find work again as quickly as possible. This is a tangible contribution by the European Union to assisting people during the crisis. By doing this, the EU is showing very clearly that it is willing and able to provide support even to individuals in crisis situations. It is important now that the money is made available smoothly and immediately to enable these people to return to the labour market quickly. However, in addition to this individual assistance for the workers affected, the European Union also needs to take additional measures to deal with the effects of the financial crisis. Globalisation in the sense of the division of labour at international level (sharing of prosperity) is appropriate and important. However, the Commission, the European Parliament and the Member States must work harder to promote fair competitive conditions in their international economic relations in order to avoid disadvantaging individual countries or sectors. in writing. - This proposal on behalf of the mobilisation of EGAF for German workers - as well as the proposal from the Lithuanian refrigeration sector - was to be among the first beneficiaries of the fund in 2010. Both are worthy applications. I welcome the new Commission's commitment to continuing this fund which provides people with a 'hand up' as opposed to a 'hand out' following redundancy. My own constituency has benefited from this fund and I hope it continues to do so in future The global downturn has severely reduced the demand for luxury items and even though this makes the current troubles of the motor car industry understandable, it makes it no less saddening. The situation in Germany is particularly difficult due to sheer numbers; 2 476 redundancies are concentrated in the same area, around the same industry. It is my hope that the EUR 6.199 million will help produce a successful way out of the crisis for the workers, their families and the area The EU is an area of solidarity, and the European Globalisation Adjustment Fund (EGF) is a part of that. This support is essential for helping the unemployed and victims of relocations that occur in a globalised context. An increasing number of companies are relocating, taking advantage of reduced labour costs in various countries, particularly China and India, often to the detriment of countries that respect workers' rights. The EGF is aimed at helping workers who are victims of the relocation of companies, and it is fundamental in helping them have access to new employment in the future. The EGF has already been used in the past by other EU countries, particularly Portugal and Spain, so we should now grant this aid to Germany. I voted in favour of the report on the mobilisation of the European Globalisation Adjustment Fund. In this instance, Germany requested support in connection with redundancies in the automotive industry - specifically in the Karmann Group. In this connection, it is important to mention that the money from the fund is used for the reintegration into the labour market of individual workers who have been made redundant and not to compensate for any necessary restructuring measures for companies or sectors. Out of solidarity with our neighbouring country and with the workers, the money that is, unfortunately, made necessary by continuing globalisation and the economic and financial crisis caused by speculators on both sides of the Atlantic, should, in my opinion, be made available immediately. I voted in favour of the European Parliament resolution on the mobilisation of the EGF to support the 2 476 people made redundant in Germany's automotive industry. The period of unemployment will be used by the German authorities for a broad upgrading of skills levels, not only with regard to vocational training and higher education, but also to allow migrant and low-skilled workers to achieve basic skills to help them become reintegrated into the labour market. At European level, we are facing in the automotive manufacturing industry similar situations in Sweden, where 2 258 workers have been made redundant, in Austria, where 774 redundancies have been made in companies manufacturing motor vehicles, trailers and semi-trailers, and in Belgium, where the industry has made more than 2 500 employees redundant. Throughout Europe, more than 8 000 jobs will be lost due to restructuring of the automotive manufacturing industry. The financial assistance offered to redundant workers should be made available as quickly and efficiently as possible. However, this is a short-term measure which will not resolve the problem of disappearing jobs. The EU needs a strong industrial policy in the automotive manufacturing industry in order to keep existing jobs and even create new ones. Today, we voted on three applications for assistance from the European Globalisation Adjustment Fund. I supported all three applications, since I believe that the assistance provided by this fund is particularly needed by our people at this time. In May 2009, the European Commission allowed deviation from the provisions of the regulation in exceptional circumstances and taking into account the situation that has come about during the economic and financial crisis allowed assistance to be targeted at the unemployed. I am very sorry that some Member States where unemployment is particularly high, and the level of poverty is very high, were unable to apply for assistance on time and benefit from the opportunities provided by this fund and to offer assistance to the unemployed. I think that the European Commission should also explain whether the assistance provided from this fund is being used effectively and whether this assistance is bringing real added value to the people for whom it is intended. I voted for this report since financial aid from the European Globalisation Adjustment Fund (EGF) will help redundant workers to return to and integrate into the labour market. During the financial and economic crisis, the level of unemployment in Lithuania grew significantly over 12 months, and it is therefore necessary to adapt to the effects of the crisis and ensure at least temporary financial assistance in order to provide jobs for the redundant workers of the company Snaigė. In this case, we are not talking about a few workers made redundant by the company, but about a huge number of people, around 651 workers, in the 25-54 age group. I am pleased that the long awaited vote on the allocation of temporary financial assistance took place today, as this sensitive matter concerning the Lithuanian company and its redundant workers was delayed and some of the workers of the company in question lost their jobs as far back as November 2008. I hope that the funds approved by today's vote will be allocated purposefully and effectively. One of the characteristics of the European Globalisation Adjustment Fund is that it seeks to promote the entrepreneurial spirit. This promotion must be understood by the European institutions and national governments as a crucial element in confronting the challenges facing the European productive sector. I recognise that public action should take place not only through this form of promotion but also, and crucially, by removing artificial and bureaucratic obstacles to entrepreneurial activity. There is still much to be done in this respect. It is right that there should be measures seeking to test, reallocate and retrain those who have become unemployed as a result of globalisation, for example, the workers in the Lithuanian refrigeration sector, particularly in the company AB Snaigand two of its suppliers. However, it is no less right that there should be measures that, by preserving justice and healthy competition, seek to strengthen companies and their workforces in the context of an economy that is open and increasingly competitive. Today's resolution that the European Union supports the use of the European Globalisation Adjustment Fund with three reports, of which two deal with Lithuania and one with Germany, is to be welcomed in every way, and shows concretely that the European Union can directly alleviate the situation of people who have been made redundant, and that it can help with their retraining. In Estonia, over 30 000 people in the building sector have lost their jobs in the last eighteen months, and I would therefore call on the Estonian Government and the Ministry of Social Affairs to ask boldly for help from European Union funds, which were envisaged for this type of situation. It is worth noting that although today, Germany and Lithuania received support, according to Eurostat data, unemployment is highest in Spain, Latvia and Estonia, which might also think about how the European Union could give them direct help. Rapporteur, ladies and gentlemen, I welcome this initiative to support company workers who have suffered from the globalisation process. I support it wholeheartedly and am pleased that in this instance, people in Lithuania will receive aid. In general, I believe that this fund's total should be increased several times over, by reducing allocations elsewhere. I am convinced that such a fund must also cover company owners. Often, they suffer so much that later, they are unable to get back on their feet and start a new business. In many cases, company owners suffer more than their workers: to take risks while doing business, to create jobs and to pay taxes, they put up not only their shares, but their personal property as well. Therefore, it would be beneficial if - taking each case individually - we were to examine the possibility of also providing assistance to company owners, who have suffered from globalisation and the global economic crisis. I am pleased that today, we had a vote on the allocation of funds from the European Globalisation Adjustment Fund (EGF), with the aim of earmarking EUR 1 118 893 in financial assistance for workers made redundant from 128 companies in the construction sector in Lithuania. The construction sector in Lithuania is going through tough times, since there has been a huge decline in construction demand due to the financial and economic crisis, and in the recession, it is very difficult for Lithuanian citizens to obtain loans to build or purchase a home. I voted for this report, since this EU financial assistance will help people who have become victims of globalisation to find work and return to the labour market and will help them to escape the grip of the recession. Therefore, in this situation, we must show solidarity with the workers who have been made redundant precisely because of changes in the global economy and the reduction in jobs in certain sectors caused by the financial crisis. The fact that more and more European countries have sought the mobilisation of the European Globalisation Adjustment Fund (EGF) makes it clear that the effects of this phenomenon have been felt by all sides, justifying in itself the name which has been given to the fund. Whilst globalisation has been shown to be beneficial at a global level, it is nevertheless necessary to pay attention to the occasions where, due to its effects, the less competitive sectors are affected. One such case is that of the Lithuanian construction sector. The fact that the fund is a prompt, specific and time-limited form of assistance requires all political decision makers, business leaders and workers to develop new ways of restoring lost competitiveness and accessing new markets. Otherwise, assistance such as that of the EGF will be merely palliative and will end up being shown to be insufficient. The European Union must use all measures at its disposal to react to the consequences of the global economic and financial crisis, and within this context, the EGF can play a crucial role in aiding the reintegration of workers who have been made redundant. The interinstitutional agreement of 17 May 2006 allows the mobilisation of the EGF within the annual ceiling of EUR 500 million. The present proposal relates to the mobilisation of a total sum of EUR 1 118 893 from the EGF to assist Lithuania, with the aim of supporting the workers made redundant in the 128 firms operating in the civil construction sector. The requests for action by this Fund have been successful. This instance involved responding to a request for assistance by Lithuania as a result of the redundancies that have occurred at 128 firms active in the civil construction sector. What is needed is a clear break with the neoliberal policies that are causing an economic and social disaster within the countries of the European Union before our very eyes. Responses to this disaster also need to be more than mere palliatives. Neither can we omit to point out the injustice of a regulation which benefits countries with higher incomes to a greater extent, particularly those with higher levels of salaries and unemployment support. This support is essential for helping the unemployed and victims of relocations that occur in a globalised context. In this particular case, the aim is to help those made redundant by more than 120 companies in the civil construction sector that were forced to close their doors due to the great crisis affecting the sector. The European Globalisation Adjustment Fund (EGF) is aimed at helping all those affected by the consequences of major structural changes in the patterns of global trade and to assist in their reintegration into the labour market. The EGF has already been used in the past by other EU countries, particularly Portugal and Spain, so we should now grant this aid to Lithuania. In September 2009, Lithuania submitted a request for assistance to use the European Globalisation Adjustment Fund (EGF) in connection with the redundancies which were made in 128 firms in the civil construction sector. I voted for the European Parliament Resolution on the mobilisation of the EGF for building construction in Lithuania. I believe that an eco-efficient economy and construction of energy-efficient buildings can help bring about economic recovery in the EU. It is estimated that these sectors can create around 2 million jobs across Europe by 2020. In 2006, there were approximately 2.9 million firms operating in the construction sector, generating EUR 510 billion and providing jobs for 14.1 million people at EU-27 level. As a result of the economic and financial crisis, during the first and second quarters of 2009, the volume of activity in the construction sector in Lithuania fell by 42.81% and 48.04% respectively, compared with the early part of 2008. This is having an adverse impact on Lithuania at a time when it has one of highest unemployment rates in the EU. The construction sector has been particularly affected, accounting for the loss of nearly 10% of jobs in Lithuania in 2008 alone. I wholeheartedly support this initiative and am voting in favour of the assistance for construction company workers, who have suffered from the current global crisis and the globalisation process. I am sure that all of us are more than a little guilty in being unable to stop the bubble inflated by estate agents and construction organisations. It was clear that it would lead to a crisis. The duty of politicians is to serve the people and prevent misfortune. Therefore, in voting for this project, I propose and ask for the financial assistance to be increased, since EUR 1 one million is only a drop in the ocean for the hundreds of companies that have suffered and which employ tens of thousands of workers. Speaking to people who work in precisely such companies, I have heard that people no longer believe in either their own state or the European Union. Thus, by increasing this type of assistance, we would improve the image of the European Union itself and strengthen faith in the national states. in writing. - I fully support the two reports by Reimer Böge that have been adopted by Parliament on financial support for redundant workers in Lithuania from the European Globalisation Adjustment Fund, and I am grateful to other colleagues who supported them. Unfortunately, I was late for this vote because on my way to the plenary chamber, the lift was not working. Both reports - on the situation in the construction sector and on the company Snaig- represent the most acute unemployment cases in Lithuania. The EU financial support will alleviate the hardships Lithuanian workers are facing. The construction sector is one of the hardest hit in Lithuania. Now more than a hundred companies have been forced into bankruptcy. The EUR 1.1 million will target almost 1 000 workers in this highly sensitive and hard-hit sector. The situation is very similar with Snaig- the support of EUR 258 000 from the EGF would target 650 redundancies in a city that has one of the highest unemployment rates - nearing 20% now. Even though this might be only the tip of the iceberg of the unemployment problem in Lithuania, the financial support will help those in most need. The European Globalisation Adjustment Fund (EGF) was created in 2006 in order to provide additional assistance to workers affected by the consequences of significant changes in the structure of international trade and to assist in their reintegration into the labour market. From 1 May 2009, the remit of the EGF has been expanded and it now includes assistance to workers made redundant as a direct consequence of the economic and financial crisis. At this time when we are facing this severe economic and financial crisis, one of the principal consequences is an increase in unemployment. The EU must use all the means at its disposal to respond to the consequences of the crisis, particularly in terms of the assistance to be provided to those who are facing the reality of unemployment on a daily basis. For these reasons, I voted in favour of the present proposal on the mobilisation of the EGF to assist Lithuania, with the objective of supporting the workers made redundant in the 128 firms operating in the civil construction sector. in writing. - Whilst we are opposed to EU membership and therefore EU funding, the money in this fund has already been allocated and is not therefore 'new' money. We would prefer help for redundant workers to be funded by national governments. However, for as long as the EU is the competent authority, help for redundant workers must, apparently, come from this fund. There will be critics in the UK of this money being paid to German and Lithuanian workers. However, if it were to be proposed to provide funds for (say) our steelworkers from Corus, we could not oppose such a contribution. Therefore, we cannot logically oppose these contributions. Mr President, ladies and gentlemen, we voted in favour of Mr Böge's reports on mobilisation of the European Globalisation Adjustment Fund, thinking, above all, of those workers being made redundant. However, in doing so, we also felt a degree of unease. For in truth, this fund is as much good as a sticking plaster on a wooden leg in view of the wideranging social consequences of your irresponsible, excessively free market policy. At times, it gives the impression, despite your denials, of using European taxpayers' money to fund policies designed to relocate and restructure large companies, while simultaneously giving the Europe of Brussels the cheap option of declaring itself 'in solidarity with' the unemployed it is creating. Another reason for our unease: the thresholds required to qualify for these funds, especially in terms of the numbers of redundancies. For it is primarily and, once again, except in exceptional cases, the very large companies which benefit from them. It would appear that the workers of medium-sized, small and very small enterprises, the small businessmen and women who are shutting up shop, have been passed over yet again where economic and social policy is concerned. We voted in favour of this resolution so as to ensure the environmental sustainability of the Atlantic regions, particularly the islands of the European Union. These constitute an essential part of its maritime area and are facing problems and specific needs, such as environmental problems. The case of the Azores is worth noting, as it has the largest Exclusive Economic Zone in the European Union. Under the scope of the present discussion, it is necessary to ensure environmental surveillance of the waters of the Atlantic, as the people of these islands depend on the good environmental condition of their marine waters. It is therefore important to clearly define minimum objectives for environmental quality along with monitoring programmes that can ensure this sound environmental condition. There is also a need to address the cases mentioned by the rapporteur, such as navigation accidents or plastic bags, which can have devastating consequences for economic, social and environmental sustainability in the Atlantic regions. This calls for the implementation of specific measures appropriate to the environmental and socio-economic reality of the marine ecosystems within the Atlantic. This is why the signing of such agreements is important for the sustainable development of populations that depend on the Atlantic. I welcome the signing of this additional protocol to resolve a political conflict which has prevented Spain and Morocco from ratifying the Cooperation Agreement for the Protection of the Coasts and Waters of the North-East Atlantic against Pollution (Lisbon Agreement). The protection of coasts and waters is strategically important for the socio-economic well-being of coastal communities, local development, employment, and the preservation and creation of economic activity. It needs to be ensured that all the European Union's marine waters are kept are in a good environmental condition in order to guarantee sustainable development. The present protocol is directly linked to issues such as environmental protection, climate change, safety, public health, regional development, relations with third countries and development cooperation. This protocol, which will allow a variety of forms of pollution in the Atlantic to be combated, is crucial for ensuring the fight against contamination or the risk of pollution in seas or on coasts, through a mechanism that is aimed at ensuring cooperation between the contracting parties in case of a pollution-causing accident, and which will oblige them to establish and implement their own emergency structures and plans. in writing. - I voted no to this report and in doing so, was mindful of a good news story in respect of our marine environment. The rapporteur mentions the 'plastic soup', the drifting mass of plastic and rubber in the Pacific Ocean, and notes what is described as an increasing problem in the Atlantic Ocean of lost fishing nets. In this respect, it is worth mentioning the work of KIMO International and their 'Fishing for Litter' Project. Originally started in March 2000 by the Dutch Government and Dutch fishermen, the project was aimed at clearing the North Sea of litter, using fishing nets. KIMO International has since expanded this project to harbours in the UK, Sweden and Denmark, with EU financial assistance. Since 2001, EU fishermen have removed hundreds of tonnes of rubbish from our seas and returned it to land where it is collected and disposed of responsibly. All of the EU fishermen involved in this project need to be applauded for their dedication, which removes waste permanently from the sea, benefiting the fishing industry, wildlife and the environment. The EU has signed a group of agreements with individual Member States and neighbouring third countries relating to the sea, including the Helsinki Convention, the Bonn Agreement, the Barcelona Convention and the so-called Lisbon Agreement. The aim of these agreements is to secure individual and collective measures in case of the risk of pollution, or pollution that is already happening at sea or in coastal areas. Although the Lisbon Agreement was signed in 1990, it never entered into effect, due to a territorial dispute between Spain and Morocco. A supplementary protocol resolving this dispute was signed by all the signatories in 2008 and therefore nothing should prevent the adoption of the Lisbon Agreement. The rapporteur mentions in the report two persistent and growing problems relating to pollution of the sea and the coastal areas, the first of which is the vast floating mass of plastic and rubber items in the Pacific Ocean, covering an area 34 times greater than a medium-sized Member State such as the Netherlands. The second persistent problem which Anna Rosbach mentions, and for which she seeks a solution, is the quantity of old, discarded and lost fishing nets. This report is an example of constructive work aimed at solving the main problems in the area of marine and coastal pollution, and I am therefore supporting it with my vote. Twenty years after it was signed, the Cooperation Agreement for the Protection of the Coasts and Waters of the North-East Atlantic against Pollution, agreed between Portugal, Spain, France, Morocco and the EU, is now ready to enter into force, following ratification by all the contracting parties. The Council now proposes to conclude, on behalf of the European Union, an additional protocol which will finally allow the agreement to enter into force. This agreement is of supreme importance to Portugal, bearing in mind the length of its coastline and the importance of the sea for its national economy, and not forgetting the Erika and Prestige disasters. I therefore congratulate the Council and the Member States on the conclusion of this additional protocol and I hope for the swift and effective entry into force of the agreement as this will provide our coastlines with greater protection against environmental disasters such as those which, unfortunately, have blighted our coasts in the recent past. I am delighted at the adoption of this report as it will allow the entry into force of a network of regional agreements on marine pollution which have been signed between the EU and certain Member States and neighbouring third countries. In this case, we have the Lisbon Agreement, which was signed in October 1990 but which has never entered into force due to a territorial dispute between Spain and Morocco, two of the contracting parties, over the southern boundary (Western Sahara) endorsed in subheading c) of Article 3 of the agreement. The additional protocol, which found a solution to the conflict and an acceptable wording for subheading c) of Article 3, was only signed in May 2008 by Portugal, Spain, France and Morocco. With the conclusion of this additional protocol, the Lisbon Agreement can enter into force, 20 years after it was signed. As well as its security aspects, this protocol covers environmental protection. We are all aware of the ecological disasters which have threatened the coasts of our countries in recent years. It is hoped that these rules will help to avoid accidents like the Erika and the Prestige, as the sea does not have any physical or political boundaries and requires sharing of efforts and concerted action. The European Community has participated in different regional agreements on maritime pollution which facilitate mutual assistance and cooperation between Member States. This network of agreements appears in the Cooperation Agreement for the Protection of the Coasts and Waters of the North-East Atlantic against Pollution (Lisbon Agreement), promoted by Portugal, which has not entered into force due to a territorial dispute between Spain and Morocco. I believe that, in the name of the environmental rules promoted by the EU, and once an agreement has been reached on the additional protocol, the Lisbon Agreement can finally be put into practice. in writing. - (DE) The Additional Protocol to the Cooperation Agreement for the Protection of the Coasts and Waters of the North-East Atlantic against Pollution forms part of a network of regional agreements concerning the protection of the marine environment, which the EU has concluded with individual Member States and neighbouring third countries. The protection of our oceans, which function as a source of food for millions of Europeans, is also an important task for the EU, which is why I have unreservedly voted in favour of this report. In this connection, it should be mentioned that, in addition to the Lisbon Agreement dealt with here, there are also the Helsinki Convention, the Bonn Agreement and the Barcelona Convention. Each of these agreements covers different parts of the seas surrounding the EU Member States and is intended to enable individual or collective intervention by the contracting parties in the event of pollution or the threat of pollution of the seas or coasts as a result of an accident. The Lisbon Agreement was signed in October 1990, but never entered into force on account of a territorial dispute between two contracting parties, Spain and Morocco, in respect of the 'southern borders' (Western Sahara). The additional protocol, in which the dispute was settled and an appropriate wording was found, was signed as recently as May 2008 by Portugal, Spain, France and Morocco, and finally, on 25 March 2009, it was also signed by the European Union. in writing. - (PT) Almost 50% of the population of the European Union lives in coastal regions, and this fact alone demands redoubled attention to the integrated preservation and management of these regions. In view of this, it is crucial that Integrated Coastal Zone Management is ensured within the EU, as recommended by the European Commission in a statement published on this matter. It is also important to point out that 80% of the rubbish and pollution in the sea originates from the land, which is why there needs to be a concerted strategy which also involves combating this problem on the land. Apart from environmental issues, oceanic pollution and European coastal degradation present an economic problem. This is because in certain countries, such as Portugal, the practice of tourism which is aimed at maritime activities like whale watching, diving and others, constitutes a significant source of income for some regions, including the Azores, Madeira and the Algarve. Like what is happening with overfishing, the pollution of the waters has also contributed substantially to the current state of depletion in certain stocks of species that are important fishery resources. Therefore, the Marine Strategy Directive, an environmental pillar of the strategy for integrated maritime policy, needs to be implemented in full. Oceans and coastal zones must be a strategic priority for Europe, and for this reason, I wholly support this report by Parliament. I voted for this report in order to help bring the Additional Protocol to the Lisbon Agreement into force. This agreement creates a mechanism for ensuring cooperation between the contracting parties in the case of accidents causing pollution and obliges them to devise and implement their own emergency structures and plans. This agreement forms part of a network of regional marine agreements which the EU concluded with some individual Member States and neighbouring third countries. The network consists of the Helsinki Convention, the Bonn Agreement, the Barcelona Convention and, in this case, the Lisbon Agreement, each of which covers different parts of the sea around EU countries, aiming at individual or collective intervention of the contracting parties in case of pollution or a threat of pollution of the seas or coasts, in order to protect the environment and citizens' health. The policy of consumer protection aims to promote the health, safety, economic and legal interests of consumers, along with their right to information. Consumer protection is an overarching and fundamental policy of the European Union, focusing on the guarantee of healthy markets in which consumers can act with safety and confidence, encouraging innovation and cross-border trade. I voted in favour of the present report as I consider it essential to strengthen European consumer protection policy and to render it more effective and meaningful for the public. Confident and well-informed consumers who have the capacity to make choices are essential to the efficient functioning of the internal market. This must aim to provide consumers with a significant amount of choice over products and services of a high quality and which are competitively priced whilst, at the same time, offering a high level of protection, thus playing a fundamental role in making the EU competitive, dynamic and innovative at a global level. The European Union's internal market has expanded considerably in recent years, currently covering nearly 500 million consumers in 27 Member States. Standardising consumer protection principles and rules at European Union level and improving the mechanisms supporting their application is an achievable objective, without any assumption that the products and services offered in all 27 Member States will reach the same level of quality in the short or medium term. The current difficult economic situation which the whole of Europe is going through is highlighted by a fall in incomes and rise in unemployment, which is reflected across the Community in the real need to manage the daily shopping better. The attitude of European consumers, which is directly affected by the impact of the economic recession, is particularly evident in relation to the goods and services which they buy and want at good quality so that they can consume as many of these items as possible. As a result, consumer protection measures are steadily growing in importance. The consolidation of the structures for monitoring the market in all Member States to ensure that the products being marketed meet the highest safety standards is a solution to suit how things stand at the moment. EU consumers have a vital role in enhancing growth, employment and competitiveness, and their interests are a main priority in forming key policies such as health, business and industry, the environment, and energy and transport, among others. Regarding energy, the internal market cannot function properly and competitively due to the existence of so-called 'energy islands' such as the Baltic region, which is isolated from the rest of Europe in terms of energy, and is dependent on a single external supplier. The existence of an electricity grid and gas pipeline covering the whole of the European territory must be a priority, as Europe is highly dependent on energy imports. The electricity market must also adopt a set of measures aimed at total openness, for the benefit of European consumers. Favourable conditions need to be created for genuine and fair competition and the creation of a real single market. Member States must take all measures necessary to carry out clear objectives, particularly the protection of vulnerable consumers, the protection of basic consumer rights, and economic and social cohesion. The promotion of the rights and well-being of consumers is a fundamental aspect of the European Union. I support all the efforts that have been made in this regard, which are restoring public confidence in the markets. Consumer protection becomes even more important within the context of the economic crisis which has increased the pressure upon the least protected consumers - those with low incomes. It is necessary to institute a coordinated approach which will allow consumers to exercise their rights in a confident manner. In view of this, I emphasise the need: firstly, to promote policies to inform and educate consumers (on the part of the EU and the Member States) through campaigns, information points and increasing the resources of the European Consumer Centres; secondly, to apply the rules that already exist effectively, strengthening monitoring of the market and regulatory mechanisms and applying pressure on the Member States for the correct collection of Community resources. I reiterate that only in this way will consumers be able to make well informed choices without being subject to all sorts of pressures from producers. This reinforces their confidence in the market, generates increased competition, improves the quality of products and services, and increases consumption (an important factor for economic recovery). Consumer protection is closely linked to the capacity of the market to offer a wide choice of high-quality goods and services at competitive prices. It is clear that greater consumer trust, awareness and responsibility call for increasingly high-quality goods and services which, in turn, increases competition between suppliers, which will be encouraged to improve their products, while keeping prices at competitive levels. I agree with the importance attached by the Commission and the Member States to launching a communication strategy on consumer rights via web portals, awareness-raising campaigns and information points, while also promoting use of the 'eYouGuide' website, and, at the same time, ensuring the reliability, credibility and impartiality of the organisations responsible for management and organisation. Furthermore, the five Consumer Markets Scoreboard indicators identified by the resolution - although not exhaustive - will certainly allow people to obtain useful information for improving, if necessary, the reference regulatory framework, provided that the information provided by Member States is comprehensive and can be compiled on an easily comparable basis. I voted in favour of the report even though I am confused as to the appointment of the Consumer Ombudsman and the means of collective redress. I believe that following the entry into force of the Treaty of Lisbon, and during the current economic crisis, the interests and protection of consumers must be robustly guaranteed. Consumers need to be provided with specific instruments to ensure that their interests are integrated effectively into all of the European Union's policies The rapporteur takes as a starting point the results of the Consumer Markets Scoreboards, which is a logical and pragmatic approach. Both the satisfaction and the problems of consumers can be deduced from the statistical reports which are focusing on the matter. Further development of the confidential database on consumer problems is essential for the identification of markets. However, it is necessary to improve data collection in such a way that it can take account of the differences between the various systems in the Member States which, because of the diversity, are sometimes extreme. In my opinion, the most problematic issue is the enforceability of legislation and of contractual obligations. In the case of trade on cross-border markets in particular, the enforceability of the law is non-existent. Establishing rules to protect the consumer in the EU will have no effect if these are not properly implemented in national law and applied and also enforced at the Member State level. The rapporteur has taken up the issue of consumer protection on the basis of the scoreboards in an acceptable way. I would, however, welcome more concrete proposals for improving the current situation. Despite this reservation, the report contributes to consumer protection in the EU and I will therefore vote for its adoption. The European Union's consumer policy is a fundamental component in consolidating the internal market. For this reason, this policy must allow European consumers and members of the public to have access to high quality products and services at competitive prices, whilst at the same time benefiting from a high level of protection of their rights. Increasing education and awareness of both their rights and obligations, as well as a responsible attitude on the part of companies, will contribute to a more dynamic form of cross-border trade and, as a result, to the close integration of the internal market, with an impact on European competitiveness. The correct balance must also be struck between the rights and obligations of consumers and the impact of relevant adopted legislation regarding the rights and obligations of firms and service suppliers. The Treaty of Lisbon refers to consumer protection as an overarching and fundamental policy of the European Union, which establishes that consumer protection requirements must be taken into account. In this context, it is essential to strengthen European consumer protection policy and to render it more effective and meaningful for the public. It is crucial to respond to the needs and problems of the European public. In this sense, instruments for monitoring the market, such as the Consumer Markets Scoreboard, are justified. A good consumer protection policy must ensure healthy markets, and security and confidence, whereby cross-border trade and innovation are encouraged. I advocate a transparent policy where brand name of origin is obligatory. Consumer protection is important in the face of imported products that are unsafe, and this requires closer cooperation between market monitoring authorities and customs authorities. The safety of products circulating in the domestic market requires a combination of efforts with the authorities of third countries, and therefore justifies the Commission's initiative to step up international cooperation and sign formal agreements with the relevant authorities of third countries, especially China, the US and Japan. in writing. - I voted in favour of the Hedh report. Scotland currently lacks a voice in EU consumer matters: we have no independent representation in the Council and consumer legislation is largely reserved to London. Given our separate legal institutions, it is essential that these powers are returned to the Scottish parliament so that Scotland can play a full role in the ongoing EU debate on these matters. Consumer protection is, and has always been, one of the EU's priorities, and it was consolidated following the adoption of the Treaty of Lisbon. Consumers who are well informed of their rights and obligations contribute to a more transparent and competitive market. With the present economic crisis, it is vital to protect the most vulnerable consumers and those with lower incomes. The increasing complexity of retail markets, particularly those related to services, is making it more difficult for consumers to make the best choices. In order to effectively evaluate markets and adopt policies that produce the best possible results for consumers, market monitoring instruments are required. For this reason, the Consumer Markets Scoreboard is very important. In order to ensure that we have effective consumer protection, it is important to improve the information provided to, and the education of, consumers. The aim is to have 'empowered consumers' in the internal market. However, the report does not adequately address the problems associated with a completely unregulated market. European standards are not always met, whether they be quality and safety standards or even environmental and health regulations. I therefore abstained from voting. Consumer protection is an extremely important matter for the Commission to tackle. Simply implementing effective measures on this matter will, of course, be insufficient if there is no involvement on the part of consumers. Consumers must be aware of their rights. Making maximum use of the possibilities of the single European market is a tremendous challenge for the Commission. In order to meet this challenge, effective consumer protection must be one of the priorities chosen by the EU. I think using the Consumer Markets Scoreboards, which are a tool for monitoring markets, could not be more beneficial from the point of view of the consumer. The scoreboards clearly show which markets are not sufficiently meeting the needs of consumers. By analysing them, we can ascertain, among other things, that consumers are experiencing particular problems in the market for services, and that Internet trade between particular Member States is being restricted to a large extent by trans-border barriers. I am pleased by the fact that further scoreboards are being planned. In addition, I hope they will supply us with yet more detailed information than before. Thanks to such tools, it is significantly easier to understand the problems of consumers and to respond to their needs. There is no doubt that introducing EU regulations on consumer protection in individual EU countries is beneficial to our citizens. I voted in favour of the report by Mrs Hedh on consumer protection. This own-initiative report rightly recognises the crucial role of consumer organisations, which are the ideal organisations for alerting public authorities to the problems consumers experience in their daily lives. Naturally, I also support the requirement for Member States to adequately consult consumer organisations at all stages of the decision-making process and of the transposition and implementation of consumer law. Very important as well is the matter of also including in the Consumer Markets Scoreboard long-term indicators such as those relating to market shares, quality, advertising, transparency and comparability of offers, indicators relating to enforcement and consumer empowerment, social, environmental and ethical indicators, and also indicators to measure redress and consumer detriment. The only two drawbacks of this report, as I see it, are the failure to adopt the amendment tabled by the Group of the Greens/European Free Alliance to learn from the market failure in the energy sector, and our amendment requesting a revision of the Toys Directive. The fact that this amendment did not prevail remains regrettable. Nevertheless, I wish to congratulate the rapporteur and her colleagues in the Committee on the Internal Market and Consumer Protection on this sound report. in writing. - I welcome this contribution to the consumer scoreboard from Parliament. The consumer scoreboard is an important indicator of how effective and efficient Member States are at implementing legislation from the EU. I welcome the rapporteur's calls for greater transparency and visibility of the surveillance measures and support her call for improved collective redress mechanisms in the EU. in writing. - (SV) The free market within the EU makes the Union a strong player, but also means that consumers must be given good, clear information about the range available on the market. The position of consumers needs to be strengthened. I therefore voted in favour of the report on consumer protection today. However, the report contains certain wording that is problematic. There is a risk that consulting consumer organisations at all stages of the decision-making process will make this process rather drawn out. Civil society plays an important part in achieving relevant consumer protection, but this may take different forms in different countries without this having a detrimental effect on the result. The principle of subsidiarity must apply in the matter of the establishment of consumer protection authorities and consumer ombudsmen, as well as in the wording concerning the curriculum in schools. The EU must set minimum levels and objectives for common consumer policy, but should not decide in every detail exactly how the Member States are to achieve these objectives. The report calls on all Member States to collect and record information on accidents and injuries in a common database. Such a database must not give rise to the need for excessive administrative work. Its administration must be reasonable and proportionate to the benefit to individuals. However, consumer rights and consumer protection in the internal market are so important that I voted in favour of the report despite the concerns that I have just outlined. Rapporteur, ladies and gentlemen, I am pleased that we are seriously trying to take care of the protection of consumer rights. However, this has been going on for several years now and we are still unable to create an ideal mechanism and tighten the compulsory conditions by fulfilling these tasks at national level. Sometimes, this almost seems like a game or hypocrisy. Until we strictly regulate the activities of monopolies, in whatever area, so that their profits are clearly limited, and the operating costs, salaries and bonuses are strictly controlled - i.e., the provision of raw materials, manufacturing, product provision - then it is hard to imagine consumers receiving cheap and high quality goods or services. As I have considerable experience in this area, I am ready to collaborate in this matter. in writing. - I welcome the adoption of this report. I feel it is important to protect consumers and to put a greater focus on strengthening market surveillance, so that products destined for citizens meet the highest standards possible. I welcome the move to step up international cooperation on safety products and to pursue formal agreements with enforcement authorities in third countries. I support calls to set up a special Consumer Ombudsman for the extra-judicial settlement of disputes and believe that more effective cross-border cooperation mechanisms will help to improve protection for consumers across the EU. Article 12 of the Treaty on the Functioning of the European Union reaffirms that consumer protection requirements shall be taken into account in defining and executing other Union policies and activities. The Commission must ensure that consumers' interests are genuinely integrated in all policies and must examine in its impact studies the potential effects of any new legislative act and of policies that directly or indirectly affect consumers. While consumer complaints are an important indicator of market failures, their absence does not always mean that markets are working well, since there are times when consumers tend to complain less, because of different consumer traditions or because of their perception of the likelihood that their complaint will be taken into account. Consumer organisations have a crucial role to play in alerting public authorities to the problems that consumers face. The instruments should be optimised so that they can operate more effectively at all levels. I call on the Member States to ensure that consumer organisations are duly consulted at every stage of the decision-making process and during the transposition and implementation of consumer legislation. I voted in favour of this report on SOLVIT. European consumers should be fully aware of their rights and this problem-solving network should be easily accessible to everyone. In the European Union as a whole, the number of people contacting SOLVIT seeking advice and help is increasing, and from this it can be understood that the importance of SOLVIT as a problem-solving tool for European citizens and businesses is growing. I fully support the demand in the report for better and wider advertising of SOLVIT's services and I agree that information about the rights of citizens and businesses in the internal market should be clarified so that everyone can take advantage of these rights in their everyday lives. in writing. - To enjoy the benefits of the internal market, consumers must have an effective means of redress following misapplication of internal market law. The SOLVIT network was created to guarantee quick redress without having to use judicial proceedings. I believe that this network could be of great use but at the moment, it is not functioning effectively and is not using its potential to the full. Many of our citizens and small businesses are unaware of such a network. Thus, I believe that Member States should put greater efforts and means into promoting SOLVIT and raising awareness amongst citizens and businesses. Moreover, some SOLVIT centres receive more cases than they are able to resolve because the centres are understaffed. I believe that Member States need to strengthen the role of national SOLVIT centres by ensuring cooperation among national, regional and local authorities and to engage in an active exchange of views and best practices with other Member States in order to fully exploit the potential of the SOLVIT network. In operation since 2002, SOLVIT is an online problem-solving network in which the Member States of the European Union participate, with the aim of providing a pragmatic response to the difficulties which arise as a result of the incorrect application of Community legislation by the public authorities. Although the internal market presently works relatively well, it is also true that, on occasion, errors or problems of interpretation arise with respect to the rights of members of the public and firms who attempt to make the most of the advantages that the internal market provides. I voted in favour of the present report since the SOLVIT network has shown itself to be of huge importance to the resolution of all sorts of problems, from the member of the public who is searching for another Member State in which to study, work or be reunited with a partner, etc., through to firms who have encountered problems with the public authorities, problems with VAT refunds or other issues. The SOLVIT network aims to provide members of the public and firms with a high level of service, on the basis of important quality and performance criteria. I welcome the Buşoi report on SOLVIT. This informal network for solving problems related to the internal market has been crucial in providing free assistance to both members of the public and businesses in solving specific problems with the public authorities. Its importance is reflected in the growing number of cases brought over the last year. However, given the cross-cutting problems identified at national level, it is vital to consider a series of measures for improving the effectiveness of these centres. I believe, therefore, that Member States must intensify their efforts to provide information to members of the public and businesses on the rights that they enjoy within the internal market by making use of the increase in financial and human resources and the training of employees on the SOLVIT network on internal market rules. It is also important for its employees to have a solid knowledge of English, as well as their native language. I call on the Member States and the Commission to promote greater access to the SOLVIT network for members of the public and businesses, with a view to the effective implementation of the internal market rules. The internal market is not, nor should it be, a merely bureaucratic structure. To truly benefit from its obvious advantages, firms and the European public must be able to exercise their rights in practice by means of rapid, responsive and efficient mechanisms. On this basis, the SOLVIT network assumes a fundamental importance. Given the increasing number of cases in which SOLVIT centres have been involved over the last year, I consider it to be vital for the good of consumers that we should move towards a range of reforms and improvements which Parliament has proposed with this in mind. For example, the strengthening of Commission control over the effective application of the rules of the internal market; clear increases to the resources provided to SOLVIT centres (the commissioning of experts on the elements of the internal market, an increase in funds for the national centres, specialised and up-to-date training of existing specialist personnel, coordinated online links between local centres and Commission services); and significant investment in the promotion and advertising of the SOLVIT network by the Member States and Commission through all social communication methods, promoting a high level of connection with the public and firms. For all these reasons, I support the Buşoi report on SOLVIT. The SOLVIT network has shown that it is a very useful instrument for solving the problems - without legal proceedings - encountered by citizens and businesses as a result of the misapplication of internal market law by public authorities. It should therefore be supported in several ways, by means of better cooperation between the Commission, Parliament and Member States. Above all, it is necessary to better promote awareness of its existence among citizens and businesses and to strengthen cooperation among national, regional and local authorities. Greater importance should also be given to the training of public officials who work in this area, such as training of the SOLVIT network staff, which, as the Commission's communication stresses, should also be developed by means of the European Social Fund. I voted in favour of the report because I believe that strengthening the SOLVIT network can really help improve the legal framework of the internal market, which we are trying so hard to build. Promoting transparency of data with an interactive online database increases awareness of standards, enables problems to be resolved faster and increases trust in operators. The SOLVIT network was set up by the Commission and the Member States in order to resolve, via non-judicial means, any problems that members of the public and businesses face as a result of the incorrect application of legislation concerning the internal market. This network has shown itself to be effective in the resolution of problems, but it is still underutilised by the general public. For this reason, the Commission intends to promote the rapid and complete application of the SOLVIT network, increasing transparency in order to overcome obstacles to freedom of movement and providing the public with information on their rights, so as to fulfil the potential of the internal market. With this in mind, the Commission is urging the Member States to duly promote the SOLVIT network amongst the public and firms, bearing in mind its capabilities and the added value which it represents. Given that many of the problems which could be dealt with through the SOLVIT network are currently resolved judicially, increasing the time and money wasted by members of the public and firms, and given that the SOLVIT network could provide an alternative and more rapid and efficient solution to legal disputes, I believe that making the SOLVIT network fully operational will benefit the workings of the internal market as well as the protection of the interests and rights of members of the public and firms. The SOLVIT network became operational in July 2002, having been created by the Commission and the Member States with the aim of resolving the problems that were being experienced by members of the public and businesses as a result of the misapplication of internal market legislation, allowing a swift, free and effective response without recourse to the courts. All the EU Member States along with Norway, Iceland and Liechtenstein have created SOLVIT centres at national level, mostly integrated with their respective ministries of economy or foreign affairs. These centres cooperate directly through an electronic database in order to find rapid and pragmatic solutions to the problems submitted by members of the public and businesses. The Member States must intensify their efforts to provide information to members of the public and businesses on the rights that they enjoy within the internal market, thus allowing them to exercise these rights. The services provided by SOLVIT must be made known to members of the public and businesses in an effective way. The SOLVIT network, which aims to be an effective solution to the problems of the internal market, has been very successful in solving these problems. This SOLVIT network was set up in 2002 in order to address problems that members of the public and businesses face as a result of the incorrect application of European legislation relating to the internal market. The SOLVIT network replaces the courts in a more effective and less bureaucratic manner, finding solutions within 10 weeks. However, the increased flow of SOLVIT cases has resulted in several deficiencies with its response. This means that it is very important for there to be an effort towards an increase in human and financial resources, along with adequate training of the SOLVIT network officials, so that they can improve their effectiveness in addressing the increasing number of cases submitted to them. The internal market offers citizens and companies a host of opportunities. The internal market operates well, on the whole. However, sometimes mistakes can be made too. SOLVIT is a network for resolving problems where EU Member States work together to resolve, without resorting to legal proceedings, problems which have arisen due to the inappropriate application of internal market legislation by the public authorities. There is a SOLVIT centre in every Member State of the European Union (as well as in Norway, Iceland and Liechtenstein). I voted for this report to give SOLVIT centres a boost in resolving the complaints submitted by both citizens and companies. The internal market, with more than 1 500 frequently complex documents, seems to Europeans to be a pretty incomprehensible 'big contraption', which, to boot, is not always correctly implemented in the Member States (I am thinking, in particular, of the recognition of professional qualifications). Consequently, SOLVIT is proving to be an invaluable tool: a genuine support service for consumers and businesses in matters relating to the single market, this cooperative network has, for several years, worked to solve, informally, problems linked to the misapplication of internal market law by the public authorities. I voted in favour of the report on SOLVIT. Nonetheless, despite its excellent success rates (more than 80% of cases are successfully resolved), and despite the fact that it represents a rapid, extrajudicial and free solution to the problem of obtaining redress, SOLVIT is still relatively unknown among the general public. We must do more to raise its profile. Finally, I regret that in certain Member States, including my own, the SOLVIT centre is so poorly provided for in terms of budget and personnel. The time has come, I believe, for Member States to appreciate how useful these centres are and to provide them with the means to function properly. The report by Mr Buşoi on SOLVIT is very important. In the performance of my parliamentary duties, I am contacted many times a week by citizens asking me what are often very personal and very specific questions on the operation of Community law. I am often able to help them promptly by directing them to SOLVIT. The report we adopted today clearly describes the benefits of this instrument. It is an extremely balanced piece of work in that it states very clearly what action must be taken to improve the instrument. A good media strategy is certainly needed in order to raise awareness of SOLVIT. Making a unique Internet address available can contribute to this. It is clear that SOLVIT's efficiency needs to be further increased. This can indeed be done by enhancing cooperation between civil servants with a sufficiently high level of knowledge. Also crucial is the recommendation for Member States to increase the staffing of SOLVIT centres in order to build up administrative capacity in the various ministries at national level. The objective must be for all SOLVIT centres to answer the questions quickly and come up with genuine solutions; the very purpose for which SOLVIT was created. Rapporteur, ladies and gentlemen, I support this initiative and agree entirely with the strengthening of the SOLVIT network and the broadening of its activities. No expense should be spared in having information about this European structure's activities and opportunities spread in the national media, on the Internet or on television programmes. However, I can tell you all that there are double standards: the legislation is not applied in a uniform manner and there are even different penalties for the same activities. SOLVIT was created in order to resolve the problems faced by citizens and businesses as a result of the poor application of legislation on the internal market. All the Member States, as well as Norway, Iceland and Liechtenstein, have established a national SOLVIT centre. They cooperate directly in order to devise rapid and pragmatic solutions to the problems submitted by citizens and businesses. The centres need sound legal advice on the legal merits of the problems submitted and the solutions proposed. They have access to legal advice both within their centre and within the competent administration. Where there are differences of legal opinion on cases being handled jointly, complex legal issues or simply no proper access to legal advice in their country, SOLVIT centres often turn to the Commission for advice. Member States should ensure that the centres have proper access to legal expertise within their administration. The Commission should speed up the provision of informal legal assessments to the centres on request. I welcome the Member States' commitment to monitoring European legislation and its application. It is not good enough that the European colegislators should implement laws that create more problems than they solve. We have very high standards of animal health requirements in Ireland and, as a result, I voted in favour of this important report, which will protect the health status of Irish animals. The report's recommendation with regard to extending the transitional system for the movement of animals until the end of December 2011 is necessary and timely. These rules establish a general system for identifying pets (cats, dogs and ferrets) travelling between Member States and all animals will have to have passports with them showing that they have been vaccinated against rabies. These protective measures are necessary as the health standards in Ireland are extremely high at present and, as a result, the country is free from rabies, from certain ticks and from tapeworms which could endanger the health of both humans and animals. Madam President, I voted in favour of the report on the proposed resolution of the European Parliament and the Council concerning veterinary conditions for the non-commercial movement of pets, even though I do not agree with the entire text of the proposal. I am particularly concerned that it provides for an extension of the transitional period during which the importation of dogs and cats into Ireland, Malta, Finland, Sweden and the United Kingdom is subject to stricter requirements. For example, Malta, Ireland and the United Kingdom are requesting that pet dogs and cats be subject to additional examinations for ticks, which must also be certified in their animal passports. This is already the second consecutive extension of the transitional period, which I consider to be highly irregular from the perspective of EU legislative practice. The Commission should, as soon as possible, assess the possibility of expanding the general regime to the Member States which currently fall under the transitional regime, for the purposes of which it should order the drafting of a consultative opinion by the European Food Safety Authority. I firmly believe that repeated extensions of the transitional period are not in the interests of European citizens. The existing differences in the protective measures of the previously mentioned Member States, such as different time limits for inoculations and serological examinations and different deadlines for anti-parasite examinations, make it more difficult and more costly to travel with pets in the EU. Community laws regulate the non-commercial movement of pets into the Community, within the framework of which they establish a so-called general regime, under which pet dogs, cats and ferrets, which are being moved between Member States in the EU, must be accompanied by identification documents and information on their mandatory inoculations against rabies and on the diseases they have had. Regulation (EC) No 998/2003 also establishes a so-called transitional regime allowing Member States to apply stricter requirements for the entry and movement of these animals on their territory. Great Britain, in particular, is making considerable use of this derogation. The Commission proposes to extend the designated transitional regime up to 31 December 2011, and the rapporteur Mrs de Brún supports this move. In view of the fact that a compromise has been achieved in both the Council and the ENVI committee, of which this report constitutes a part, I have voted for its adoption. Regulation (EC) 998/2003, which the Commission proposes to amend, establishes harmonised norms on the non-commercial movement of pets inside the European Union, as well as their entry into it. It envisages, however, a temporary system under which some Member States may impose more restrictive conditions in the case of certain illnesses such as rabies, echinococcosis and tick infestation. The importance of the free movement of pets within the European Union area notwithstanding, I reiterate my conviction that it is fundamental that such pets must comply with all sanitary criteria so that they do not present a risk to human or animal health. This report provides rules for the movement of pets within the European area and how this should be done in accordance with the objectives of preventing the spread of diseases, particularly rabies. Freedom of movement is one of the key pillars of the European Single Market. This issue is particularly pertinent for citizens of a Europe without borders, where we have witnessed an increased movement of pets between Member States. We all agree that it must be possible to travel with pets, but we also all agree that this must be done in accordance with the set public health criteria in order to ensure a greater level of protection for human and animal health. I therefore welcome the general passport system, which will harmonise hygiene measures, and the controls which facilitate the free movement of pets. The report also provides a transitional arrangement until the end of 2011, so that some countries can prepare to put the necessary infrastructure in place. in writing. - I voted in favour of Mrs de Brún's report. The freedom of movement which lies at the heart of the single market means that this is an issue of importance to a great many citizens across Europe. Public and animal health matters are also of vital importance and I consider that the rapporteur has done a good job in striking a balance. The animal health conditions that must be placed on the cross-border movement of domestic animals which are not intended for sale are aimed at ensuring both a greater degree of protection for human and animal health and greater ease of movement for pets accompanied by their respective owners. In this way, if the relevant rules are followed and a certificate of vaccination against rabies and an analysis of the immune system reaction to this vaccine performed by an authorised veterinarian is carried during journeys within the Community area, this will facilitate the non-commercial movement of pets. I have voted in favour of this important report because in doing so, we are supporting the Commission proposal on the extension of the transitional regime as regards rabies, meaning that the end of the regime coincides better with the period when the European Commission expects to terminate EU funding of vaccination programmes to eradicate sylvatic rabies in some Member States, which is the main rabies problem in the EU. In addition, the Commission has opted for a careful precautionary approach, giving priority to prevention and to additional health considerations related to the internal market and free movement of pets. The different policy options have been compared and considered by the Commission, taking into account the various opinions of the European Food Safety Authority (EFSA). The proposed date for ending the transitional regimes will allow the infrastructure to be converted and the staff in place to be retrained gradually and adapt to the new situation. in writing. - I welcome this report, which will allow Member States to continue with measures to protect against the spread of rabies but which will also lead to the free, safe movement of pets throughout Europe after 2011. The extension of the derogation for certain countries until 2011 will allow them to continue with tests and health checks for diseases such as rabies. This transitional period is an important step towards the eventual free, safe movement of pets in the European Union. I would like to congratulate all those who worked to secure the agreement on the new comitology procedure. It is a good compromise which will allow an effective response if Member States have justified concerns over the spread of other diseases. It also ensures that, when using delegated powers, the Commission will consult a variety of experts - Commission experts, Member State experts, non-governmental experts and Parliament's experts. We must ensure that this commitment is upheld. In the wider context, we have received written assurances that this report will not set a precedent for the future use of delegated powers. This takes into account Parliament's concerns about setting a precedent for the new comitology procedure under the Lisbon Treaty. The EU 2020 strategy is a document that offers much hope. In recent times, there has been much talk about the recovery of the EU economy, but the majority of Member States have yet to see the end of the crisis. In public, discussion of the crisis is limited to the state of public finances, although the rapidly increasing unemployment in some Member States has already reached a critical level. It is strange to hear EU high officials praising some governments for their excellent work, when each month, the number of unemployed in those countries is growing at a catastrophic rate, social guarantees are being reduced and the number of people living below the poverty level is increasing. It is becoming very difficult for the people in such countries to understand whether the European Union is implementing a policy of poverty reduction or actually increasing poverty in the social area. In my opinion, governments that have been unable to even solve unemployment stabilisation problems should not receive undeserved praise. The European Commission should take greater responsibility and responsibly supervise the implementation of national government crisis management plans, while assessing very clearly the effects of such reforms on the people. The Schengen Agreement is a treaty between European countries on the policy of freedom of movement of individuals within the Schengen area. Any person who is in possession of a document which proves that he legally resides in a Member State should be able to move freely within an area where there are no internal borders. However, not all countries are yet in compliance with their obligation to provide a residence permit to the nationals of third countries who are holders of this form of long-stay visa. For this reason, it is inconsistent that a student who has obtained a visa to take a course in Portugal should not have the option to go, for example, to Belgium to gather information from a specialised library for the writing of his thesis. For this reason, I voted in favour of the present report, bearing in mind that it is important to facilitate the freedom of movement within the Schengen area of nationals of third countries who legally reside in one of the Member States on the basis of a long-term type D visa provided by that Member State. I congratulate the rapporteur, Mr Coelho, for once more managing to achieve an agreement at first reading, which will allow this situation to be resolved before the Visa Code enters into force next month. I voted for the new amendments to this regulation given that hitherto, third-country nationals holding long-stay visas have encountered problems with the restriction on free movement. They have been unable to travel freely from one European Union Member State to another and even had difficulties returning to their native country. This regulation extends the principle of equivalence between residences permits and short-stay visas issued by the Member States fully implementing the Schengen acquis to long-stay visas. It must be underlined that a long-stay visa should have the same effects as a residence permit as regards free movement in the Schengen area without internal borders. I would like to draw attention to the fact that it is very important that once the movement of third-country nationals in the Schengen area has been simplified, security guarantees in the Member States are not infringed. The implementation of this regulation should not reduce security, since it provides for the duty of states to check a person's data in the Schengen Information System before issuing a long-stay visa and, if necessary, asking other EU Member States about that person. Hitherto, this was only done when issuing residence permits. I welcome the adoption of this regulation by a very large majority - by 562 votes to 29, with 51 abstentions. From now on, any third-country national holding a long-stay visa issued by a Member State will be able to travel to the other Member States for three months in any six-month period, under the same conditions as the holder of a residence permit. This was a measure which many students and researchers, such as those participating in European exchange programmes (Erasmus Mundus), have been waiting for. It is a step forward in terms of making the Union a more attractive destination for students, academics and researchers from third countries. Moreover, it can be seen as a reminder of the European Parliament's request for the Member States to take steps towards the future introduction of a visa intended specifically for students participating in exchange programmes. I do have one regret, however: the United Kingdom, Ireland and Denmark have not adopted this regulation and will not be subject to its application, even though these countries attract a large number of foreign students and researchers present in the Schengen area. The creation through the Schengen Agreement of a European area without border controls was an important step in constructing an open internal market with free movement of people and goods. For this same reason, the crucial aim upon which the agreement is based is to allow the free movement of individuals within an area where there are no internal borders. As a result, it seems to us absurd that citizens who are from outside the EU but who possess long-stay visas provided by one of the States which are party to the Schengen Agreement may not move freely within this area. The examples given by the rapporteur seem to us to be evidence of the absurdity which this system represents in practice. For this reason, I agree with the Commission's proposal, in the wording suggested by Parliament, to treat long-stay visas as residence permits, thus ensuring freedom of movement for their holders. Firstly, I welcome the excellent quality of this report. In accordance with the Community legislation in place, nationals of third countries who hold a long-stay visa (a visa for a stay in excess of three months) are not authorised to travel to other Member States during their stay or to travel through other Member States when they return to their country of origin, since there is no provision for this in the Schengen Convention. The new rules proposed mean that a long-stay visa will have the same effect as a residence permit in terms of free movement within the Schengen area, without internal borders, or that a person who holds a long-stay visa issued by a Member State will be authorised to travel to other Member States for three months within a period of six months, and under the same conditions as the holder of a residence permit. For this system to work, there should be controls that are equivalent to those that are currently in place in other areas, so as to ensure good communication between Member States and coherence between the issuing of long-stay visas, residence permits and Schengen Information System alerts. It is a good thing that a foreigner who holds a long-stay visa granted by a Member State is able to travel to other Member States for at least three months within a period of six months, and on the basis of the same conditions as the holder of a residence permit. As this is the main matter covered by the regulation to which this report relates, we voted in favour. As we know, at present and in accordance with Community legislation which is in force, nationals of third countries who hold long-stay visas who might be, for example, students who wish to make a study trip to another Member State, scientists, academics, relatives of nationals of third countries and EU citizens, are not allowed to travel to other Member States during their stay or to pass through other Member States when returning to their country of origin, a situation which is not envisaged in the Schengen Agreement. The new rules which have now been approved will mean that a person who holds a long-stay visa (a visa for a stay of more than three months, or a type D visa) will have the same rights as the holder of a residence permit in terms of freedom of movement within the Schengen area. Mr President, ladies and gentlemen, we voted against Mr Coelho's report. Indeed, to allow holders of a long-stay visa, that is to say, one lasting more than six months, to benefit automatically from freedom of movement throughout all the States of the Schengen area, as though they were holders of a residence permit, is irresponsible. Your examples are misleading. It does not matter whether we are talking about students wishing to visit the capitals of Europe (with the exception of London, Dublin and Copenhagen, which are outside the Schengen area), researchers whose research is due to last less than a year, or expatriates without the appropriate residence and work permits - it is all of marginal importance and merely a pretext. In point of fact, this measure is yet another negation of the sovereign right of States to decide who may or may not, under which conditions and for how long, enter their territory. By standardising rights, it ultimately makes long-stay visas completely meaningless, for the sake of promoting a sort of automatic resident's status, one that is granted from the moment a person wishes to come to Europe for more than three months and for a purpose other than that of tourism. This is unacceptable. I supported the Coelho report on the freedom of movement of persons with a long-stay visa because, behind issues relating to administrative formalities, I believe it is important, for example, for young foreigners who come to study in our countries not to be confined to living in one country, but to be able to have the freedom to travel from one country to another, whether to study or to discover the diversity and wealth of European culture. Unlike those who are raising the spectre of security and the fight against illegal immigration, we must defend here the need to develop a knowledge-based society in Europe, as elsewhere. in writing. - I abstained on the Coelho report as it deals with aspects of Schengen which are not applicable in Scotland. Firstly, I should like to thank Mr Coelho for the quality of his report and for the true expertise that he brings to all his work on visa policy. Adoption of this regulation is a necessity and a matter of urgency. It is a necessity because, due to an extremely contentious practice carried out by Member States, which no longer convert long-stay visas into residence permits, we have ended up with absurd situations in which any third-country national who is legally resident on EU territory by virtue of a D visa is prevented from travelling within the other Member States of the Schengen area. This practice creates unnecessary obstacles to movement within the Schengen area and runs counter to the very philosophy of the Schengen acquis. Adoption of this text is also urgent in view of the forthcoming entry into force of the Community Code on Visas, which abolishes D + C visas. As well as maintaining a high level of security within the Schengen area, thanks to the obligation to consult the Schengen Information System when processing D visa applications, this report provides a fair and balanced solution to situations that must no longer arise in the future. The previous legislation, which did not allow a citizen of a third country with a long-stay visa granted by a Member State to travel to other Member States, did not meet the mobility needs of the majority of those citizens. We are talking about students, scientists, academics and others who, as part of their professional and/or academic work, need to travel between several Member States, and would not be able to do so under the existing legislation. In this way, these changes are rectifying this anomalous situation while still continuing to safeguard all security rules on the movement of citizens of third countries within the EU. I voted for this regulation because I consider that it is a welcome improvement to a previous measure which restricted the rights of long-stay visa holders in a Member State. Just as society is in a state of flux, European legislation must not remain standing still either because we are facing new problems and challenges. At the same time, we are being given new instruments for managing issues related, for instance, to free movement. This report aims to make it considerably easier for third-country nationals with a long-stay 'D' visa to move freely throughout the Community. In doing so, it completely disregards the fact that it ought to be within the competence of the Member States to decide whether and which third-country nationals are permitted to enter the country and who should be refused entry. It is for that reason that I voted against the report. in writing. - I voted, together with my group, in favour of this report because it points out that the proposals made in this framework seek to make it easier for third-country nationals legally residing in a Member State to move in the Schengen area on the basis of a D long-stay visa issued by that Member State. They are intended to provide a response to situations where Member States are unable, for various reasons, to issue residence permits in time to third-country nationals residing in their territory, by extending the existing principle of equivalence between a residence permit and short-stay C visas to long-stay D visas. A long-stay visa will thus have the same effect as a residence permit as regards circulation in the Schengen area. This will make it possible for anyone in possession of a document showing that he is legally resident in a Member State to move freely in the Schengen area for short periods of no more than three months in any half year. The free movement of individuals is one of the fundamental principles of the European Union, and the Schengen area was created in order to put this objective into practice effectively. The Group of the European People's Party, to which I belong, has always defended the principle of the freedom of movement of individuals, following the principle that rules and common procedures regarding visas, residence permits and the control of borders must form part of the full Schengen concept. In this context, I support the new measures which have been adopted, taking into account the fact that the free movement of nationals of third countries, that is, residents of a Member State on the basis of a type D long-stay visa travelling to other Member States within the Schengen area, is sometimes rendered difficult as a result of a delay in the conversion of their visa into a residence permit. In accordance with the document, the principle of equivalence between residence permits and short-stay visas will now be applied to long-stay visas. For these reasons, and given that the adopted measures not only leave matters relating to the granting of visas unaffected, including those relating to security issues, but also constitute a natural and necessary development of the Schengen concept, I voted in favour of the document. The Fianna Fáil members of the European Parliament, Pat the Cope Gallagher and Liam Aylward, strongly oppose what is proposed in this report regarding the introduction of a Common Consolidated Corporate Tax Base (CCCTB in English). The European Centre for Economic Studies carried out a study recently on how practical it would be to introduce the Common Consolidated Corporate Tax Base in Europe, and it was clear from that study's conclusions that such a tax system would not be workable, practical or desirable from the political point of view. A Common Consolidated Corporate Tax Base in Europe would not improve the competitiveness of the European Union or the operation of the single market, and on top of that, the CCCTB could interfere with small open economies like that of Ireland. The question of taxation is within the competence of the individual Member States and the Irish Government has the right to use its power of veto in relation to any tax measures, including CCCTB. This right is enshrined in the treaties, including the Treaty of Lisbon. Effective competition in the supply of goods and services reduces prices, improves quality and allows greater choice for consumers. It also allows technological innovation to progress. Research in the energy sector is crucial, along with investment in infrastructure, particularly in the interconnection of gas and electricity networks, in order to promote competition. The security of supply and real competition in the energy market depend on the interconnection and the smooth operation of energy infrastructures. Strong competitiveness is also important within the telecommunications sector with measures to promote competitiveness through preferential tariffs. In order to achieve this, it is important to analyse the relevant market. I would even stress the importance of monitoring the competitive behaviour of fuel markets within the European Union. I would emphasise that support mechanisms like State aid must not be used to protect national industries at the expense of the internal market and European consumers, and that these mechanisms should be used with the aim of re-establishing a sustainable knowledge economy. The report on competition policy shows how to enhance the functioning of the markets to the benefit of European consumers and businesses. Particular attention is paid to issues concerning cartels and consumers. Fighting cartels is vital to ensure that the benefits of a competitive system reach the end consumer. Indeed, they represent one of the most serious violations of competition law: operators are allowed to increase prices, limit production and divide the market up between themselves. The Commission has a sanctionative role, thus preventing anti-competitive behaviour, and imposes fines on cartel members, discouraging any business from indulging in or continuing anti-competitive behaviour. During an economic crisis there is a risk of increasing the level of protectionism. It is therefore necessary to avoid public intervention that would change the conditions of competition on the internal market but, at the same time, to acknowledge that State aid is sometimes essential in order to tackle the crisis. I voted in favour, since anti-competitive conditions encourage abuses of dominant positions to the detriment of SMEs and it is therefore vital that Europe does its best to provide greater guarantees and protection for goods. on behalf of the ECR Group, in writing. - The ECR Group is a firm supporter of strong and effective competition policy as a tool both for protecting the consumer and encouraging fair access to markets. We are happy to support the actions taken by the Commission in recent years in pursuit of these aims, and, in particular, their actions against unfair State aid. Thus, it is to our dismay that the report, which was initially well drafted, has been made less effective by the irrelevant and unwelcome additions of paragraphs pre-empting the outcome of the negotiations on the financial supervisory architecture, calling for a common consolidated corporate tax base and attacking the right of enterprises to employ contract staff. Members of our group have, in the past, voted in favour of reports on the Commission's competition policy and our hope is that such reports will, in future, emerge from the Economic and Monetary Affairs Committee in better shape. Our abstention reflects this concern, and we reiterate in this explanation of vote our support for the continued good work of the Commission in the field of competition. Greater competition means more choice for the European public and a more competitive environment for firms. As such, there should be no separation between EU policies on competition and those relating to consumers. Thus, action from the Committee to guarantee an effective competitive environment at the heart of the internal market are vital if we are to ensure the achievement of those objectives, although it may call into question the absolute powers conferred upon that institution. During the crisis of the past few months, the authorisation of the State aid justified by recent events has been fundamental for the recovery of the economy. Furthermore, the fight against cartels and the abuse of a dominant position by firms is fundamental if we are to guarantee that a climate of fair competition will survive within the internal market, allowing the various economic agents to benefit from conditions which are conducive to the pursuit of their activities. The economic crisis, the effects of which we are still experiencing, requires exceptional measures, such as State aid. However, it needs to be ensured that this does not unduly distort competition or increase the budgetary deficit and public debt. In view of this, its application should be a matter of sober consideration. The level of public debt, which is rapidly on the rise, will be a burden for future generations and an obstacle to economic recovery and growth. Excessive debt and budgetary deficits not only compromise the stability of the euro, but also place severe restrictions on public spending in priority sectors such as education, health, innovation and the environment. Within this context, it is necessary to proceed to a rigorous assessment of the rescue and recovery package and the effectiveness of State aid. Protectionism and fragmentation of the single market must be avoided, as they weaken Europe's position within the global economy. A single market that functions properly is the key to a healthy economy and, in all certainty, economic recovery. Ultimately, economic policies must gain more legitimacy through greater intervention by Parliament under the codecision process. Policies and effective rules relating to competition have always been crucial for the healthy coexistence of all economic operators in the euro area. Although the EU has been greatly affected by the recent global economic crisis, the truth is that a strong currency, a consistent single market, sound public finances and a good system of social protection have contributed greatly to helping us survive the effects of the crisis. However, the State aid distributed by various Member States without any concern for the good of the European Union as a whole could lead to significant distortions in competition. It is therefore crucial that there is an assessment of all the measures taken by each Member State to combat the crisis, so that in the future, the EU will have the capacity to react jointly and harmoniously in order to avoid protectionism and fragmentation of the single market. Such situations do nothing but harm Europe, which wants to be strong within the global economy. Policy on competition is one of the most important policies of the Community and was one of the first to be agreed. The legitimacy and necessity of its introduction relate directly to one of the main objectives of the European Communities, which was the establishment of a common market in the Member States. Competition policy is intended to give a guarantee that barriers to internal trade, which have been lifted as part of the common market, will not be replaced by other measures on the part of businesses or governments, because this would lead to the distortion of competition. Competition policy is principally concerned with the interests of consumers, and tries to ensure them easy access to goods and services offered on the single market at prices which are as close as possible throughout the Union. I would like just to draw your attention to the serious crisis which has hit Europe, and to say that an internal market which functions well is the key to a healthy economy, and is now certainly the key to the work of rebuilding which awaits us in the near future. This report contains some sensible proposals, such as the different treatment, within competition law, of multinational concerns, on the one hand, and small and medium-sized enterprises on the other. However, I do not believe that it is right to deregulate, or not to regulate, retail prices in the telecoms sector. In general, I consider the tenor of the report, which assumes the absolute efficiency of the free market, to be misguided. It is for that reason that I have voted against this report. I voted in favour of the report by Mrs in 't Veld, which welcomes the Commission's 2008 report on competition policy. Indeed, I share this positive view: this change in the Commission's approach should be noted. In fact, in this report, the Commission explains that it is putting the concerns of consumers at the centre of its activities in relation to competition, and that it considers that the main objective of competition policy is the optimisation of the wellbeing of consumers. I welcome this. Can it be that the Commission is finally acting fully in accordance with Article 12 of the Treaty of Lisbon, which stipulates that consumer protection must be taken into consideration in the definition and implementation of the other policies of the Union? I also encourage the Commission to continue to engage in the regular dialogue which it has decided to create between its services, consumers and the associations which represent them. In this respect, it is a good thing that, in 2008, a unit was created to deal with consumer relations within the DirectorateGeneral for Competition. We are now requesting a full report on the activities of this unit so that we may have a better idea of how useful it is. in writing. - I, together with my group, the Greens/EFA, voted in favour of the in 't Veld report on the annual Report on Competition Policy (2008) because it provides an opportunity for Parliament to set out its priorities and its assessment of the way the Commission conducts its competition policy. I am glad that, in line with the vote in the ECON Committee, the in 't Veld report was adopted (as expected) by a large majority (Greens in favour, as in the case of major political groups). Europe, hit by the economic crisis, was able to react quickly and mitigate the effects of the crisis thanks to its common currency, strong internal market and stable system of social protection. This does not mean there are now no perceptible repercussions, but signs of an improvement in the situation are visible. Unfortunately, consumers are still struggling with problems relating to making use of the benefits of competition. Their rights must be protected, but they need to be more aware and have greater knowledge. The proper functioning and competitiveness of the European market means the consumer is able to make use of the system of competition by choosing products, services and lower prices. Insufficient competition is, however, something which is currently being seen, especially in the pharmaceutical and telecommunications sectors. Absence of competition is directly detrimental to consumers, as it also is to the economy. There is also a need for monitoring of competitive behaviours in EU fuel markets. Penalties should be applied for breaking the law on the protection of competition which are commensurate to the violation, and stronger deterrents should be made use of in the case of repeated violations of the law. Above all, however, the crisis has shown up the weakness of the European economy and has indicated those areas which should be strengthened. All strategies of economic policy must still be subject to democratic control, and must be realised with care for the common good and with respect for the rights of the citizens of Europe. in writing. - I voted for this report. An effectively working internal market is essential for the creation of a stable and innovative economic environment. However, the internal market cannot function effectively without correctly transposed, applied and enforced Community rules. Unfortunately, the number of infringement proceedings remains too high in the Member States. Such a situation distorts the internal market and leaves customers without adequate protection. The European Parliament in 2008 called on the Commission to provide more detailed information on the directives which have not been implemented in the Member States, and I very much hope that the Commission will be able to present such information in the nearest future. In 1997, the Commission published the work of the first Internal Market Scoreboard. which focused on the implementation of the rules of the internal market by the Member States, given that substantial delays were preventing members of the public and businesses from making the most of the internal market. Through the assessment and publication of developments regarding implementation, the Evaluation Panel has contributed to a reduction in the level of non-implementation of directives by the Member States. I voted in favour of the present report as I consider it imperative that the Member States incorporate internal market legislation into their national legislation in a timely way, because the internal market can only operate properly if EU regulations relating to its operation are correctly implemented and applied, and if checks on compliance are made. Notwithstanding the fact that the Member States have achieved the highest standards in terms of time taken to incorporate internal market regulations into national legislation, I do not believe the data provided by the most recent Internal Market Scoreboard to be satisfactory. The creation of a stable and innovative internal market which caters for the needs of consumers and in which firms can maximise the creation of new jobs cannot coexist with systematic delays in the implementation of Community legislation and failure to apply directives. It is individuals and business that suffer most from the delay in implementation of policies relating to the internal market through the costs that result from reduced choice, less competition and less open markets. With this in mind, I believe it is important for Parliament to apply pressure regarding the application of internal market regulations. It was the Member States who set the implementation periods for these directives. They must at least be required to respect the objectives which they themselves set. This is a fundamental goal for an internal market in a period of economic crisis. Having improved the directive transposition deficit, which stands at 1%, it remains vital to focus on improving the actual implementation of internal market legislation in national legal systems. The Commission, Parliament and the Member States must make greater efforts in this regard and collaborate with one another. For its part, the Commission should do more to support the Member States throughout the transposition period, by means of dialogue and the exchange of information to resolve problems before the end of the deadline for transposition. It should also organise an annual internal market forum and look into new ways to eliminate the barriers remaining to completing the internal market, including the simplification of legislation. We Members of the European Parliament, as representatives of citizens, must exploit any possible opportunity to inform them of European legislation, by promoting studies, workshops, conventions and hearings. National parliaments, on the other hand, must be closely involved in European legislative processes to be aware of proposed measures in time, and improve cooperation between national, regional and local authorities. In this respect, the Treaty of Lisbon gives elected assemblies a more incisive role that they must make the most of. For all the above reasons, which are clearly explained in the report, I voted in favour. After the most recent publication (March 2010) of results by the Internal Market Scoreboard, it has been shown that the percentage of directives on the internal market which have not been incorporated into national legislation is 0.7%, a lower result than that presented in July 2009 which was, as noted by the rapporteur, 1.0%. The timely and appropriate implementation of Community legislation is vital to a greater integration of the internal market in view of its direct impact on legal certainty and the confidence of the European public. For this reason, Member States must adopt a responsible attitude in the application of this legislation so that in future, there will not be a lack of implementation, but rather greater legal certainty and the opportunity for the public to benefit from equitable conditions within the internal market. The internal market cannot function properly if the Community rules relating to its operation are not properly transposed and implemented and compliance with them is not verified. It is therefore imperative that Member States transpose internal market legislation into national law in a timely manner. There are 22 directives whose deadline for transposition expired more than two years ago. Furthermore, 6% of the directives were not transposed by all Member States, meaning that 100 directives on the internal market were not as effective as they could have been within the EU. The Member States and the Commission must act decisively in response to this situation. I endorse the view that the Commission should publish the directives that were not implemented in each Member State on its website, so that this situation becomes public knowledge. It appears that the number of cases of infringement is still too high; some Member States have a number of cases well above the EU average of 47. The Member States are also called on to ensure the operation of cross-border networks of electronic information systems created by the Commission. Contrary to what the report claims, it is clear today that the process of liberalising markets and privatising public services, which is still ongoing, has not brought any appreciable gains in terms of prices, quality of service or reduction in public spending. On the contrary, consumer protection organisations and users of public services report increases in prices, reductions in service quality and increases in the cost of service provision. Liberalisation has, in fact, contributed to the loss of jobs and to the creation of private monopolies, jeopardising the rights of workers, users of public services and consumers, as has clearly happened in telecommunications, transport, electricity and with post offices. This situation has, for its part, served to worsen the economic and social crisis. For these reasons, persisting with such a policy is arguing for a continued worsening of the socio-economic situation for millions of people. It means arguing for squandering public services, which are a public resource, as well as transferring them to private groups. It means arguing for insecurity, unemployment and poverty. It means arguing for widening the gap between the richest and poorest. It means arguing for a more unjust society. That is why we have not voted in favour. Mr President, ladies and gentlemen, we voted against Mrs Thun Und Hohenstein's report. This Parliament is fixated on the number of transposed directives, the famous Internal Market Scoreboard. Nobody ever questions the intrinsic quality of this legislation, or even the real need for or relevance of the 90 000 pages of text which represent what you call the 'acquis communautaire', or of the approximately 1 700 directives concerning the internal market. No more so, by the way, than they are concerned about finding out whether the objectives headlined when these texts were adopted have been achieved, whether the impact analyses have proved accurate, and whether the principles of subsidiarity and proportionality have been respected. All the shortcomings are said to be the responsibility of the Member States, which nonetheless have less and less room for manoeuvre in adapting these documents to national circumstances, given that the most minute detail is fixed, while the treaties indicate an obligation to produce results but not resources. A little selfanalysis and selfcriticism would do the European institutions a power of good. The Internal Market Scoreboard is a very important tool which gives information on the state of transposition of European legislation by the Member States. Despite their obligations, Member States are delaying transposition and are also carrying out transposition incorrectly. The scoreboard shows that Member States are managing increasingly well with the implementation of legislation, although a considerable number of them are still outside the target set. We need a clear obligation for Member States to improve these indicators. Recently, we have said a lot in the European Parliament about the necessity of strengthening the internal market. The internal market will not, however, function properly if the legislation which is the foundation of a correctly functioning internal market is not transposed properly and on time. The internal market must also gain the support of our citizens. Therefore, I endorse the rapporteur's suggestion to hold an annual internal market forum, as well as the suggestion of an 'internal market test', which is a suggestion to check legislation from the point of view of the four freedoms of the internal market: free flow of capital, goods, services and people. in writing. - The Internal Market Scoreboard provides a useful overview of the application of Community rules in areas of vital importance to European consumers and businesses. Unfortunately, Scotland does not as yet feature as an independent country on the scoreboard. I consider it essential that the Scottish parliament gains full powers in those areas currently reserved to London; when that happens, I am confident that Scotland will feature amongst the Member States implementing measures for the benefit of consumers and businesses. in writing. - I fully support the concept of the Internal Market Scoreboard as a tool for measuring the success of the single market. This is an essential tool for communicating how Member States treat European law. It also shows that the burden of over-regulation, which often tarnishes the image of the EU, is often not the fault of any EU institution but of the Member State itself. There is a lesson to be learned here and greater transparency is needed in future. Mr President, an effectively working internal market is reliant on satisfied consumers who have confidence in it. European consumers are vitally important as we move from recession into growth. The reports we have adopted raise important issues regarding how to improve consumer protection and the functioning of the internal market, which I supported during the Committee's deliberations and in today's vote. I will mention three of these. Firstly, the Internal Market Scoreboard is a welcome tool. Its five main indicators are surely crucial in evaluating how the internal market is functioning generally and from the point of view of consumers. I think we should support the idea that in future, the scoreboard should incorporate information on the implementation of internal market legislation in Member States that are still found wanting. We need to dispense with the 'cherry picking' mentality. Secondly, I am surprised at the very negative attitude of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament to the proposed internal market test. This is probably due to a mistaken conclusion, for the test could also act to promote specifically social and environmental objectives. That is surely what the entire integration process is about: the economy and a viable internal market are made to serve more general goals. History has shown the wisdom of the Schuman Declaration. Thirdly, I would like to express my support for the development of remedies to ensure the legal protection of consumers. In Finland, our system for the outofcourt settlement of consumer disputes and the consumer ombudsman institution work very well. The Commission needs to conduct an intensive dialogue with the Member State authorities to ensure the spread of good practices. Nevertheless, we need to remember that if consumer protection and the internal market are to be strengthened, aware and active consumers are more important than official monitoring and legal protection. A healthy internal market is crucial if there is to be sound competition and the economic development that comes with it. However, if this is to become a reality, Community directives need to be adopted by all Member States in the same way, without exceptions. The Internal Market Scoreboard and the Consumer Panel have a crucial role in improving the functioning of the internal market. Although we are on the right track, we are still a long way from achieving all the objectives outlined for a more efficient internal market. Everyone therefore needs to make an effort, including national parliaments, which have a very important and decisive role. in writing. - I finally decided to vote against the report because we failed in eliminating Article 10 from the text. The maintenance of this article is crucial because it calls for establishing systematic 'internal market tests' in order to verify ex ante whether EU legislative proposals comply with all internal market rules. As a result of a problem with the voting machine, my intended vote was not recorded. I therefore declare that I voted in favour of all the points on which voting took place in the present session.

Title: New Jersey U.SA- My parents are illegals but I am a U.S citizen... please read Answer #1: &gt;no criminal activity other than welfare fraud and tax fraud, both felonies.Answer #2: &gt;they have been living here for over 15 years with no criminal activity. This doesn't jive with &gt;my dad is working with a cousin's social security numberAnswer #3: Are you positive you are a citizen? Do you have a birth certificate showing you were born in the US? You need to talk to an immigration lawyer to pursue legalizing your parents.

AMENDMENT TO NOTE PURCHASE AGREEMENT THIS AMENDMENT TO NOTE PURCHASE AGREEMENT (this “Amendment”) dated as of December 7,2007, is entered into among Navistar Financial Retail Receivables Corporation (the “Seller”), Navistar Financial Corporation (“Servicer”), Kitty Hawk Funding Corporation, (“KHFC”), as a Conduit Investor, and Bank of America, National Association (“Bank of America”), as Agent, the Administrator and an Alternate Investor. RECITALS A.The Seller, the Servicer, KHFC and Bank of America are parties to that certain Note Purchase Agreement, dated as of February 27, 2006 (as amended, supplemented or otherwise modified through the date hereof, the “Agreement”). B.Such parties desire to amend the Agreement as hereafter set forth. C.NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1.Amendments to Agreement. By their signatures hereto, each of the parties hereto hereby agrees to the following amendments to the Agreement: (a)The Agreement is hereby amended by amending and restating Section 3.01 (a)(v) of the Agreement in its entirety to read as follows: “(v) except for those caused by the failure of NFC and its affiliates to deliver its financial statements and related financial information for the fiscal years ended October 31, 2005 or October 31, 2006, or for fiscal quarters ending January 31, April 30 and July 31 of 2006, or for the fiscal quarters ending January 31, April 30 and July 31 of 2007, in each case, prior to November 30, 2008, the Seller (i) is not in violation of its Certificate of Incorporation or By-Laws and (ii) is not in breach or violation of any of the terms or provisions of, or with the giving of notice or lapse of time, or both, would be in default under, any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, partnership agreement, or other agreement or instrument to which the Seller is a party or by which it may be bound or to which any of its properties or assets may be subject, except for such violations or defaults that would not have a Material Adverse Effect;” (b)The Agreement is hereby amended by amending and restating Section 3.01 (b)(vi) of the Agreement in its entirety to read as follows: “(vi) except for those caused by the failure of NFC and its affiliates to deliver its financial statements and related financial information for the fiscal years ended October 31, 2005 or October 31, 2006, or for fiscal quarters ending January 31, April 30 and July 31 of 2006, or for the fiscal quarters ending January 31, April 30 and July 31 of 2007, in each case, prior to November 30, 2008, NFC (i) is not in violation of its Certificate of Incorporation or By-Laws and (ii) is not in breach or violation of any of the terms or provisions of, or with the giving of notice or lapse of time, or both, would be in default under, any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, partnership agreement, or other agreement or instrument to which the Seller is a party or by which it may be bound or to which any of its properties or assets may be subject, except for such violations or defaults that would not have a Material Adverse Effect;” (c)The Agreement is hereby amended by amending and restating Section 5.02(c) of the Agreement in its entirety to read as follows: “(c)(1) as soon as available and in any event within (i) 45 days after the end of each of the first three fiscal quarters of any fiscal year and (ii) 120 days after the end of the last fiscal quarter of any fiscal year, copies of the interim or annual, as applicable, financial statements of NFC, prepared in conformity with generally accepted accounting principles consistently applied; provided, however that NFC shall not be required to deliver its financial statements for fiscal years 2005, 2006 and 2007 and for the fiscal quarters ending January 31, April 30 and July 31 of 2006, for the fiscal quarters ending January 31, April 30 and July 31 of 2007 and for the fiscal quarters ending January 31, April 30 and July 31 of 2008 (such financial statements, collectively, the “Financial Statements”) until the earlier to occur of November 30, 2008 and five (5) Business Days after the filing thereof with the SEC and (2) as soon as available but no later than the due dates therefor prescribed in Section 4 of the Fifth Waiver and Consent, dated as of November [_],2007 (the “Fifth Waiver”)to the Amended and Restated Credit Agreement dated as of July 1, 2005, among the Servicer and Bank of America, among others, each of the reports referred to in Section 4 of the Fifth Waiver, provided, however, that such reporting shall not be required so long as the Servicer’s parent has filed all reports with the Securities and Exchange Commission required pursuant to Section 13 of the Exchange Act; provided further, however, that each of the Seller and the Servicer acknowledge and agree that, notwithstanding any provision in the Agreement, that an immediate Event of Default will occur if, without the need for the giving of any notices by any party or the passage of any grace period, the Agent shall not have received the Financial Statements by the earlier of (i) November 30, 2008 and (ii) five (5) Business Days after the filing of such Financial Statements with the SEC, unless the Agent, each Conduit Investor and each Alternate, shall have provided a further waiver of the covenant violation described in this sentence on or before such date; and 2.Waiver. By their signature hereto, each of the parties hereto waives (i)any condition or covenant that has not been satisfied, the breach of any representation or warranty made or deemed made, and any occurrence of an Event of Default, termination or similar event (in each case, with respect to all of the foregoing, whether such event is matured or unmatured and collectively referred to herein as a “Default”), under the Agreement, solely to the extent such Default was caused directly by or resulted directly from a breach of any representation or warranty in Section 3.01(a)(xii) or Section 3.01(b)(x) of the Agreement resulting from or arising out of any restatement, in connection with the audit conducted for the fiscal year ended October 2005, or October 31, 2006, of any financial statements of NFC or any of its affiliates for any period ending on or before the expiration of the waiver contemplated herein, or any reports, financial statements, certificates or other information containing similar or derived information therefrom with respect to such periods, provided that each such report shall be delivered by the earlier of (i) November 30, 2008 and (ii) five (5) Business Days after the filing thereof with the SEC. Each party (other than NFC and the Seller) hereto hereby expressly reserves, and nothing herein shall be construed as a waiver of NFC’s failure to comply with Sections 3.01(a)(v), 3.01(b)(vi) and 5.02(c), as amended hereby or any Servicer Default occurring as a result of NFC’s failure to deliver the reports referred to in the immediately preceding sentence on or before the earlier of (i) five (5) Business Days after the filing thereof with the SEC and (ii) November 30, 2008. 3.Representations and Warranties. The Seller hereby represents and warrants to KHFC and Bank of America that, after giving effect to this Amendment, no Event of Default has occurred and is now continuing, and NFC hereby represents and warrants that, after giving effect to this Amendment, no Event of Default or Servicer Default has occurred and is now continuing. 4.Effect of Amendment. All provisions of the Agreement, as extended by this Amendment, remain in full force and effect. After this Amendment becomes effective, all references in the Agreement to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Agreement in the Agreement or in any other document relating to the Seller’s securitization program shall be deemed to be references to the Agreement as extended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement other than as set forth herein. 5.Conditions Precedent. The effectiveness of this Amendment is subject to the receipt of the fee specified in the fee letter, dated as of the date hereof. 6.Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 7.Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to any otherwise applicable principles of conflicts of law. 8.Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreement or any provision hereof or thereof. [signatures on next page] IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, as Seller By: /s/ JOHN V.MULVANEY, SR. Name: John V. Mulvaney, Sr. Title: V.P., CFO & Treasurer NAVISTAR FINANCIAL CORPORATION, as Servicer By: /s/ JOHN V.MULVANEY, SR. Name: John V. Mulvaney, Sr. Title: V.P., CFO & Treasurer KITTY HAWK FUNDING CORPORATION, as a Conduit Investor By: /s/ PHILIP A. MARTONE Name: Philip A. Martone Title: Vice President BANK OF AMERICA, NATIONAL ASSOCIATION, as Agent, Administrator and as an Alternate Investor By: /s/ WILLEM VAN BEEK. Name: Willem Van Beek Title: Principal

  Exhibit 10.5.16 Via Hand Delivery January 08, 2007 Eric Pryor 119 Fairwood Court Danville, CA 94506 Dear Eric, As previously discussed with your manager, your position is currently among those scheduled to be relocated to Houston. This letter and attachments provide additional information regarding this very important transition for you and our company. One of our goals with the consolidation of certain functions in Houston is to accelerate the creation of a more integrated culture and leadership team for the new Calpine with a unified vision of who we are, where we are going, and how we are going to get there. We believe this is an exciting opportunity for you to be part of a new beginning with Calpine. We hope you will seriously consider joining us in Houston. If you choose to relocate with your position to Houston prior to September 3, 2007, you are eligible for level 4 relocation assistance as outlined in the attached Relocation Summary. All business travel to Houston prior to your permanent relocation on or before September 3, 2007, will be treated as usual and customary business expenses. If your decision is to not relocate with your position at this time, Calpine is offering you the option of commuter status. While you are in commuter status, Calpine will reimburse you for the following reasonable and customary commuting expenses until September 3, 2007; airfare, lodging, taxi/auto rental, and meals. You may continue to commute after September 3, 2007, however, associated expenses as outlined above will be treated, for tax purposes as business expenses and incrementally deducted from a portion of the relocation package for which you are eligible. The total amount available for funding to support commuting expenses after September 3, 2007 is $50,000. This amount is reflective of the estimated relocation services provided in your package, excluding real estate costs associated with the sale of your current home and the purchase of a new home in the Houston area. Once this $50,000 allowance for commuting expenses is exhausted, you will be solely responsible to cover commuting costs. Please note that beginning September 3, 2007 you will be expected to maintain a customary full-time schedule in Houston, which generally includes full days Monday thru Friday. Prior to September 3, 2007, you will be expected to engage in travel to Houston as deemed appropriate and necessary by your manager. If you decide to permanently relocate to the Houston area after September 3, 2007, only the balance remaining in the relocation package will be offered to support relocation costs incurred. If the full $50,000 has been exhausted, only the real estate related portion, as outlined in the attached summary, will be available.     Lastly, should you choose to leave Calpine instead of relocating to the Houston area prior to June 30, 2008, you will be eligible for severance benefits as described in the attached Severance Policy. In addition to the severance benefits, you will be eligible for a 2006 CIP bonus, if funded, and a 2007 Transaction Bonus equal to 100% of your CIP target. Should you choose to leave Calpine instead of relocating to the Houston after June 30, 2008, you will be eligible for severance benefits as determined and in place by Calpine at the time of your termination of employment. Calpine reserves the right to extend the September 3, 2007 date referenced above We appreciate your support and look forward to working with you to ensure a smooth and successful transition. Please complete and return a copy of this letter, including the election form below, on or before January 19, 2007. If you have questions regarding the terms and conditions outlined above, please contact Ed Pawkett at (408)794-2411. Sincerely, -s- Kelly J. Zelinski [f27583f2758301.gif] Kelly J. Zelinski If your decision is not to relocate with your position to Houston, please consider applying for other positions within Calpine. Should you elect not to move into another Calpine position and you remain employed up to the scheduled transition date, you will be eligible for severance benefits as described in the attached Severance Policy. In addition to the severance benefits, you will also be eligible for a 2006 CIP bonus (if funded) and a 2007 Transaction Bonus equal to 100% of your CIP target (if your transition date is sometime in 2007) for staying with Calpine until your position relocates to Houston. EMPLOYEE ELECTION AND AKNOWLEDGEMENT      Check one:                           I agree to relocate to Houston on or before September 3rd, 2007.               X         I accept the commuter option and will decide whether to relocate at a later date. I acknowledge and understand that the terms and conditions outlined above do not affect my status as an “at-will” employee in any way. I further understand that if I am terminated for cause at any point then I am not eligible for severance benefits regardless of how long I stay with Calpine. “Cause” shall mean (i) material breach of company policy, (ii) conviction of a felony, (iii) repeated unexplained or unjustified absence, (iv) willful insubordination, or (v) failure to meet Calpine’s standards of competence and job performance. Signed /s/ Eric N. Pryor      Date                                         

Exhibit 99.1 Financial Statements and Supplementary Data. Page No. • Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP. F-1 • Report of Independent Registered Public Accounting Firm McGladrey & Pullen, LLP. F-2 • Consolidated Balance Sheets of the Company as of December31, 2008, and for Waterfront, as of December31, 2007 F-3 • Consolidated Statements of Operations, of the Company for the period from March20, 2008 through December31, 2008 and for Waterfront, for the period from January1, 2008 through March19, 2008, and for the year ended December31, 2007 F-4 • Consolidated Statements of Stockholders’ Equity (Members’ Deficit) of the Company for the period from March20, 2008 through December31, 2008, and for Waterfront, for the period from January1, 2008 through March19, 2008, and for the year ended December31, 2007 F-5 • Consolidated Statements of Cash Flows, of the Company for the period from March20, 2008 through December31, 2008, and for Waterfront, for the period from January1, 2008 through March19, 2008, and for the year ended December31, 2007 F-6 • Notes to Consolidated Financial Statements F-7 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Pacific Office Properties Trust, Inc.: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholders’ equity (members’ deficit), and of cash flows present fairly, in all material respects, the financial position of Pacific Office Properties Trust, Inc. (the “Company”) at December31, 2008 and the results of their operations and their cash flows for the period from March20, 2008 to December31, 2008 in conformity with accounting principles generally accepted in the United States of America.

Exhibit 10.7 Rental Agreement (Translation) Property Landlord: Yonggan Fang Tenant: Shandong Jiajia International Freight & Forwarding Co., Ltd. Lianyungang Branch Both parties have agreed on the following property leasing terms and entered this agreement for execution. 1. Property Landlord leases its own housing property located at: China Logistic Mansion, Suite 804 to Tenant for use. The construction area of the property is 110 square meters. 2. The annual rent for the property is RMB 30,000 (with internet access provided). The rental term commences on March 15th,2011 and ends onMarch 15th ,2012. The tenant is required to pay the landlord the annual rent RMB 30,000 in cash by April 10th 2011. 3. During the term, the landlord shall take responsibility for the following : 1) the property in good condition for tenant’s use 2) Regular check on the property and its attachments and bearing expenses for regular maintenance 3) If landlord plans to sell or pledge the property, he/she should notice the tenant three months in advance. 4. During the term, the tenant shall take responsibility for the following: 1) Tenant shall get landlord’s written permission before making any remodel to the property or expansion of equipment use at the expenses of the tenant. 2) Tenant is responsible for compensating or repairing the damages to the property or equipments due to the misuse or other negligent conduct of the tenant 3) Tenant shall assist in the regular maintenance and check conducted by landlord on the property. 4) Tenant shall return the property to the landlord upon expiration of the lease. If the tenant needs to continue to lease this property, the tenant shall negotiate with the landlord two months before expiration date, and both parties shall enter a new lease agreement based on negotiation. 5. Breach: If either party is unable to perform this Agreement, the other party has the right to terminate the agreement before the expiration date, and the defaulting party shall bear the loss incurred; if the tenant doesn’t pay the due rents or other expense on time, the landlord has right to terminate the agreement and take back the property; if the tenant does not pay off outstanding bills, the landlord has right to detain some items of the tenant in the property. 6. If the property and accessories are damaged due to force majeure, either party has no responsibility for the loss of the counterpart. 7. Both parties shall take a consultative approach to solve the dispute during the lease, if consultations fail, they may file to the court which has jurisdiction over the prosecution for the legal proceeding. 8. This lease agreement has two original copies with identical content. Each party has one original copy. 9. Miscellaneous: The tenant shall pay for the electric bill on time every month. Landlord: /s/ Yonggan Fang Date: March 25, 2011 Tenant: Shandong Jiajia International Freight & Forwarding Co., Ltd. Lianyungang Branch (corporate seal) Signature of Authorized Representative: /s/Shouliu Kang Date: March 25, 2011 Signed by landlord:Signed by tenant:

Exhibit 10.1 December 27, 2017 Pamela H. Patsley Dallas, TX 75201 Dear Ms. Patsley: This agreement is entered into by and between Pamela H. Patsley (“Executive”) and MoneyGram International, Inc. (the “Company”), and sets forth certain amendments to the Employment Agreement entered into between the Executive and the Company dated as of July 30, 2015, effective as of January 1, 2016 (the “Employment Agreement”). This agreement, and the amendments set forth herein, shall be effective as of the later signature date set forth below (the By signing below, Executive and the Company acknowledge and agree that, 1.    Section 1 of the Employment Agreement shall be deleted and the following “1. Employment. The Company hereby agrees to continue to employ Executive, and employment pursuant to the terms hereof, until February 2, 2018 (the “Term”).” 2. Section 4.2 of the Employment Agreement shall be deleted and the following “4.2 Cash Bonus. As of the Effective Date, Executive’s eligibility to receive an award under the Company’s Performance Bonus Plan, as amended from time to time, or any successor annual incentive compensation program (“PBP”), shall be in the sole discretion of the Board and subject to achievement of any annual PBP bonus goals established by the HRN or the Board in its sole discretion. For the avoidance of doubt, this Section 4.2 shall not affect the terms of any annual bonus awards previously granted to Executive under the PBP and outstanding as of the Effective Date. 3. Section 4.3 of the Employment Agreement shall be deleted and the following “4.3 Equity Awards. As of the Effective Date, Executive shall not be eligible to receive any awards under the Company’s 2005 Omnibus Incentive Plan, as amended from time to time, or any successor equity incentive compensation program (the “Equity Plan”). For the avoidance of doubt, this Section 4.3 shall not affect the terms of any outstanding awards granted under the Equity Plan and held by Executive as of the Effective Date, including the settlement or vesting provisions thereof. 4.    Section 6.2 of the Employment Agreement shall be deleted and the following “6.2 Expiration of the Term. Upon expiration of the Term, Executive shall be (b), (e) and (f) hereof.” In the event of conflict between the terms of the Employment Agreement and the terms of this agreement, the terms of this agreement shall govern. Except as specifically referenced or addressed herein, all other terms, covenants and provisions of the Employment Agreement are hereby ratified and confirmed and   2 Name:   Laura Gardiner Title:   Chief Human Resources Officer Date:   December 27, 2017   ACKNOWLEDGED AND AGREED: Pamela H. Patsley December 27, 2017 Date   SIGNATURE PAGE TO EMPLOYMENT AGREEMENT LETTER AMENDMENT

Exhibit 10.3b   AMENDMENT TO SECURED CONVERTIBLE PROMISSORY NOTE SERIES 2017-08   THIS AMENDMENT TO SECURED CONVERTIBLE PROMISSORY NOTE SERIES 2017-08 (the “December 2018 Amendment”) is made effective as of December 21, 2018 (the “Effective Date”) by and between Drone Aviation Holding Corp., a Nevada corporation (the “Company”) and ______ (the “Holder”) (collectively the   BACKGROUND   A. The Company and Holder are the parties to that certain Secured Convertible Promissory Note Series 2017-08 Note originally issued by the Company to the Holder on August 3, 2017 (the “Note”);   B. The Parties amended the Note on September 26, 2018 pursuant to the terms of an Amendment to Convertible Promissory Note (the “September 2018 Amendment”);   C. The principal balance of the Note is $2,000,000.00 as of the Effective Date and the accrued and unpaid interest on the Note is $15,369.86 as of December 21, 2018 (collectively, the “Indebtedness”); and   D. In exchange for the Holder’s agreement to immediately convert the Indebtedness concurrently with the execution of this December 2018 Amendment on the Effective Date (the “Conversion”) and such other good and valuable consideration provided for in this December 2018 Amendment, the Parties desire to amend the Note as set forth below and take such further action as set forth below as part of the Company’s efforts to strengthen its balance sheet and improve its working capital.   NOW THEREFORE, in consideration of the execution and delivery of the December 2018 Amendment and other good and valuable consideration, the receipt and   1. Section 2(c) of the Note shall be amended to delete Section 2(c) in its   2(c) Conversion Price. For purposes of this Note, the term “Conversion Price” shall mean, with respect to conversion pursuant to Sections 2(a), (b), (c) and (d)(ii), $0.50 per share subject to adjustment in accordance with Section 2(g).   2. The Holder hereby elects to convert the Indebtedness pursuant to the terms and conditions of the Note, as amended hereby and as set forth in the Notice of Conversion attached hereto as Exhibit A.   3. This December 2018 Amendment shall be deemed part of, but shall take Note. All initial capitalized terms used in this December 2018 Amendment shall have the same meaning as set forth in the Note unless otherwise provided. Except not in conflict with the terms of this December 2018 Amendment, shall remain in   1     SIGNATURE PAGE TO NOTE AMENDMENT   IN WITNESS WHEREOF, the parties hereto have executed this December 2018   DRONE AVIATION HOLDING CORP.                 By:     By:                      Kendall W. Carpenter     Trustee   Chief Financial Officer                      2     EXHIBIT A   NOTICE OF CONVERSION     The undersigned hereby elects to convert the principal amount and accrued interest due under the Note (defined below) into shares of Common Stock to be below, of Drone Aviation Holding Corp., a Nevada corporation (the “Company”) according to the conditions of the Secured Convertible Promissory Note Series 2017-2018 issued by the Company on August 3, 2017, as amended (the “Note”), as   Conversion calculations:   Date to Effect Conversion   Balance of Principal Amount of the Note prior to Conversion: $ Principal Amount of Note to be Converted: $ Accrued Interest: $ Total Amount to be Converted: $ Number of shares of Common Stock to be Issued:   Applicable Conversion Price: $0.50 Balance of Principal Amount of Note subsequent to Conversion: $0 Address for Delivery: Transfer Agent Book Shares   or   DWAC Instructions: Broker no: _________ Account no: ___________       3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of August, 2013. Commission File Number 000-51341 Gentium S.p.A. (Translation of registrant’s name into English) Piazza XX Settembre 2, 22079 Villa Guardia (Como), Italy (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F[X]Form 40-F [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes[ ]No [X] If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-. EXPLANATORY NOTE Crinos S.p.A., a subsidiary of the Stada Group, has waived its right to royalty payments equal to 1.5% of the net sales of Defibrotide in Europe for seven years following the Registrant’s receipt of a marketing authorization for Defibrotide from the European Medicines Agency, the rights of which Crinos S.p.A. had previously acquired pursuant to an agreement with the Registrant in 2006.The wavier was obtained in connection with the Registrant’s agreement with EG S.p.A., another subsidiary of the Stada Group, dated July 3, 2013, whereby the Registrant agreed to (i) sell the Italian marketing authorization for Genkinase, and (ii) supply EG S.p.A. and Crinos S.p.A. Urochinasi (the active pharmaceutical ingredient of Genkinase) for a period of five years. This report and the exhibit attached thereto are incorporated by reference into the registration statements of Gentium S.p.A. on Forms F-3:File No. 333-135622, File No. 333-137551, File No. 333-138202, File No. 333-139422, File No. 333-141198, and File No. 333-174575 and on Forms S-8: File No. 333-137534, File No. 333-146534 and File No. 333-181171. Exhibit Description 1 Waiver from Crinos S.p.A. dated July 3, 2013. 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 thereunto duly authorized. GENTIUM S.P.A. By: /s/ Salvatore Calabrese Title: Chief Financial Officer and Senior VP, Finance Date: August 8, 2013 INDEX TO EXHIBITS Exhibit Description 1 Waiver from Crinos S.p.A. dated July 3, 2013.

Exhibit 10.1 THIS AMENDED AND RESTATED TRANSACTION AND ADVISORY FEE AGREEMENT (this “Agreement”) is dated as of December 23, 2009 and is between Pinnacle Foods Finance LLC, a Delaware limited liability company (together with its successors, the “Company”) and Blackstone Management Partners V L.L.C., a Delaware limited liability company (“BMP”). Capitalized terms used in this Agreement and not defined herein shall be as defined in the Stock Purchase Agreement, dated as of November 18, 2009 (the “Stock Purchase Agreement”), among Birds Eye Holdings LLC, a Delaware limited liability company (“Seller”), Birds Eye Foods, Inc., a Delaware corporation (“Birds Eye”), and Pinnacle Foods Group LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Pinnacle Opco”). BACKGROUND 1. Peak Finance LLC, a Delaware limited liability company that was merged with and into the Company (with the Company as the surviving entity) and BMP entered into to that certain Transaction and Advisory Fee Agreement, dated as of April 2, 2007 (the “Current Transaction and Advisory Fee Agreement”), pursuant to which, among other things, BMP has provided certain financial and structural analysis, due diligence investigation, corporate strategy, and other financial advisory services to the Company. 2. Pursuant to the Stock Purchase Agreement, Pinnacle Opco will acquire all of the issued and outstanding capital stock of Birds Eye from Seller (the “Acquisition”) as of the Closing. 3. BMP has expertise in the areas of finance, strategy, investment, acquisitions and other matters relating to the Company, Birds Eye, and their respective businesses, and has facilitated the Acquisition and certain other related transactions (collectively, the “Transactions”) through its provision of financial and structural analysis, due diligence investigations, other advice and negotiation assistance with all relevant parties to the Transactions. BMP has also provided advice and negotiation assistance with relevant parties in connection with the financing of certain of the Transactions as contemplated by 4. The Company desires to continue to avail itself, for the term of this Agreement, of BMP’s expertise and services as aforesaid, which the Company believes will be beneficial to it, and BMP desires to continue to make such expertise available and provide such services to the Company on the terms, and subject to the conditions set forth in this Agreement in consideration of the payment of the fees described below by amending and restating in its entirety the Current Transaction and Advisory Fee Agreement. 5. The rendering by BMP of the services described in this Agreement and the funding of equity by certain Affiliates (as defined below) of BMP (the “Affiliated Investors”) has been made and will be made on the basis that the Company will pay, or cause to be paid, the fees described below. AGREEMENT SECTION 1. Transaction and M&A Advisory Fees. In consideration of BMP undertaking financial and structural analysis, due diligence investigations, corporate strategy and other advice and negotiation assistance necessary in order to enable the Transactions to be consummated, Pinnacle Opco will pay, or the Company will cause Pinnacle Opco to pay, BMP at the Closing a non-refundable and irrevocable transaction fee of $14,000,000. SECTION 2. Appointment. The Company hereby engages BMP to render the Services (as defined below) on the terms and subject to the conditions of this Agreement. SECTION 3. Services. (a) BMP agrees that until the Termination Date (as defined in Section 8, below) or the earlier termination of its obligations under this Section 3(a) pursuant to Section 4(f) hereof, it will render to the Company, by and through itself and its affiliates, and such of their respective directors, officers, employees, representatives, agents and third parties as BMP in its sole discretion may designate from time to time (its “Affiliates”), advisory and consulting services in relation to the affairs of the Company and its subsidiaries, including, without limitation, (i) advice regarding the structure, distribution and timing of private or public debt or equity offerings and advice regarding relationships with the Company’s and its subsidiaries’ lenders and bankers, including in relation to the selection, retention and supervision of independent auditors, outside legal counsel, investment bankers or other financial advisors or consultants, (ii) advice regarding the strategy of the Company and its subsidiaries, (iii) advice regarding the structuring and implementation of equity participation plans, employee benefit plans and other incentive arrangements for certain key executives of the Company, (iv) general advice regarding dispositions and/or acquisitions and (v) such other advice directly related or ancillary to the above financial advisory services as may be reasonably requested by the Company (collectively, the “Services”). However, BMP will have no obligation to provide any other services to the Company absent an agreement between BMP and the Company over the scope of such other services and the payment therefor. (b) It is expressly agreed that the Services to be rendered hereunder will not include investment banking or other financial advisory services which may be provided by BMP or any of its Affiliates to the Company or any of its recapitalization, issuance of private or public debt or equity securities (including, without limitation, an initial public offering of equity securities), financing or similar transaction by the Company or any of its subsidiaries. BMP may be entitled to receive additional compensation for providing services of the type specified in the preceding sentence by mutual agreement of the Company or such subsidiary, on the one hand, and BMP or its relevant Affiliates, on the other hand. In the absence of an express agreement regarding compensation for services performed by BMP or any of its Affiliates in connection with any such transaction specified in this Section 3(b), and without regard to whether any such services were performed, BMP shall be entitled to receive upon consummation of: (i) any such acquisition, divestiture, disposition, merger, consolidation, restructuring or recapitalization, a non-refundable and irrevocable fee equal to (x) 1% of the aggregate enterprise value of the acquired, divested, merged, consolidated, restructured or recapitalized entity (calculated, on a common equity (or the fair market value thereof if not publicly traded), (2) the value of its preferred stock (at liquidation value), (3) the book value of its cash and cash equivalents), or (y) if such transaction is structured as an asset purchase or sale, 1% of the consideration paid for or received in respect of the assets acquired or disposed of; (ii) any such refinancing, a non-refundable and irrevocable fee equal to 1% of the aggregate value of the securities subject to such refinancing; and (iii) any such issuance, a non-refundable and irrevocable fee equal to 1% of the aggregate value of the securities subject to such issuance. (c) Without affecting the rights of BMP under Section 3(b) hereof, if the Company or any of its subsidiaries determines that it is advisable for the Company or such subsidiary to hire a financial advisor, consultant, investment banker or any similar advisor in connection with any acquisition, divestiture, securities), financing or similar transaction, it will notify BMP of such determination in writing. Promptly thereafter, upon the request of BMP, the parties will negotiate in good faith to agree upon appropriate services, compensation and indemnification for the Company or such subsidiary to hire BMP or one of its Affiliates for such services. The Company and its subsidiaries may not hire any person, other than BMP or one of its Affiliates, to perform any such services unless all of the following conditions have been satisfied: (i) the parties are unable to agree upon the terms of the engagement of BMP or its Affiliate to render such services after 30 days following receipt by BMP of such written notice; (ii) such other Person has a reputation that is at least equal to the reputation of BMP or its Affiliate in respect of such services; (iii) ten business days have elapsed after the Company or such subsidiary provides a written notice to BMP of its intention to hire such other Person, which notice shall identify such other Person and shall describe in reasonable detail the nature of the services to be provided, the compensation to be paid and the indemnification to be provided; (iv) the compensation to be paid is not more than BMP or its Affiliate was willing to accept in the negotiations described above; and (v) the indemnification to be provided is not more favorable to the Company or the applicable subsidiary than the indemnification that BMP or its Affiliate was willing to accept in the negotiations described above. SECTION 4. Advisory Fee. (a) In consideration of the Services being rendered by BMP, for the term of this Agreement, the Company will pay, or will cause to be paid, to BMP an annual non-refundable and irrevocable advisory fee (the “Advisory Fee”; the term “Advisory Fee” as used in this Agreement with respect to any annual period means all amounts payable with respect to such annual period pursuant to Sections 4(b) or (c) hereof, as applicable; provided that notwithstanding anything to the contrary contained in this Agreement, the minimum annual Advisory Fee payable to BMP shall be $2,500,000). (b) The Advisory Fee for the year ending December 31, 2009 was equal to $2,500,000 and was paid to BMP on August 21, 2009. (c) The Advisory Fee for fiscal year 2010 and each subsequent year shall be equal to the greater of $2,500,000 or 1% of Consolidated EBITDA (as defined in that certain Credit Agreement (as amended, supplemented or otherwise modified from time to time) entered into as of April 2, 2007, by and among the Company, as borrower, Peak Finance Holdings LLC, a Delaware limited liability company, Barclays Bank PLC as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer, Goldman Sachs Credit Partners L.P., as Syndication Agent and Lender, Mizuho Corporate Bank Ltd and General Electric Capital Corporation, as Co-Documentation Agents and as Lenders and each lender from time to time party thereto. The Company will pay, or cause to be paid, to BMP, such Advisory Fee on January 1, 2010, and thereafter on January 1 of each subsequent year throughout (d) In the event the Company or any of its subsidiaries enters into a business combination transaction with another entity that is large enough to constitute a “significant subsidiary” of the Company under any of the relevant tests contained in Regulation S-X as promulgated by the Securities and Exchange Commission, the Company and BMP will mutually agree, following good faith negotiations, on an appropriate increase in the minimum annual Advisory Fee as warranted by the increase in the Company’s size. Such increase will be based on the percentage increase in the Company’s EBITDA determined on a pro forma basis giving effect to such business combination transaction. (e) To the extent the Company cannot pay, or cause to be paid, the Advisory Fee for any reason, including by reason of any prohibition on such payment pursuant to any applicable law or the terms of any debt financing of the Company or its subsidiaries, the payment by the Company or any of its subsidiaries to BMP of the accrued and payable Advisory Fee will be payable immediately on the earlier of (i) the first date on which the payment of such deferred Advisory Fee is no longer prohibited under any contract applicable to the Company and the Company or its subsidiaries, as applicable, is otherwise able to make such payment, or cause such payment to be made, and (ii) total or partial liquidation, dissolution or winding up of the Company. Notwithstanding anything to the contrary herein, under any applicable law or under any contract applicable to the Company or its subsidiaries, any forbearance of collection of the Advisory Fee by BMP shall not be deemed to be a subordination of such payments to any other Person or creditor of the Company or its subsidiaries. Any such forbearance shall be at BMP’s sole option and discretion and shall in no way impair BMP’s right to collect such payments. Any installment of the Advisory Fee not paid on the scheduled due date will bear interest, payable in cash on each scheduled due date, at an annual rate of 10%, compounded quarterly, from the date due until paid. (f) Notwithstanding anything to the contrary contained in this Agreement, BMP may elect (in its sole discretion by the delivery of written notice to the Company) at any time in connection with or in anticipation of a change of assets or an initial public offering of the equity of the Company or its successor or any controlling person thereof (or at any time thereafter) to receive, in consideration of the termination of the Services and for any remaining Advisory Fees payable by the Company under this Agreement and in addition to any fees owing to BMP in connection with such transaction pursuant to Section 3(b) hereof, a single lump sum non-refundable and irrevocable cash payment (the “Lump Sum Fee”) equal to the then present value (using a discount rate equal to the yield to maturity on the date of such written notice of the class of outstanding U.S. government bonds having a final maturity closest to the tenth anniversary of April 2, 2007 (the “Discount Rate”)) of all then current and future Advisory Fees payable under this Agreement, assuming the Termination Date is the tenth anniversary of April 2, 2007. Promptly after the receipt of such written notice, the Company shall pay the Lump Sum Fee to BMP by wire transfer in same-day funds to the bank account designated by BMP, which payment shall not be refundable under any circumstances. Following the payment of the Lump Sum Fee, the obligation of BMP to provide the Services hereunder, and the obligations of the Company to pay Advisory Fees, shall be terminated, but all other provisions of this Agreement shall continue unaffected. (g) To the extent the Company does not pay, or cause to be paid, any portion of the Lump Sum Payment by reason of any prohibition on such payment pursuant to any applicable law, the terms of any agreement or indenture governing indebtedness of the Company or its subsidiaries, any unpaid portion of the Lump Sum Payment shall be paid to BMP on the first date on which the payment of such unpaid amount is permitted under such agreement or indenture. Notwithstanding anything to the contrary herein, under any applicable law or under any contract the Lump Sum Fee by BMP shall not be deemed to be a subordination of such subsidiaries. Any such forbearance shall be at BMP’s sole option and discretion and shall in no way impair BMP’s right to collect such payments. Any portion of the Lump Sum Payment not paid on the scheduled due date shall bear interest at an annual rate equal to the Discount Rate, compounded quarterly, from the date due until paid. SECTION 5. Reimbursements. In addition to the fees payable pursuant to this Agreement, the Company will pay, or cause to be paid, directly, or reimburse BMP and each of its Affiliates for, their respective Out-of-Pocket Expenses (as defined below). For the purposes of this Agreement, the term “Out-of-Pocket Expenses” means the out-of-pocket costs and expenses incurred by BMP and its Affiliates in connection with the Transactions and the Services or any other services provided by them under this Agreement (including prior to the Closing), or in order to make Securities and Exchange Commission and other legally required filings relating to the ownership of equity securities of the Company or its successor by BMP or its Affiliates or otherwise incurred by BMP or its Affiliates from time to time in the future in connection with the ownership or subsequent sale or transfer by BMP or its Affiliates of capital stock of the Company or its successor, including, without limitation, (a) fees and disbursements of any independent professionals and organizations, including independent accountants, outside legal counsel or consultants, retained by BMP or any of its Affiliates, (b) costs of any outside services by BMP or any of its Affiliates, and (c) transportation, per diem costs, word processing expenses or any similar expense not associated with BMP’s or its Affiliates’ ordinary operations. All payments or reimbursements for upon or as soon as practicable following request for payment or reimbursement in accordance with this Agreement, to the bank account indicated to the Company by the relevant payee. The Company will indemnify and hold harmless BMP, its Affiliates and their respective partners (both general and limited), members (both managing and otherwise), shareholders, officers, directors, employees, agents and representatives (each such Person being an “Indemnified Party”) from and against any and all actions, suits, investigations, losses, claims, damages and the Services or other services contemplated by this Agreement or the Current Transaction and Advisory Fee Agreement (including, in each case, prior to the Closing) or the engagement of BMP pursuant to, and the performance by BMP of the Services or other services contemplated by, this Agreement or the Current Closing), whether or not pending or threatened, whether or not an Indemnified the Company. The Company will reimburse any Indemnified Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as they are incurred in connection with action, claim, suit, investigation or proceeding for which the Indemnified Party would be entitled to indemnification under the terms of the previous sentence, Party is a party thereto. The Company agrees that it will not, without the prior relating to the matters contemplated hereby or the Current Transaction and Advisory Fee Agreement (including, in each case, prior to the Closing) (if any appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party. The rights of an Indemnified Party to indemnification hereunder will be in addition to any other rights and remedies any such Person may have under any other agreement or instrument to which each Indemnified Party is or becomes a SECTION 7. Accuracy of Information. The Company shall furnish or cause to be furnished to BMP such information as BMP believes reasonably appropriate to rendering the Services and other services contemplated by this Agreement and to comply with the Securities and Exchange Commission or other legal requirements relating to the beneficial ownership by BMP or its Affiliates of equity securities of the Company (all such information so furnished, the “Information”). The Company recognizes and confirms that BMP (a) will use and recognized public sources in performing the Services and other services Information and such other information and (c) is entitled to rely upon the Information without independent verification. SECTION 8. Term. This Agreement will become effective as of the Effective Time and (except as otherwise provided herein) will continue until the “Termination Date,” which is the earliest of (i) the tenth anniversary of April 2, 2007, (ii) such time as the Affiliated Investors beneficially own less than 5% of the total common equity of the Company and (iii) such earlier date as the Company and BMP may mutually agree upon in writing; provided, that (x) the occurrence of the Termination Date will not affect the obligations of the Company to pay, or cause to be paid, any amounts accrued but not yet paid as of such date, (y) Section 5 hereof will remain in effect after the Termination Date with respect to Out-of-Pocket Expenses that were incurred prior to or within a reasonable period of time after the Termination Date, but which have not been paid to BMP in accordance with Section 5 hereof, and (z) the provisions of Sections 4(e), 4(g), 6, 7, 9 and 10 hereof will survive after the Termination Date. The Advisory Fee will accrue and be payable with respect to the entire fiscal year of the Company in which the Termination Date occurs. SECTION 9. Disclaimer, Opportunities, Release and Limitation of Liability. (a) Disclaimer; Standard of Care. BMP makes no representations or warranties, under the Current Transaction and Advisory Agreement. In no event shall BMP be omission or alleged omission that does not constitute gross negligence or willful misconduct of BMP as determined by a final, non-appealable determination (b) Freedom to Pursue Opportunities. In recognition that BMP and its Affiliates currently have, and will in the future have or will consider acquiring, investments in numerous companies with respect to which BMP or its Affiliates may serve as an advisor, a director or in some other capacity, in recognition that BMP and its Affiliates have myriad duties to various investors and partners, in anticipation that the Company, on the one hand, and BMP (or one or more Affiliates, associated investment funds or portfolio companies), on the other hand, may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, in recognition of the benefits to be derived by the Company hereunder, and in recognition of the difficulties which situation, the provisions of this Section 9(b) are set forth to regulate, define and guide the conduct of certain affairs of the Company as they may involve BMP. Except as BMP may otherwise agree in writing after the date hereof: (i) BMP and its Affiliates shall have the right: (A) to directly or indirectly engage in any business (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Company and its subsidiaries); (B) to directly or indirectly do business with any client or customer of the Company and its subsidiaries; (C) to take any other action that BMP believes in good faith is sentence of this Section 9(b); and (D) not to present potential transactions, matters or business opportunities to the Company or any of its subsidiaries, and to pursue, directly or indirectly, any such opportunity for themselves, and to direct any such opportunity to another Person. (ii) BMP and its Affiliates shall have no duty (contractual or otherwise) to affiliates or to refrain from any actions specified in Section 9(b)(i) hereof, and the Company, on its own behalf and on behalf of its affiliates, hereby irrevocably waives any right to require BMP or any of its Affiliates to act in a manner inconsistent with the provisions of this Section 9(b). (iii) Neither BMP nor any of its Affiliates shall be liable to the Company or any of its affiliates for breach of any duty (contractual or otherwise) by Section 9(b) or of any such Person’s participation therein. (c) Release. The Company hereby irrevocably and unconditionally releases and forever discharges BMP and its Affiliates and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives from any and all liabilities, claims and causes of action in connection with the Services or other services contemplated by this Agreement or the Current Transaction and Advisory Fee Agreement (including, in each case, prior to the Closing) or the engagement of BMP pursuant to, and the performance by BMP of the Services or other services contemplated by, this Agreement or the Current Transaction and Advisory Fee Agreement (including, in each case, prior to the Closing) that the Company may have, or may claim to have, on or after the date hereof, except with respect to any act or omission that constitutes gross negligence or willful misconduct as jurisdiction. (d) Limitation of Liability. In no event will BMP or any of its Affiliates be to, in connection with or arising out of this Agreement or the Current Closing), including, without limitation, the services to be provided by BMP or any of its Affiliates hereunder or which have been provided by such Persons under the Current Transaction and Advisory Fee Agreement (including, in each case, prior to the Closing), or for any act or omission that does not constitute determination of a court of competent jurisdiction or in excess of the fees actually received by BMP hereunder. departure by any party hereto from any such provision, will be effective unless it is in writing and signed by each of the parties hereto. Any amendment, waiver purpose for which given. The waiver by any party of any breach of this Agreement subsequent breach. (b) Any notices or other communications required or permitted hereunder shall be made in writing and will be sufficiently given if delivered personally or sent by facsimile or electronic mail with confirmed receipt, or by overnight courier, given written notice: if to BMP: 345 Park Avenue Attention: Prakash Melwani Facsimile: (212) 583-5712 E-mail: melwani@blackstone.com with a copy (which copy shall not constitute notice to BMP) to: Attention: Daniel Clivner E-mail: dclivner@stblaw.com c/o Pinnacle Foods Group LLC 6 Executive Campus, Suite 100 Attention: Kelley Maggs Facsimile: (973) 541-6693 E-mail: kelley.maggs@pinnaclefoodscorp.com facsimile or electronic mail with confirmed receipt, and (ii) one business day after being sent by overnight courier. written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto. laws of the State of New York without giving effect to any conflicts of law (e) Each party to this Agreement, by its execution hereof, (i) hereby courts sitting in New York County, New York for the purpose of any action, relating to the subject matter hereof, (ii) hereby waives to the extent not agrees not to commence or maintain any action, claim, cause of action or suit out of or based upon this Agreement or relating to the subject matter hereof or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is indemnification rights set forth in this agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by New York law, and requested, at its address specified pursuant to Section 10(b) hereof is (f) Except as otherwise contemplated by Section 3(a) hereof, neither this Agreement nor any of the rights or obligations hereunder may be assigned by the Company without the prior written consent of BMP; provided, however, that BMP may assign or transfer its duties or interests hereunder to any Affiliate at the sole discretion of BMP. Subject to the foregoing, the provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the next sentence, no Person or party other than the parties hereto and their respective Agreement. The parties acknowledge and agree that BMP and its Affiliates and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives are intended to be third-party beneficiaries under Section 6 hereof. (g) This Agreement may be executed by one or more parties to this Agreement on any number of separate counterparts (including by facsimile or electronic mail (via .pdf counterpart)), and all of said counterparts taken together will be (h) Any provision of this Agreement that is prohibited or unenforceable in any (i) Each payment made by the Company pursuant to this Agreement shall be paid by wire transfer of immediately available federal funds to such account or accounts as specified by BMP to the Company prior to such payment. executed, this Transaction and Advisory Fee Agreement as of the date first written above.   BLACKSTONE MANAGEMENT PARTNERS V L.L.C. By:       /S/    PRAKASH MELWANI           Name: Title:   Prakash Melwani Authorized Person PINNACLE FOODS FINANCE LLC By:       /S/    CRAIG STEENECK           Name: Title:   Craig Steeneck

Exhibit 10.1 PACIFIC CAPITAL BANCORP 2010 EQUITY INCENTIVE PLAN RESTRICTED STOCK UNIT AGREEMENT This Restricted Stock Unit Agreement (“Agreement”) is dated as of                     , 20     (the “Grant Date”), between Pacific Capital Bancorp, a Delaware corporation (the “Company”) and                      WITNESSETH: WHEREAS, the Company has awarded Participant a right to receive shares of the Company’s common stock (“Common Stock”), subject to the requirements set forth in this Agreement pursuant to the terms and conditions of the Pacific Capital Bancorp 2010 Equity Incentive Plan (the “Plan”). NOW, THEREFORE, in consideration of the promises and as an inducement and incentive to Participant to perform his or her duties and fulfill his or her responsibilities on behalf of the Company and its Subsidiaries at the highest level of dedication and competence, and other good and valuable consideration, receipt of which is hereby acknowledged, the Company hereby awards to Participant a right to receive              shares of Common Stock (the “RSUs”), pursuant to the terms and subject to the conditions and restrictions set forth in this Agreement and the Plan, and in connection with such award, the Company and Participant hereby agree as follows: AGREEMENT: 1. Vesting Requirements. The RSUs shall become vested in accordance with the vesting requirements set forth Exhibit A (the “Vesting Requirements”). Immediately upon vesting, the commensurate number of of RSUs shall be converted to Common Stock on a one-unit for one-share basis and such Common Stock shall be delivered to Participant as soon as reasonably practicable, subject to the applicable tax withholding. 2. Termination of Employment. If Participant ceases to be employed by the Company and/or a Subsidiary prior to completion of the Vesting Requirements, Participant agrees that the RSUs awarded will be immediately and unconditionally forfeited without any action required by Participant or the Company, to the extent that the Vesting Requirements have not been met as of such cessation of employment. 3. No Ownership Rights Prior to Issuance of Common Stock. Participant shall not have any rights as a stockholder of the Company with respect to the shares of Common Stock underlying the RSUs, including but not limited to the right to vote or receive dividends with respect to such shares of Common Stock, until and after the shares of Common Stock have been actually issued to Participant and transferred on the books and records of the Company. 4. Withholding Taxes. Upon vesting pursuant to the Vesting Requirements, Participant shall be entitled to receive the shares of Common Stock, less an amount of shares of Common Stock with a Fair Market Value on the date of vesting equal to the minimum required withholding obligation taking into account all applicable federal, state, and local taxes, and Participant shall be entitled to receive the net number of shares of Common Stock after withholding of shares for taxes. Notwithstanding the foregoing, prior to the delivery of any shares of Common Stock, Participant may make adequate arrangements with the Company to pay the applicable withholding taxes with cash or other payroll withholding. following the date of vesting pursuant to the Vesting Requirements, the Company shall cause to be delivered to Participant a stock certificate representing the number of shares of Common Stock (net of tax withholding as provided in Section 4) deliverable to Participant in accordance with the provisions of this Agreement. 6. Nontransferability. Prior to their conversion into Common Stock, the RSUs may or hypothecated otherwise than by will or by the laws of descent and distribution, prior to such time as the shares of Common Stock have actually been issued and delivered to Participant. 7. Acknowledgements. Participant acknowledges receipt of and understands and agrees to the terms of the RSUs and the Plan. In addition to the above terms, Participant understands and agrees to the following: (a) Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and provisions thereof, including the terms and of the Vesting Requirements. If and to the extent that any provision contained in this Agreement is inconsistent with the Plan, the Plan shall govern. (b) Participant acknowledges that as of the date of this Agreement, the and the Company regarding the acquisition of shares of Common Stock underlying the RSUs in the Company and supersedes all prior oral and written agreements (c) Participant understands that the Company has reserved the right to amend or time does not in any way obligate the Company or its Subsidiaries to grant additional RSUs in any future year or in any given amount. Participant Participant’s status as an employee of his or her employer and, if Participant’s employer is not the Company, can in no event be interpreted or understood to mean that the Company is Participant’s employer or that there is an employment relationship between Participant and the Company. Participant further acknowledges and understands that Participant’s participation in the Plan is (d) Participant acknowledges and understands that the future value of the shares of Common Stock acquired by Participant under the Plan is unknown and cannot be   2 this Agreement shall confer upon Participant any expressed or implied right to be retained in the service of Company or any Subsidiary for any period at all, nor restrict in any way the right of Company or any such Subsidiary, which right is hereby expressly reserved, to terminate his or her employment at any time with or without cause. Participant acknowledges and agrees that any right to receive delivery of shares of Common Stock is earned only by continuing as an employee of Company or a Subsidiary at the will of Company or such Subsidiary, or satisfaction of any other applicable terms and conditions contained in this Agreement and the Plan, and not through the act of being hired, being granted the RSUs or acquiring shares of Common Stock hereunder. 9. Compliance with Laws and Regulations. The award of the RSUs to Participant and the obligation of the Company to deliver shares of Common Stock hereunder shall be subject to (a) all applicable federal, state, and local and laws, rules and regulations, and (b) any registration, qualification, approvals or other Company shall, in its sole discretion, determine to be necessary or applicable. Moreover, shares of Common Stock shall not be delivered hereunder if such delivery would be contrary to applicable law or the rules of any stock exchange. 10. Definitions. All capitalized terms that are used in this Agreement that are 11. Notices. Any notice or other communication required or permitted hereunder shall, if to the Company, be in accordance with the Plan, and, if to Participant, be in writing and delivered in person or by registered or certified mail or overnight courier, postage prepaid, addressed to Participant at his or her last known address as set forth in the Company’s records. 12. Severability. If any of the provisions of this Agreement should be deemed accordance with the laws of the State of Delaware, and any dispute arising out of or in connection with the same shall be submitted to binding arbitration in Santa Barbara, California before a single arbitrator in accordance with the rules of arbitration of the American Arbitration Association. 14. Transferability of Agreement. This Agreement may not be transferred, assigns, including, in the case of Participant, his or her estate, heirs, representatives. 15. Counterparts. This Agreement has been executed in two counterparts, each of   3 IN WITNESS WHEREOF, Pacific Capital Bancorp has caused this Agreement to be executed and Participant has executed this Agreement, both as of the day and   PACIFIC CAPITAL BANCORP By:       [Insert Title]     Participant   4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2010 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-14790 Playboy Enterprises, Inc. (Exact name of registrant as specified in its charter) Delaware 36-4249478 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 680 North Lake Shore Drive Chicago, IL (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (312) 751-8000 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. Yes þ No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer oAccelerated filer þNon-accelerated filer oSmaller reporting company o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ At July 30, 2010, there were 4,864,102 shares of Class A Common Stock and 28,832,622 shares of Class B Common Stock outstanding. FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains “forward-looking statements,” including statements in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as to expectations, beliefs, plans, objectives and future financial performance, and assumptions underlying or concerning the foregoing. We use words such as “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “anticipates,” “intends,” “continues” and other similar terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which could cause our actual results, performance or outcomes to differ materially from those expressed or implied in the forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. The following are some of the important factors that could cause our actual results, performance or outcomes to differ materially from those discussed in the forward-looking statements: Foreign, national, state and local government regulations, actions or initiatives, including: (a) attempts to limit or otherwise regulate the sale, distribution or transmission of adult-oriented materials, including print, television, video, Internet and mobile materials; (b) attempts to limit or otherwise regulate the sale or distribution of certain consumer products sold by our licensees; or (c) limitations on the advertisement of tobacco, alcohol and other products which are important sources of advertising revenue for us; Risks associated with our foreign operations, including market acceptance and demand for our products and the products of our licensees and other business partners; Our ability to effectively manage our exposure to foreign currency exchange rate fluctuations; Further changes in general economic conditions, consumer spending habits, viewing patterns, fashion trends or the retail sales environment, which, in each case, could reduce demand for our programming and products and impact our advertising and licensing revenues; Our ability to protect our trademarks, copyrights and other intellectual property; Risks as a distributor of media content, including our becoming subject to claims for defamation, invasion of privacy, negligence, copyright, patent or trademark infringement and other claims based on the nature and content of the materials we distribute; The risk our outstanding litigation could result in settlements or judgments which are material to us; Dilution from any potential issuance of common stock or convertible debt in connection with financings or acquisition activities; Further competition for advertisers from other publications, media or online providers or decreases in spending by advertisers, either generally or with respect to the men’s market; Competition in the television, men’s magazine, Internet, mobile and product licensing markets; Attempts by consumers, distributors, merchants or private advocacy groups to exclude our programming or other products from distribution; Our television, Internet and mobile businesses’ reliance on third parties for technology and distribution, and any changes in that technology, distribution and/or delays in implementation which might affect our plans, assumptions and financial results; Risks associated with losing access to transponders or technical failure of transponders or other transmitting or playback equipment that is beyond our control; Competition for channel space on linear or video-on-demand television platforms; Failure to maintain our agreements with multiple system operators and direct-to-home, or DTH, operators on favorable terms, as well as any decline in our access to households or acceptance by DTH, cable and/or telephone company systems and the possible resulting cancellation of fee arrangements, pressure on splits or other deterioration of contract terms with operators of these systems; Risks that we may not realize the expected sales and profits and other benefits from acquisitions; Any charges or costs we incur in connection with restructuring measures we have taken or may take in the future; Increases in paper, printing, postage or other manufacturing costs; Effects of the consolidation of the single-copy magazine distribution system in the U.S. and risks associated with the financial stability of major magazine wholesalers; 2 Effects of the consolidation and/or bankruptcies of television distribution companies; Risks associated with the viability of our subscription, ad-supported and e-commerce Internet models; Our ability to sublet our excess space may be negatively impacted by the market for commercial rental real estate as well as by the global economy generally; The risk that our common stock could be delisted from the New York Stock Exchange, or NYSE, if we fail to meet the NYSE’s continued listing requirements; Risks that adverse market conditions in the securities and credit markets may significantly affect our ability to access the capital markets; The risk that we will be unable to refinance our 3.00% convertible senior subordinated notes due 2025, or convertible notes, or the risk that we will need to refinance our convertible notes, prior to the first put date of March 15, 2012, at significantly higher interest rates; The risk that we are unable to either extend the maturity date of our existing credit facility beyond the current expiration date of January 31, 2011 or establish a new facility with a later maturity date and acceptable terms; and Further downward pressure on our operating results and/or further deterioration of economic conditions could result in further impairments of our long-lived assets, including our other intangible assets. For a detailed discussion of these and other factors that may affect our performance, see Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. 3 PLAYBOY ENTERPRISES, INC. FORM 10-Q TABLE OF CONTENTS Page PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Operations and Comprehensive Loss for the Quarters Ended June 30, 2010 and 2009 (Unaudited) 5 Consolidated Statements of Operations and Comprehensive Loss for the Six Months Ended June 30, 2010 and 2009 (Unaudited) 6 Consolidated Balance Sheets at June 30, 2010 (Unaudited) and December 31, 2009 7 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 (Unaudited) 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 24 Item 4. Controls and Procedures 24 PART II OTHER INFORMATION Item 1. Legal Proceedings 25 Item 1A. Risk Factors 26 Item 6. Exhibits 27 4 Table of Contents PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PLAYBOY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS for the Quarters Ended June 30 (Unaudited) (In thousands, except per share amounts) Net revenues $ $ Costs and expenses Cost of sales (43,548 ) (47,180 ) Selling and administrative expenses (11,987 ) (11,372 ) Restructuring expense (1,587 ) (9,096 ) Total costs and expenses (57,122 ) (67,648 ) Operating loss (1,159 ) (5,457 ) Nonoperating income (expense) Investment income 6 Interest expense (2,192 ) (2,175 ) Amortization of deferred financing fees (164 ) (164 ) Other, net (928 ) (467 ) Total nonoperating expense (3,278 ) (2,107 ) Loss before income taxes (4,437 ) (7,564 ) Income tax expense (967 ) (1,196 ) Net loss $ ) $ ) Other comprehensive income Unrealized gain on marketable securities - 3 Foreign currency translation gain Total other comprehensive income Comprehensive loss $ ) $ ) Weighted average number of common shares outstanding Basic and diluted Basic and diluted loss per common share $ ) $ ) The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 5 Table of Contents PLAYBOY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS for the Six Months Ended June 30 (Unaudited) (In thousands, except per share amounts) Net revenues $ $ Costs and expenses Cost of sales (81,095 ) (97,610 ) Selling and administrative expenses (23,408 ) (23,910 ) Restructuring expense (2,258 ) (12,275 ) Impairment charges (447 ) (5,518 ) Total costs and expenses (107,208 ) (139,313 ) Operating income (loss) (15,489 ) Nonoperating income (expense) Investment income 11 Interest expense (4,362 ) (4,322 ) Amortization of deferred financing fees (328 ) (389 ) Other, net (987 ) (556 ) Total nonoperating expense (5,666 ) (4,535 ) Loss before income taxes (4,763 ) (20,024 ) Income tax expense (1,603 ) (2,398 ) Net loss $ ) $ ) Other comprehensive income (loss) Unrealized loss on marketable securities - (23 ) Foreign currency translation gain Total other comprehensive income Comprehensive loss $ ) $ ) Weighted average number of common shares outstanding Basic and diluted Basic and diluted loss per common share $ ) $ ) The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 6 Table of Contents PLAYBOY ENTERPRISES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) June 30, Dec. 31, Assets Cash and cash equivalents $ $ Receivables, net of allowance for doubtful accounts of $4,724 and $3,834, respectively Receivables from related parties Inventories Deferred tax asset Prepaid expenses and other current assets Total current assets Property and equipment, net Programming costs, net Trademarks, net Distribution agreements, net of accumulated amortization of $7,040 and $6,751, respectively Deferred tax asset - Other noncurrent assets Total assets $ $ Liabilities Acquisition liabilities $ $ Accounts payable Accrued salaries, wages and employee benefits Deferred revenues Other current liabilities and accrued expenses Total current liabilities Financing obligations Acquisition liabilities Deferred tax liability Other noncurrent liabilities Total liabilities Shareholders’ deficit Common stock, $0.01 par value Class A voting – 7,500,000 shares authorized; 4,864,102 issued 49 49 Class B nonvoting – 75,000,000 shares authorized; 29,162,792 and 29,014,343 issued, respectively Capital in excess of par value Accumulated deficit (281,330 ) (274,964 ) Treasury stock, at cost – 381,971 shares (5,000 ) (5,000 ) Accumulated other comprehensive loss (2,553 ) (3,049 ) Total shareholders’ deficit (27,555 ) (22,296 ) Total liabilities and shareholders’ deficit $ $ The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 7 Table of Contents PLAYBOY ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the Six Months Ended June 30 (Unaudited) (In thousands) Cash flows from operating activities Net loss $ ) $ ) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation of property and equipment Amortization of intangible assets Amortization of investments in entertainment programming Amortization of deferred financing fees Stock-based compensation Noncash interest expense Impairment charges Deferred income taxes Payments of deferred compensation plan - (5,188 ) Net change in operating assets and liabilities (2,049 ) Investments in entertainment programming (10,983 ) (13,310 ) Other, net (591 ) Net cash provided by (used for) operating activities (1,816 ) Cash flows from investing activities Purchases of investments - (94 ) Proceeds from sales of investments - Additions to property and equipment (1,211 ) (1,769 ) Other, net 3 - Net cash provided by (used for) investing activities (1,208 ) Cash flows from financing activities Payments of deferred financing fees - (157 ) Payments of acquisition liabilities (4,800 ) (2,800 ) Proceeds from stock-based compensation 68 41 Net cash used for financing activities (4,732 ) (2,916 ) Effect of exchange rate changes on cash and cash equivalents (427 ) Net increase (decrease) in cash and cash equivalents (3,493 ) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 8 Table of Contents NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (A) Basis of Preparation The financial information included in these financial statements is unaudited but, in the opinion of management, reflects all normal recurring and other adjustments necessary for a fair presentation of the results for the interim periods. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows for the entire year. These financial statements should be read in conjunction with the financial statements and notes to the financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. (B) Recently Issued Accounting Standards In January 2010, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, or ASU No. 2010-06. ASU No. 2010-06 requires additional disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers between levels of the fair value hierarchy as defined in FASB Accounting Standard Codification, or ASC, Topic 820, Fair Value Measurements and Disclosures, or ASC Topic 820. We adopted the provisions of ASU No. 2010-06 beginning with the first quarter of 2010, except for the disclosure presenting disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3), which we are required to adopt in the first quarter of 2011. As ASU No. 2010-06 affects disclosures only, the adoption of ASU No. 2010-06 does not affect our results of operations or financial condition. (C) Restructuring Expense In the current year quarter, we implemented a plan to downsize our organizational structure and reduce overhead costs. As a result of this plan, we recorded a charge of $1.2 million related to a workforce reduction of 18 employees, most of whose positions will be eliminated by the end of the third quarter of 2010. Severance payments under this plan will begin in the third quarter of 2010 and will be completed in 2011. In the first quarter of 2010, we implemented a plan to further reduce headcount and real estate lease obligations. As a result of this plan, we recorded a charge of $0.4 million related to a lease termination fee and a workforce reduction of 10 employees, whose positions will be eliminated in the first quarter of 2011. Severance payments under this plan will begin in the first quarter of 2011 and will be completed in 2011. In the fourth quarter of 2009, we implemented a plan to outsource non-editorial functions of Playboy magazine and other domestic publications to American Media, Inc. through its wholly owned subsidiary, American Media Operations, Inc., as well as to reduce other overhead costs. As a result of this plan, we recorded a charge of $3.7 million related to a workforce reduction of 26 employees, most of whose positions were eliminated by the end of the first quarter of 2010, and contract termination fees. Severance payments under this plan began in the fourth quarter of 2009 and will be completed in 2011. In the second quarter of 2009, we recorded a charge of $9.3 million related to our plan to vacate our leased New York office space. The charge primarily reflected the discounted value of our remaining lease obligation net of estimated sublease income. We recorded additional restructuring charges related to this plan in 2009 representing depreciation of leasehold improvements and furniture and equipment as well as accretion of the difference between the nominal and discounted remaining lease obligation net of estimated sublease income. We expect to record additional restructuring charges, representing depreciation and accretion, of $8.3 million over the remaining approximate nine-year term of the lease, or approximately $1.0 million on average annually. We recorded $0.4 million and $0.7 million of these restructuring charges representing depreciation and accretion during the current year quarter and six-month period, respectively. In the first quarter of 2009, we implemented a restructuring plan to integrate our print and digital businesses in our Chicago office as well as to streamline operations across the Company, including the elimination of positions. As a result of this plan, we recorded a charge of $2.6 million related to a workforce reduction of 107 employees, whose positions were eliminated by the end of the second quarter of 2009. Severance payments under this plan 9 Table of Contents began in the first quarter of 2009 and were substantially completed by the end of 2009 with some payments continuing into 2010. In the fourth quarter of 2008, we implemented a restructuring plan to lower overhead costs, primarily related to senior Corporate and Entertainment Group positions. As a result of this plan, we recorded a charge of $4.0 million related to 21 employees, most of whose positions were eliminated in the first quarter of 2009. Payments under this plan began in the fourth quarter of 2008 and were largely completed by the end of 2009 with some payments continuing into 2011. We recorded a favorable adjustment of $0.1 million and an unfavorable adjustment of $0.8 million during the prior year quarter and six-month period, respectively, as a result of changes in assumptions for this plan. In the third quarter of 2008, we implemented a restructuring plan to reduce overhead costs. As a result of this plan, we recorded a charge of $2.2 million related to costs associated with a workforce reduction of 55 employees, most of whose positions were eliminated in the fourth quarter of 2008. Payments under this plan began in the fourth quarter of 2008 and were substantially completed by the end of 2009 with some payments continuing into 2010. We recorded favorable adjustments of $0.1 million and $0.4 million during the prior year quarter and six-month period, respectively, as a result of changes in assumptions for this plan. The following table sets forth the activity and balances of our restructuring reserves, which are included in “Accrued salaries, wages and employee benefits,” “Other current liabilities and accrued expenses” and “Other noncurrent liabilities” on our Consolidated Balance Sheets (in thousands). Workforce Reduction Consolidation of Facilities and Operations Total Balance at December 31, 2009 $ $ $ Reserve recorded Accretion of discount on net lease obligation - Adjustments to previous estimates (52 ) 26 (26 ) Cash payments (1,538 ) (2,040 ) (3,578 ) Balance at June 30, 2010 $ $ $ The above table excludes depreciation of leasehold improvements and furniture and equipment related to our leased New York office space. (D) Impairment Charges In accordance with ASC Topic 360, Property, Plant, and Equipment, we conduct impairment testing on long-lived assets, or asset groups, whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. During the first quarter of 2010, we implemented a plan to further reduce our headcount and real estate lease obligations. As a result, we evaluated the related long-lived assets for recoverability. We determined the carrying amount of this asset group was not recoverable and we recorded an impairment charge of $0.4 million in the first quarter of 2010 representing the entire net book value of these long-lived assets. In concert with the integration of our print and digital businesses in the first quarter of 2009, we moved the reporting of our digital business from the Entertainment Group into the Print/Digital Group, which we formerly called the Publishing Group. These businesses were combined in order to better focus on creating brand-consistent content that extends across print and digital platforms. Due to this realignment of our operating segments, which are also our reporting units as defined in ASC Topic 350, Intangibles–Goodwill and Other, or ASC Topic 350, we conducted interim impairment testing of goodwill in accordance with ASC Topic 350. Interim testing of goodwill was also necessitated by lower expected financial results in the new Print/Digital Group than that of the former Entertainment Group, which contained the digital business’ assets prior to the realignment of our operating segments. We estimated the implied fair value of the goodwill using a combined weighted forecasted-discounted cash flow method and a market multiple approach based in part on our financial results and our expectation of future performance at the time of our impairment testing, which are Level 3 inputs within the fair value hierarchy under ASC Topic 820 as described in Note (I), Fair Value Measurement. As a result of this testing, the implied fair value 10 Table of Contents of goodwill of the Print/Digital operating segment was lower than its carrying value, and we recorded an impairment charge on the entire balance of the Print/Digital Group’s goodwill of $5.5 million in the first quarter of 2009. Further downward pressure on our operating results and/or further deterioration of economic conditions could result in additional future impairments of our long-lived assets, including our other intangible assets. (E) Earnings Per Common Share The following table sets forth the computations of basic and diluted earnings per share, or EPS (in thousands, except per share amounts): Quarters Ended June 30, Six Months Ended June 30, Numerator: For basic and diluted EPS – net loss $ ) $ ) $ ) $ ) Denominator: For basic and diluted EPS – weighted average shares Basic and diluted loss per common share $ ) $ ) $ ) $ ) The following table sets forth the number of shares related to outstanding options to purchase our Class B common stock, or Class B stock, the number of restricted stock units, or RSUs, that provide for the issuance of Class B stock and the potential number of shares of Class B stock contingently issuable under our 3.00% convertible senior subordinated notes due 2025, or convertible notes. These shares were not included in the computations of diluted EPS for the quarters and six-month periods ended June 30, 2010 and 2009, as their inclusion would have been antidilutive (in thousands): Quarters Ended June 30, Six Months Ended June 30, Stock options RSUs Convertible notes Total (F) Inventories The January and February 2010 issues of Playboy magazine were combined into a double issue, which went on sale in December 2009. As a result, we have higher inventories at June 30, 2010 compared to December 31, 2009. The following table sets forth inventories, which are stated at the lower of cost (specific cost and average cost) or fair value (in thousands): June 30, Dec. 31, Paper $ $ Editorial and other prepublication costs Merchandise finished goods Total $ $ (G) Income Taxes Our income tax provision consists primarily of foreign income tax, which relates to our international television networks and withholding tax on licensing income, for which we do not receive a current U.S. income tax 11 Table of Contents benefit due to our net operating loss, or NOL, position in the U.S. Our income tax provision also includes deferred federal and state income taxes related to the amortization of goodwill and other indefinite-lived intangibles, which cannot be offset against deferred tax assets due to the indefinite reversal period of the deferred tax liabilities. We utilize the liability method of accounting for income taxes as set forth in ASC Topic 740, Income Taxes. Additionally, NOL and tax credit carryforwards are reported as deferred income tax assets. The realization of deferred income tax assets is dependent upon future earnings. A valuation allowance is required against deferred income tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred income tax assets may not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. As a result of our cumulative losses in the U.S. and certain foreign jurisdictions, we have concluded that a full valuation allowance should be recorded for such jurisdictions. At June 30, 2010 and December 31, 2009, we had unrecognized tax benefits of $8.0 million and do not expect this amount to change significantly over the next 12 months. Due to the impact of deferred income tax accounting, the disallowance of these benefits would not affect our effective income tax rate nor would it accelerate the payment of cash to the taxing authorities to an earlier period. Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2006 through 2009 tax years generally remain subject to examination by federal and most state taxing authorities. In addition, for all tax years prior to 2006 generating an NOL, taxing authorities can adjust the NOL amount. In our international tax jurisdictions, numerous tax years remain subject to examination by taxing authorities, including tax returns for 2003 and subsequent years. (H) Marketable Securities We account for available-for-sale marketable securities and short-term investments under the specific identification method. We did not purchase or sell any marketable securities or investments during the current year six-month period and had no marketable securities or investments on our Consolidated Balance Sheets at June 30, 2010 or December 31, 2009. During the prior year quarter, we received proceeds of $1.2 million from sales of investments and recorded $0.7 million of gains related to those sales. During the prior year six-month period, we purchased $0.1 million of investments, received proceeds of $6.8 million from sales of investments and recorded $0.7 million of gains related to those sales. We recorded immaterial net unrealized holding gains or losses in “Other comprehensive income (loss)” during the prior year quarter and six-month period. (I) Fair Value Measurement We measure our financial assets and financial liabilities at fair value in accordance with ASC Topic 820. Our financial assets and financial liabilities relate to derivative instruments used to hedge the variability of forecasted cash receipts related to royalty payments denominated in yen and euro. Derivative instruments in asset positions, if any, are included in “Prepaid expenses and other current assets” and derivative instruments in liability positions, if any, are included in “Other current liabilities and accrued expenses” on our Consolidated Balance Sheets. We utilize the market approach to measure fair value for our assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. ASC Topic 820 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of three levels: Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities; Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for 12 Table of Contents identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data; and Level 3 – Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The following table sets forth financial assets and liabilities measured at fair value on a recurring basis and the basis of measurement at June 30, 2010 (in thousands): Total Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative assets $ 53 $ - $ 53 $ - Derivative liabilities $ ) $ - $ ) $ - We measure the fair value of our derivative instruments using broker prices, which use inputs that are readily available in public markets or can be derived from information readily available in public markets. These inputs include spot exchange rates and interest rates. (J) Financing Obligations Our financing obligations consisted of the $115.0 million principal amount of convertible notes with a carrying value of $106.4 million at June 30, 2010 and $104.1 million at December 31, 2009. The fair value of the convertible notes is influenced by changes in market interest rates, the share price of Class B stock and our credit quality. At June 30, 2010, the convertible notes had an estimated fair value of $104.1 million. This fair value was estimated using quoted market prices that are similar to Level 2 inputs within the ASC Topic 820 fair value hierarchy. (K) Contingencies In 2006, we acquired Club Jenna, Inc. and related companies, for which we paid $7.7 million at closing, $1.6 million in 2007, $1.7 million in 2008, $2.3 million in 2009 and $4.3 million in 2010. Pursuant to the acquisition agreement, we are also obligated to make future contingent earnout payments based primarily on DVD sales of existing content of the acquired business over a 10-year period and on content produced by the acquired business during the five-year period after the closing of the acquisition. No earnout payments have been made through June 30, 2010 and no future earnout payments are expected. (L) Benefit Plans We maintain a practice of paying a separation allowance, which is not funded, under our salary continuation policy to employees with at least five years of continuous service who voluntarily terminate employment with us and are at age 60 or thereafter. We made cash payments under this policy of $0.4 million during the current year quarter, $0.7 million during the current year six-month period, $0.3 million during the prior year quarter and $0.5 million during the prior year six-month period. 13 Table of Contents (M) Stock-Based Compensation The following table sets forth stock-based compensation expense related to stock options, RSUs, other equity awards and our employee stock purchase plan, or ESPP (in thousands): Quarters Ended Six Months Ended June 30, June 30, Stock options $ RSUs 86 39 16 Other equity awards 43 47 85 ESPP 6 4 9 7 Total $ The total amount of compensation expense recognized reflects the number of stock-based awards that actually vest as of the completion of their respective vesting periods. Upon the vesting of certain stock-based awards, we adjust our stock-based compensation expense to reflect actual versus estimated forfeitures. We recorded immaterial adjustments during the current year quarter, current year six-month period and prior year quarter and a favorable adjustment of $0.1 million during the prior year six-month period to reflect actual forfeitures for vested stock-based awards. Stock Options We estimate the value of stock options on the date of grant using the Lattice Binomial model, or Lattice model. The Lattice model requires extensive analysis of actual exercise and cancellation data and involves a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends and stock option exercises and cancellations. We granted 307,076 stock options during the current year quarter and 346,241 stock options during the current year six-month period, which are exercisable for shares of Class B stock and expire 10 years from the grant date. Of the stock options granted during both the current year quarter and six-month period, 300,000 stock options vest ratably over a four-year period from the grant date and the remainder vest ratably over a one-year period from the grant date. We granted 9,000 stock options during the prior year quarter and 1,005,000 stock options during the prior year six-month period, which are exercisable for shares of Class B stock, vest ratably over a three-year period from the grant date and expire 10 years from the grant date. The following table sets forth the assumptions used for the Lattice model: Quarters Ended Six Months Ended June 30, June 30, Expected volatility 52% – 100 % 45% – 104 % 52% – 100 % 43% – 104 % Weighted average volatility 69 % 61 % 70 % 57 % Risk-free interest rate 0.02% – 4.98 % 0.04% – 4.35 % 0.02% – 5.58 % 0.04% – 4.71 % Expected dividends - The expected life of stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the Lattice model. The expected life of stock options is impacted by all of the underlying assumptions and calibration of the Lattice model. The Lattice model assumes that exercise behavior is a function of the stock option’s remaining contractual term, vesting schedule and the extent to which the stock option’s intrinsic value exceeds the exercise price. The weighted average fair value per share was $2.13 for stock options granted during the current year quarter, $2.10 for stock options granted during the current year six-month period, $1.19 for stock options granted during the prior year quarter and $0.73 for stock options granted during the prior year six-month period. The weighted average expected life was 4.9 years for stock options granted during the current year quarter, 5.0 years for stock options 14 Table of Contents granted during the current year six-month period and 6.9 years for stock options granted during the prior year quarter and six-month period. The following table sets forth the activity and balances of our stock options for the current year six-month period: Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2009 $ Granted Exercised (13,000 ) Forfeited (142,500 ) Canceled (354,671 ) Outstanding at June 30, 2010 $ At June 30, 2010, we had $2.5 million of unrecognized stock-based compensation expense related to nonvested stock options, which will be recognized over a weighted average period of 3.0 years. Restricted Stock Units We granted 3,760 RSUs with a grant-date fair value per share of $3.99 during the current year quarter and 26,080 RSUs with a weighted average grant-date fair value per share of $3.45 during the current year six-month period, which provide for the issuance of Class B stock vesting ratably over a one-year period from the grant date. We granted 3,000 RSUs with a grant-date fair value per share of $1.95 during the prior year quarter and 335,000 RSUs with a weighted average grant-date fair value per share of $1.26 during the prior year six-month period, which provide for the issuance of Class B stock vesting ratably over a three-year period from the grant date. The following table sets forth the activity and balances of our RSUs for the current year six-month period: Number of Shares Weighted Average Grant-Date Fair Value Outstanding at December 31, 2009 $ Granted Vested (151,505 ) Canceled (6,186 ) Outstanding at June 30, 2010 $ At June 30, 2010, we had $0.6 million of unrecognized stock-based compensation expense related to nonvested RSUs, which will be recognized over a weighted average period of 2.2 years. 15 Table of Contents (N) Segment Information The following table sets forth financial information by reportable segment (in thousands): Quarters Ended Six Months Ended June 30, June 30, Net revenues Entertainment $ Print/Digital Licensing Total $ Loss before income taxes Entertainment $ Print/Digital (1,203 ) (2,277 ) (1,285 ) Licensing Corporate (6,410 ) (5,488 ) (12,259 ) (11,751 ) Restructuring expense (1,587 ) (9,096 ) (2,258 ) (12,275 ) Impairment charges - - (447 ) (5,518 ) Investment income 6 11 Interest expense (2,192 ) (2,175 ) (4,362 ) (4,322 ) Amortization of deferred financing fees (164 ) (164 ) (328 ) (389 ) Other, net (928 ) (467 ) (987 ) (556 ) Total $ ) $ ) $ ) $ ) June 30, Dec. 31, Identifiable assets Entertainment $ $ Print/Digital Licensing Corporate Total $ $ (O) Subsequent Events On July 8, 2010, our Board of Directors, or the Board, received a proposal from Hugh M. Hefner to acquire all of the outstanding shares of our Class A common stock and Class B stock not currently owned by Mr. Hefner for $5.50 per share in cash. Mr. Hefner owns 69.5% of our Class A common stock and 27.7% of our Class B stock. According to the proposal letter, Mr. Hefner has had discussions with Rizvi Traverse Management LLC, or Rizvi Traverse, with whom Mr. Hefner expresses an intention to partner in connection with the transaction. The proposal letter also states that Rizvi Traverse informed Mr. Hefner that it had contacted major lenders regarding potential financing and that Rizvi Traverse is highly confident ample financial resources will be available to complete the transaction. The proposal letter states that Mr. Hefner and Rizvi Traverse contemplate that the definitive agreements would not contain a financing contingency. In the proposal letter, Mr. Hefner advises the Board that out of his concerns for, amongst other matters, the Company’s brand, the editorial direction of Playboy magazine and the Company’s legacy, he is not interested in any sale or merger of the Company, selling his shares to any third party or entering into discussions with any other financial sponsor for a transaction of the nature proposed in the letter. The Board has established a special committee of independent directors to evaluate and determine the Company’s response to the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. See Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. 16 Table of Contents ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes in Item 1 of this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. RESULTS OF OPERATIONS The following table sets forth our results of operations (in millions, except per share amounts): Quarters Ended Six Months Ended June 30, June 30, Net revenues Entertainment Domestic TV $ International TV Other Total Entertainment Print/Digital Domestic magazine International magazine Special editions and other Digital Total Print/Digital Licensing Consumer products Location-based entertainment Marketing events Other - Total Licensing Total net revenues $ Net loss Entertainment Before programming amortization $ Programming amortization (7.1 ) (7.2 ) (13.7 ) (15.2 ) Total Entertainment Print/Digital (1.2 ) (2.3 ) (1.3 ) Licensing Corporate (6.4 ) (5.5 ) (12.2 ) (11.8 ) Segment income Restructuring expense (1.6 ) (9.1 ) (2.3 ) (12.3 ) Impairment charges - - (0.4 ) (5.5 ) Operating income (loss) (1.2 ) (5.5 ) (15.5 ) Nonoperating income (expense) Investment income - - Interest expense (2.2 ) (2.2 ) (4.4 ) (4.3 ) Amortization of deferred financing fees (0.1 ) (0.1 ) (0.3 ) (0.4 ) Other, net (1.0 ) (0.4 ) (1.0 ) (0.5 ) Total nonoperating expense (3.3 ) (2.0 ) (5.7 ) (4.5 ) Loss before income taxes (4.5 ) (7.5 ) (4.8 ) (20.0 ) Income tax expense (0.9 ) (1.2 ) (1.6 ) (2.4 ) Net loss $ ) $ ) $ ) $ ) Basic and diluted loss per common share $ ) $ ) $ ) $ ) 17 Table of Contents Overview Revenues decreased $6.2 million, or 10%, compared to the prior year quarter and $15.7 million, or 13%, compared to the prior year six-month period. The decreases were driven by lower revenues in our Print/Digital Group, which were primarily due to the impacts of lowering the guaranteed circulation rate base and prior year double issues of Playboy magazine. Also contributing to the decline were lower revenues from our Entertainment Group, which were largely related to our international TV business. These decreases were partially offset by higher revenues from our Licensing Group, primarily due to higher consumer products royalties. Segment income decreased $3.2 million compared to the prior year quarter and increased $1.3 million compared to the prior year six-month period. Licensing Group segment income improved in both periods. Lower Print/Digital Group results and higher Corporate expense offset the improved results from our Licensing Group. Operating results improved $4.3 million compared to the prior year quarter and $16.4 million compared to the prior year six-month period reflecting lower restructuring expense, primarily due to initial charges related to the closing of our New York office in the prior year periods, and the impact of the segment results discussed above. The current year six-month period also reflects lower impairment charges compared to the prior year period. Net loss improved $3.3 million compared to the prior year quarter and $16.0 million compared to the prior year six-month period primarily due to the operating results previously discussed. Current Economic Conditions We continue to experience many of the same challenges our partners and competitors in the media industry are facing, namely increased competition for consumers’ attention in the face of shrinking overall spending in the television and print businesses, the migration of advertisers to other platforms and the uncertainty created by the current state of the global economy. In spite of the strength of our brand and products, our licensing business continues to be challenged by trends in the retail environment as well as from the inability of potential location-based entertainment business partners to obtain project financing. We have made significant changes to many of our processes and business activities in order to address the current economic climate and industry challenges, and will continue to do so. Our goal is to narrow our focus to management of the Playboy brand and lifestyle. We have made progress in building a new business model that will create a leaner organization while using others to accelerate growth and operate more efficiently by finding partners with the size, scope and scale needed to assist us in competing in today’s business environment. Despite the current economic conditions, we believe we continue to have the liquidity to meet our needs. At June 30, 2010, we had $21.1 million in cash and cash equivalents. We also have a $30.0 million revolving credit facility, under which there were no borrowings and $0.8 million in letters of credit outstanding at June 30, 2010, resulting in $29.2 million of available borrowings under this facility. We expect to extend or replace the credit facility, which will mature on January 31, 2011. We believe our cash generated from operating activities in addition to our cash and borrowing capacity will be sufficient to meet our liquidity needs through 2011. See “Liquidity and Capital Resources” below. Recent Events On July 8, 2010, our Board of Directors, or the Board, received a proposal from Hugh M. Hefner to acquire all of the outstanding shares of our Class A common stock and Class B common stock not currently owned by Mr. Hefner for $5.50 per share in cash. Mr. Hefner owns 69.5% of our Class A common stock and 27.7% of our Class B common stock. According to the proposal letter, Mr. Hefner has had discussions with Rizvi Traverse Management LLC, or Rizvi Traverse, with whom Mr. Hefner expresses an intention to partner in connection with the transaction. The proposal letter also states that Rizvi Traverse informed Mr. Hefner that it had contacted major lenders regarding potential financing and that Rizvi Traverse is highly confident ample financial resources will be available to complete the transaction. The proposal letter states that Mr. Hefner and Rizvi Traverse contemplate that the definitive agreements would not contain a financing contingency. In the proposal letter, Mr. Hefner advises the Board that out of his concerns for, amongst other matters, the Company’s brand, the editorial direction of Playboy magazine and the Company’s legacy, he is not interested in any sale or merger of the Company, selling his shares to any third party or entering into discussions with any other financial sponsor for a transaction of the nature proposed 18 Table of Contents in the letter. The Board has established a special committee of independent directors to evaluate and determine the Company’s response to the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. See Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. Entertainment Group Domestic TV revenues decreased $0.4 million, or 4%, compared to the prior year quarter and $0.3 million, or 1%, compared to the prior year six-month period. Decreases in video-on-demand, or VOD, revenues, primarily due to increased competition from other suppliers and distribution outlets, were partially offset by increases in Playboy TV monthly subscription revenues. We expect the VOD revenue trends to continue into the future. International TV revenues decreased $1.0 million, or 9%, compared to the prior year quarter and $2.3 million, or 11%, compared to the prior year six-month period primarily due to lower sales in Europe and increased competition for customers, particularly in the U.K. We expect these challenges to continue into the future. Revenues from other businesses increased $0.3 million, or 39%, compared to the prior year quarter and decreased $0.7 million, or 29%, compared to the prior year six-month period largely related to television series produced by our production company, Alta Loma Entertainment. The decrease in current year six-month period revenues also reflects the impact of our exiting the DVD business. The group’s segment income decreased $0.4 million compared to the prior year quarter and increased $0.2 million compared to the prior year six-month period. The effects of our cost-savings initiatives and lower programming amortization expense partially offset the revenue declines in the current year quarter and more than offset the revenue declines in the current year six-month period. Print/Digital Group Domestic magazine revenues decreased $6.2 million, or 38%, compared to the prior year quarter and $12.6 million, or 42%, compared to the prior year six-month period. In response to industry dynamics, including lower overall spending by advertisers, fewer subscribers and decreasing newsstand sales, we lowered the guaranteed circulation rate base (the total newsstand and subscription circulation guaranteed to advertisers) of Playboy magazine to 1.5 million from 2.6 million effective with the January/February 2010 issue. As a result of lowering the rate base coupled with publishing two double issues in the prior year, we reported lower revenues compared to the prior year quarter and six-month period. Subscription revenues decreased $4.7 million, or 41%, compared to the prior year quarter and $9.2 million, or 44%, compared to the prior year six-month period. The July/August 2009 issue negatively impacted current year quarter and six-month period subscription revenues compared to the respective prior year periods as we recorded revenues reflecting both the July and August 2009 issues in the prior year quarter and six-month period. In the current year quarter and six-month period, we did not record revenues reflecting the August issue. The current year six-month period was further negatively impacted by publishing one fewer issue of Playboy magazine as we recorded revenues reflecting both the January and February 2010 issues in the fourth quarter of 2009. In the prior year, February was a separate issue with its revenues reflected in the prior year six-month period. Also contributing to the decreases in subscription revenues over both periods were 32% and 33% fewer average paid copies served in the current year quarter and six-month period, respectively, related to our decision to reduce Playboy magazine’s rate base effective with the January/February 2010 issue. Newsstand revenues decreased $0.2 million, or 11%, compared to the prior year quarter and $0.6 million, or 24%, compared to the prior year six-month period. Revenues for the six-month period were negatively impacted by publishing one fewer issue in the current year while both periods reflect continued overall weakness in the newsstand business due to a large number of titles and competition from free content on the Internet. Advertising revenues decreased $1.3 million, or 36%, compared to the prior year quarter and $2.8 million, or 44%, compared to the prior year six-month period. While advertising pages increased in the current year quarter and six-month period, advertising revenues decreased primarily due to 56% and 52% lower average net revenue per page largely related to the reduction in the rate base. Advertising sales for the 2010 third quarter magazine issues are 19 Table of Contents closed, and we expect to report advertising revenues to be approximately 33% lower and advertising pages to be approximately 20% higher compared to the third quarter of 2009. On a combined basis, Playboy print and digital advertising revenues decreased $0.9 million, or 23%, and $2.5 million, or 33%, compared to the prior year quarter and six-month period, respectively, as increases in Playboy digital advertising revenues partially offset the domestic magazine advertising revenue declines. International magazine revenues decreased $0.2 million, or 16%, compared to the prior year quarter and $0.4 million, or 13%, compared to the prior year six-month period due primarily to lower royalties from our European editions. Special editions and other revenues decreased $0.3 million, or 19%, compared to the prior year quarter and $0.6 million, or 19%, compared to the prior year six-month period due to 18% fewer special edition newsstand copies sold in both periods. The same industry dynamics that are impacting Playboy magazine in the domestic market are also impacting our other print businesses. Digital revenues decreased $0.7 million, or 8%, compared to the prior year quarter and $1.7 million, or 9%, compared to the prior year six-month period largely due to a decrease in paysites revenues and lower royalties from various international licensees that distribute our content on the mobile platform. These decreases were primarily due to increasing amounts of competing free content available on the Internet. We continue our focus on efforts to increase profitability of our paysites by building traffic and conversions and improving the customer and advertiser experience and our competitive position. The current year quarter and six-month period were also impacted by lower e-commerce revenues. Segment loss was $1.2 million for the current year quarter compared to segment income of $2.3 million for the prior year quarter. Segment loss for the six-month period increased $1.0 million compared to the prior year six-month period. Higher legal expense related to litigation, which resulted in a verdict in our favor, with a former international magazine licensee (see Part II, Item 1. “Legal Proceedings” of this Quarterly Report on Form 10-Q for additional information) coupled with the revenue declines in our print and digital businesses were partially offset by the effects of our cost-savings initiatives. In November 2009, we entered into an agreement with American Media, Inc. through its wholly owned subsidiary, American Media Operations, Inc., or AMI, to outsource non-editorial functions of Playboy magazine and other domestic publications, including production, circulation, advertising sales, marketing and other support services. We began transitioning these functions in 2009 and have substantially completed the transition. We have begun to realize certain cost reductions as a result of our agreement with AMI and expect to continue to reduce our cost structure related to manufacturing and marketing and expect to increase domestic magazine revenues from growth in newsstand and advertising sales. Licensing Group Licensing Group revenues increased $2.3 million, or 24%, compared to the prior year quarter and $2.9 million, or 15%, compared to the prior year six-month period primarily due to higher consumer products royalties combined with revenues from the 50th Anniversary of the Playboy Club events in the current year quarter and six-month period. The group’s segment income increased $1.6 million compared to the prior year quarter and $2.5 million compared to the prior year six-month period primarily due to the increases in revenues discussed above. Corporate Corporate expense increased $0.9 million, or 17%, compared to the prior year quarter and $0.4 million, or 4%, compared to the prior year six-month period as higher marketing expense and higher costs associated with senior management transitions more than offset the impact of various cost-savings initiatives. Restructuring Expense In the current year quarter, we implemented a plan to downsize our organizational structure and reduce overhead costs. As a result of this plan, we recorded a charge of $1.2 million related to a workforce reduction of 18 20 Table of Contents employees, most of whose positions will be eliminated by the end of the third quarter of 2010. Severance payments under this plan will begin in the third quarter of 2010 and will be completed in 2011. In the first quarter of 2010, we implemented a plan to further reduce headcount and real estate lease obligations. As a result of this plan, we recorded a charge of $0.4 million related to a lease termination fee and a workforce reduction of 10 employees, whose positions will be eliminated in the first quarter of 2011. Severance payments under this plan will begin in the first quarter of 2011 and will be completed in 2011. In the fourth quarter of 2009, we implemented a plan to outsource non-editorial functions of Playboy magazine and other domestic publications to American Media, Inc. through its wholly owned subsidiary, American Media Operations, Inc., as well as to reduce other overhead costs. As a result of this plan, we recorded a charge of $3.7 million related to a workforce reduction of 26 employees, most of whose positions were eliminated by the end of the first quarter of 2010, and contract termination fees. Severance payments under this plan began in the fourth quarter of 2009 and will be completed in 2011. In the second quarter of 2009, we recorded a charge of $9.3 million related to our plan to vacate our leased New York office space. The charge primarily reflected the discounted value of our remaining lease obligation net of estimated sublease income. We recorded additional restructuring charges related to this plan in 2009 representing depreciation of leasehold improvements and furniture and equipment as well as accretion of the difference between the nominal and discounted remaining lease obligation net of estimated sublease income. We expect to record additional restructuring charges, representing depreciation and accretion, of $8.3 million over the remaining approximate nine-year term of the lease, or approximately $1.0 million on average annually. We recorded $0.4 million and $0.7 million of these restructuring charges representing depreciation and accretion during the current year quarter and six-month period, respectively. In the first quarter of 2009, we implemented a restructuring plan to integrate our print and digital businesses in our Chicago office as well as to streamline operations across the Company, including the elimination of positions. As a result of this plan, we recorded a charge of $2.6 million related to a workforce reduction of 107 employees, whose positions were eliminated by the end of the second quarter of 2009. Severance payments under this plan began in the first quarter of 2009 and were substantially completed by the end of 2009 with some payments continuing into 2010. In the fourth quarter of 2008, we implemented a restructuring plan to lower overhead costs, primarily related to senior Corporate and Entertainment Group positions. As a result of this plan, we recorded a charge of $4.0 million related to 21 employees, most of whose positions were eliminated in the first quarter of 2009. Payments under this plan began in the fourth quarter of 2008 and were largely completed by the end of 2009 with some payments continuing into 2011. We recorded a favorable adjustment of $0.1 million and an unfavorable adjustment of $0.8 million during the prior year quarter and six-month period, respectively, as a result of changes in assumptions for this plan. In the third quarter of 2008, we implemented a restructuring plan to reduce overhead costs. As a result of this plan, we recorded a charge of $2.2 million related to costs associated with a workforce reduction of 55 employees, most of whose positions were eliminated in the fourth quarter of 2008. Payments under this plan began in the fourth quarter of 2008 and were substantially completed by the end of 2009 with some payments continuing into 2010. We recorded favorable adjustments of $0.1 million and $0.4 million during the prior year quarter and six-month period, respectively, as a result of changes in assumptions for this plan. Impairment Charges In accordance with Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 360, Property, Plant, and Equipment, we conduct impairment testing on long-lived assets, or asset groups, whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. During the first quarter of 2010, we implemented a plan to further reduce our headcount and real estate lease obligations. As a result, we evaluated the related long-lived assets for recoverability. We determined the carrying amount of this asset group was not recoverable and we recorded an impairment charge of $0.4 million in the first quarter of 2010 representing the entire net book value of these long-lived assets. 21 Table of Contents In concert with the integration of our print and digital businesses in the first quarter of 2009, we moved the reporting of our digital business from the Entertainment Group into the Print/Digital Group, which we formerly called the Publishing Group. These businesses were combined in order to better focus on creating brand-consistent content that extends across print and digital platforms. Due to this realignment of our operating segments, which are also our reporting units as defined in ASC Topic 350, Intangibles–Goodwill and Other, or ASC Topic 350, we conducted interim impairment testing of goodwill in accordance with ASC Topic 350. Interim testing of goodwill was also necessitated by lower expected financial results in the new Print/Digital Group than that of the former Entertainment Group, which contained the digital business’ assets prior to the realignment of our operating segments. As a result of this testing, the implied fair value of goodwill of the Print/Digital operating segment was lower than its carrying value, and we recorded an impairment charge on the entire balance of the Print/Digital Group’s goodwill of $5.5 million in the first quarter of 2009. We continue to have access to our credit facility after the impairment charges. Further downward pressure on our operating results and/or further deterioration of economic conditions could result in additional future impairments of our long-lived assets, including our other intangible assets. Nonoperating Income (Expense) Nonoperating expense increased $1.3 million for the current year quarter and $1.2 million for the current year six-month period primarily due to a realized gain on the sale of investments in the prior year quarter and foreign currency exchange losses due to dividend distribution and settlement of intercompany balances resulting from the strengthening of the U.S. dollar against the pound sterling and euro in the current year quarter. Income Tax Expense Income tax expense decreased $0.3 million for the current year quarter and $0.8 million for the current year six-month period primarily due to a decrease in foreign income tax obligations. Our effective income tax rate differs from the U.S. statutory rate. Our income tax provision consists of foreign income tax, which relates to our international television networks and withholding tax on licensing income, for which we do not receive a current U.S. income tax benefit due to our net operating loss position. Our income tax provision also includes deferred federal and state income taxes related to the amortization of goodwill and other indefinite-lived intangibles, which cannot be offset against deferred tax assets due to the indefinite reversal period of the deferred tax liabilities. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2010, we had $21.1 million in cash and cash equivalents compared to $24.6 million in cash and cash equivalents at December 31, 2009. At June 30, 2010 and December 31, 2009, our outstanding debt consisted solely of the $115.0 million principal amount of our 3.00% convertible senior subordinated notes due 2025, or convertible notes, with a carrying value of $106.4 million at June 30, 2010 and $104.1 million at December 31, 2009. The difference between the principal amount of $115.0 million and the financing obligation carrying value reflects the discount associated with applying the estimated 7.75% nonconvertible borrowing rate at the time of issuance of our convertible notes. The total discount will be amortized to interest expense under the effective interest rate method over a seven-year term, representing the period beginning on the issuance date of the convertible notes of March 15, 2005 and ending on the first put date of March 15, 2012. At June 30, 2010, cash generated from our operating activities and existing cash and cash equivalents were fulfilling our liquidity requirements. At June 30, 2010, we also had a $30.0 million credit facility. This facility can be used for revolving borrowings, issuing letters of credit or a combination of both. As of July 30, 2010, there were no borrowings and $0.8 million in letters of credit outstanding under this facility, resulting in $29.2 million of available borrowings under this facility. We expect to extend or replace the credit facility, which will mature on January 31, 2011. Our future net cash flows from operating activities are dependent on many factors, including industry specific trends and overall economic conditions. As described above, market-driven trends are negatively impacting 22 Table of Contents revenues within our mature television and print businesses. We expect that these trends will continue for the foreseeable future. In response to these market-driven trends, we have taken a number of significant actions designed to reduce our overall cost structure and preserve cash flow, some of which are described in “Restructuring Expense” above. We believe cash generated from operations, our existing cash and cash equivalents and funds available under our credit facility will provide sufficient liquidity to fund our operations and meet our expected capital expenditure requirements and other contractual obligations as they become due through 2011. A prolonged continuation of the economic and industry trends described above could adversely affect our future net cash flows from operating activities, which could require us to seek other sources of funds. Holders of our convertible notes may require us to purchase all or a portion of the convertible notes at a purchase price in cash equal to 100% of the principal amount of the convertible notes beginning on the first put date of March 15, 2012. We believe this put option will likely be exercised by holders of our convertible notes because the trading price of the convertible notes is significantly below the put option purchase price. As a result, we expect to be required to refinance this obligation prior to the put date. We cannot be certain whether such refinancing will take the form of debt, equity or a combination thereof. Issuance of debt would likely increase our interest expense, and the issuance of equity could be dilutive to our existing stockholders. Cash Flows from Operating Activities Net cash provided by operating activities was $2.9 million in the current year six-month period compared to net cash used for operating activities of $1.8 million in the prior year six-month period. This favorable variance was primarily due to the operating and nonoperating results previously discussed and the distribution of deferred compensation plan balances in the prior year period, partially offset by changes in working capital. Cash Flows from Investing Activities Net cash used for investing activities was $1.2 million in the current year six-month period compared to net cash provided by investing activities of $4.9 million in the prior year six-month period. The current year six-month period reflected additions of $1.2 million to property and equipment. The prior year six-month period reflected net proceeds from sales of investments of $6.7 million related to the termination of our deferred compensation plan partially offset by additions of $1.8 million to property and equipment. Cash Flows from Financing Activities Net cash used for financing activities for the current year six-month period was $4.8 million compared to $2.9 million in the prior year six-month period. The change reflected payments of acquisition liabilities of $4.8 million for the current year six-month period compared to $2.8 million in the prior year six-month period and $0.2 million of financing fees related to amending our credit facility paid during the prior year six-month period. Effect of Exchange Rate Changes on Cash and Cash Equivalents The $0.4 million negative effect of foreign currency exchange rates on our cash and cash equivalents during the current year six-month period and the $0.6 million positive effect of foreign currency exchange rates on our cash and cash equivalents during the prior year six-month period were due to the strengthening of the U.S. dollar against the pound sterling and euro in the current year six-month period and the weakening of the U.S. dollar primarily against the pound sterling in the prior year six-month period. RECENTLY ISSUED ACCOUNTING STANDARDS In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, or ASU No. 2010-06. ASU No. 2010-06 requires additional disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers between levels of the fair value hierarchy as defined in ASC Topic 820, Fair Value Measurements and Disclosures.We adopted the provisions of ASU No. 2010-06 beginning with the first quarter of 2010, except for the disclosure presenting disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3), which we are required to adopt in the first quarter of 23 Table of Contents 2011. As ASU No. 2010-06 affects disclosures only, the adoption of ASU No. 2010-06 does not affect our results of operations or financial condition. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks, including changes in foreign currency exchange rates. We experienced no material change in our exposure to such fluctuations during the quarter ended June 30, 2010. Information regarding market risks as of December 31, 2009 is contained in Item 7A. “Quantitative And Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. At June 30, 2010, we did not have any floating interest rate exposure. As of that date, all of our outstanding debt consisted of the convertible notes, which are fixed-rate obligations. The fair value of the $115.0 million aggregate principal amount of the convertible notes is influenced by changes in market interest rates, the share price of our Class B common stock and our credit quality. At June 30, 2010, the convertible notes had an estimated fair value of $104.1 million. ITEM 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act. Internal Control over Financial Reporting There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 24 Table of Contents PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On February 17, 1998, Eduardo Gongora, or Gongora, filed suit in state court in Hidalgo County, Texas, against Editorial Caballero SA de CV, or EC, Grupo Siete International, Inc., or GSI, collectively the Editorial Defendants, and us. In the complaint, Gongora alleged that he was injured as a result of the termination of a publishing license agreement, or the License Agreement, between us and EC for the publication of a Mexican edition of Playboy magazine, or the Mexican Edition. We terminated the License Agreement on or about January 29, 1998, due to EC’s failure to pay royalties and other amounts due to us under the License Agreement. On February 18, 1998, the Editorial Defendants filed a cross-claim against us. Gongora alleged that in December 1996 he entered into an oral agreement with the Editorial Defendants to solicit advertising for the Mexican Edition to be distributed in the U.S. The basis of GSI’s cross-claim was that it was the assignee of EC’s right to distribute the Mexican Edition in the U.S. and other Spanish-speaking Latin American countries outside of Mexico. On May 31, 2002, a jury returned a verdict against us in the amount of $4.4 million. Under the verdict, Gongora was awarded no damages. GSI and EC were awarded $4.1 million in out-of-pocket expenses and approximately $0.3 million for lost profits, even though the jury found that EC had failed to comply with the terms of the License Agreement. On October 24, 2002, the trial court signed a judgment against us for $4.4 million plus pre- and post-judgment interest and costs. On November 22, 2002, we filed post-judgment motions challenging the judgment in the trial court. The trial court overruled those motions and we vigorously pursued an appeal with the State Appellate Court sitting in Corpus Christi challenging the verdict. We posted a bond in the amount of approximately $9.4 million, which represented the amount of the judgment, costs and estimated pre- and post-judgment interest, in connection with the appeal. On May 25, 2006, the State Appellate Court reversed the judgment by the trial court, rendered judgment for us on the majority of the plaintiffs’ claims and remanded the remaining claims for a new trial. On July 14, 2006, the plaintiffs filed a motion for rehearing and en banc reconsideration, which we opposed. On October 12, 2006, the State Appellate Court denied plaintiffs’ motion. On December 27, 2006, we filed a petition for review with the Texas Supreme Court. On January 25, 2008, the Texas Supreme Court denied our petition for review. On February 8, 2008, we filed a petition for rehearing with the Texas Supreme Court. On May 16, 2008, the Texas Supreme Court denied our motion for rehearing. The posted bond has been canceled and the remaining claims were retried. On April 23, 2010, a jury returned a verdict in our favor. On April 12, 2004, J. Roger Faherty, or Faherty, filed suit in the United States District Court for the Southern District of New York against Spice Entertainment Companies, or Spice, Playboy Enterprises, Inc., or Playboy, Playboy Enterprises International, Inc., or PEII, D. Keith Howington, Anne Howington and Logix Development Corporation, or Logix. The complaint alleges that Faherty is entitled to statutory and contractual indemnification from Playboy, PEII and Spice with respect to defense costs and liabilities incurred by Faherty in connection with litigation that was settled in 2004, or the Logix litigation. The Logix litigation related to a suit brought by Logix, Keith Howington and Anne Howington against Faherty and other parties alleging certain contract and tort causes of action arising out of an agreement between Emerald Media Inc., or EMI, and Logix in which EMI agreed to purchase certain explicit television channels over C-band satellite. The complaint further alleges that Playboy, PEII, Spice, D. Keith Howington, Anne Howington and Logix conspired to deprive Faherty of his alleged right to indemnification by excluding him from the settlement of the Logix litigation. On June 18, 2004, a jury entered a special verdict finding Faherty personally liable for $22.5 million in damages to the plaintiffs in the Logix litigation. A judgment was entered on the verdict on or around August 2, 2004. Faherty filed post-trial motions for a judgment notwithstanding the verdict and a new trial, but these motions were both denied on or about September 21, 2004. On October 20, 2004, Faherty filed a notice of appeal from the verdict. As a result of rulings by the California Court of Appeal and the California Supreme Court as recently as February 13, 2008, Logix’s recovery against Faherty has been reduced significantly, although certain portions of the case have been set for a retrial. In light of these rulings, however, when coupled with any offset as a result of the settlement of the Logix litigation, any ultimate net recovery by Logix against Faherty will be severely reduced and might be entirely eliminated. In consideration of this appeal, Faherty and Playboy have agreed to continue a temporary stay of the indemnification action filed in the United States District Court for the Southern District of New York through the end of December 2010. In late June 2008, plaintiffs in the Logix litigation filed a motion in the trial court seeking to amend a $40.0 million judgment previously entered on consent against defendant EMI seeking to add Faherty as a judgment debtor. Although the trial court allowed that amendment, that ruling was reversed by the California Court of Appeal on February 18, 2010. In the event Faherty’s indemnification and conspiracy claims go forward against us, we believe they are 25 Table of Contents without merit and that we have good defenses against them. As such, based on the information known to us to date, we do not believe that it is probable that a material judgment against us will result. In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 450, Contingencies, or ASC Topic 450, no liability has been accrued. Eleven shareholder class action complaints have been filed against Playboy and certain officers and directors thereof in connection with Hugh M. Hefner’s July 8, 2010 proposal to acquire all of the outstanding shares of Class A common stock and Class B common stock not currently owned by Mr. Hefner for $5.50 per share in cash. In each complaint, the plaintiffs challenge Mr. Hefner’s proposal and allege, among other things, that the consideration to be paid in such proposal is unfair and grossly inadequate. The complaints seek, among other relief, to enjoin defendants from consummating Mr. Hefner’s proposal and to direct defendants to exercise their fiduciary duties to obtain a transaction that is in the best interests of our shareholders. Seven of these complaints were filed in the Chancery Division of the Circuit Court of Cook County, Illinois, and the remaining four complaints were filed in the Court of Chancery in Delaware. We have reviewed the allegations contained in the various complaints and believe they are without merit. We intend to defend the litigation vigorously. As such, based on the information known to us to date, we do not believe that it is probable that a material judgment against us will result. In accordance with ASC Topic 450, no liability has been accrued. On March 26, 2010, DirecTV, Inc., or DirecTV, filed suit against Playboy Entertainment Group, Inc. and Spice Hot Entertainment, Inc., or the Defendants, in the Superior Court of the State of California for the County of Los Angeles. The suit alleges that the Defendants are in breach of the most-favored nations provisions in the parties’ Amended and Restated Affiliation and Licensing Agreement, dated as of August 1, 2007, pursuant to which DirecTV distributes certain of our television programming. On May 21, 2010, the Defendants filed a motion to strike certain portions of DirecTV’s complaint. On July 21, 2010, DirecTV filed an amended complaint with the court, adding the allegation that DirecTV suffered damages of approximately $35.0 million. In light of the filing of the amended complaint, the Defendants have withdrawn their original motion to strike and will now file a revised motion to strike portions of the amended complaint. A hearing on the revised motion to strike is scheduled for October 21, 2010. The Defendants have reviewed the allegations contained in the amended complaint and believe they are unfounded. The Defendants intend to defend this case vigorously. As such, based on the information known to us to date, we do not believe that it is probable that a material judgment against us will result. In accordance with ASC Topic 450, no liability has been accrued. ITEM 1A. RISK FACTORS For a detailed discussion of factors that may affect our performance, see Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. Except as set forth below, there have been no material changes to these risk factors. There can be no assurance that any definitive offer will be made with respect to Hugh M. Hefner’s proposal to acquire all of our outstanding common stock, that any agreement will be executed or that this or any other transaction will be approved or consummated. The absence of a proposal to acquire our common stock would likely have an adverse effect on the market price of our common stock. On July 8, 2010, our Board of Directors, or the Board, received the proposal from Mr. Hefner described in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. The Board has cautioned our shareholders and others considering trading in our securities that it has only received the proposal and that no decisions have been made by the Board or the special committee of the Board with respect to our response to Mr. Hefner’s proposal. The proposal submitted was not a definitive offer, and there can be no assurance that any definitive offer will be made, that any agreement will be executed or that a definitive offer, if made, with respect to the proposal or any other transaction will be approved or consummated. On the last trading day prior to the announcement of Mr. Hefner’s proposal, our Class A common stock and Class B common stock closed at $4.06 and $3.94 per share, respectively. After the announcement, the price for each class of stock rose to trade close to the $5.50 per share proposal price. If this proposal were rejected or withdrawn, or if no similar transaction presented itself, the stock price would likely fall below its current trading range. 26 Table of Contents ITEM 6. EXHIBITS Exhibit Number Description Amendment to the Amended and Restated Agreement, dated June 25, 2010, by and between Playboy Entertainment Group, Inc. and Spice Hot Entertainment, Inc. and DirecTV, Inc. *10.2 Fifth Amendment, dated May 14, 2010, to the Playboy Magazine Printing and Binding Agreement between Playboy Enterprises, Inc. and Quad/Graphics, Inc. Employment Agreement, dated April 14, 2010, between Playboy Enterprises, Inc. and Christoph Pachler Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934. 27 Table of Contents 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. PLAYBOY ENTERPRISES, INC. (Registrant) Date: August 6, 2010 By /s/ Christoph Pachler Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial and Accounting Officer) 28 Table of Contents EXHIBIT INDEX Exhibit Number Description Amendment to the Amended and Restated Agreement, dated June 25, 2010, by and between Playboy Entertainment Group, Inc. and Spice Hot Entertainment, Inc. and DirecTV, Inc. *10.2 Fifth Amendment, dated May 14, 2010, to the Playboy Magazine Printing and Binding Agreement between Playboy Enterprises, Inc. and Quad/Graphics, Inc. Employment Agreement, dated April 14, 2010, between Playboy Enterprises, Inc. and Christoph Pachler Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934. 29

Exhibit 10.7 SEPARATION AND TRANSITION AGREEMENT THIS SEPARATION AND TRANSITION AGREEMENT (this “Agreement”), dated as of October 30, 2016, by and between NCI, Inc. (the “Company”), on behalf of itself and its subsidiaries and affiliates (collectively, the “Company Group”), and Brian J. Clark (“Executive”). WHEREAS, Executive is employed by the Company as its President and Chief Executive Officer; WHEREAS, Executive desires to resign from employment with the Company Group; and WHEREAS, to facilitate his transition, Executive agrees to cooperate with the 1. Resignation. 1.1 Removal from Positions. Executive shall resign from employment with the Company Group on October 31, 2016 (such date, the “Resignation Date”). In that regard, as of the Resignation Date, (a) Executive’s position as President of the Company and Chief Executive Officer of the Company, (b) Executive’s position as a member of the Board of Directors of the Company (the “Board”) and (c) all other officer positions, directorships and other positions that Executive holds with the Company Group shall terminate. 1.2 Release. Executive’s receipt of any payments and benefits pursuant to this Agreement (other than the payments and benefits pursuant to Sections 3.1(a), 3.1(b) and 4 (the “Accrued Obligations”)) is subject to Executive’s executing this Agreement and not revoking the release set forth in Section 7; provided that the release is effective within 10 days following the Resignation Date. No payments or benefits under this Agreement (other than the Accrued Obligations) shall be paid or provided to Executive until the release becomes effective in 2. Transition. 2.1 Consulting Period and Services. Commencing on the Resignation Date and ending on the six-month anniversary thereof (the “Consulting Period”), Executive shall make himself available to the Company to consult with the Company from time to time (the “Services”); provided that the Services shall not exceed 20% of the average level of services that Executive performed during the 36-month period prior to the Resignation Date. 2.2 Consulting Fee. In exchange for the Services, the Company agrees to pay Executive a total fee equal to $250,000 (the “Consulting Fee”). The Consulting Fee shall be paid to Executive ratably on a monthly basis over the Consulting Period commencing November 1, 2016; provided Executive has executed and not revoked the release in Section 7 and complied with his obligations in Section 8. Except as to the Consulting Fee, no other payments or benefits shall be due or payable to Executive for the Services. 2.3 Status as an Independent Contractor. In all matters relating to the Services, nothing under this Agreement shall be construed as creating any partnership, joint venturer or agency between the Company and Executive or to constitute Executive as an agent, employee or representative of the Company. Executive shall act solely as an independent contractor and, as such, is not authorized to bind any member of the Company Group to third parties. Consequently, Executive shall not be entitled to participate during the Consulting Period in any of the employee benefit plans, programs or arrangements of the Company Group in his capacity as a consultant. Executive shall be responsible for and pay all taxes related to the receipt of compensation in connection with the provision of the Services. Executive shall not make any public statements concerning the Services that purport to be on behalf of the Company Group, in each case without prior written consent from the Company. 2.4 Subsequent Employment. The Services shall end and the unpaid portion of the Consulting Fee shall be accelerated and paid in full when Executive notifies the Company that he has obtained full-time employment with a new employer. 3.1 Payments. The Company shall provide Executive with the following severance payments and benefits following the Resignation Date: a. any accrued but unpaid annual base salary and accrued but unused paid time-off due to Executive as of the Resignation Date; b. reimbursement for reasonable and necessary, properly-receipted expenses incurred by Executive on behalf of the Company during the period ending on the Resignation Date; c. a cash payment equal to 200% of Executive’s annual base salary in the amount of $1,000,000, payable in a lump sum; and d. a prorated annual bonus equal to $420,000 for the period beginning on January 1, 2016 and ending on the Resignation Date, payable in a lump sum. 3.2 Payment Timing. Subject to Section 10, the timing of the benefits and payments provided under Section 3.1 shall be as follows: a. amounts payable pursuant to Sections 3.l(a) and (b) shall be paid in the normal course and in no event later than 30 days following the Resignation Date; and b. the amounts payable pursuant to Sections 3.l(c) and (d) shall be paid no later than the 30th day following the Resignation Date. 4. Outstanding Equity Awards. In connection with Executive’s resignation from employment, the Company shall repurchase the Stock Options (as defined below) for $2,652,300, which represents an amount equal to (a) the number of shares of Class A Common Stock, par value $0.19 per share (each, a “Share”), of the Company underlying the Stock Options, multiplied by (b) the Purchase Price (as defined below) less the applicable per Share   2 exercise price of the Stock Options. For purposes of this Agreement, “Purchase Price” means $11.95, which represents the closing sale price of a Share on The Nasdaq Stock Market as of October 28, 2016, and “Stock Options” means Executive’s option to purchase 300,000 Shares granted under the NCI, Inc. Amended and Restated 2005 Performance Incentive Plan (the “Plan”) on June 5, 2013 at an exercise price of $4.51 per Share and Executive’s option to purchase 90,000 Shares granted under the Plan on March 9, 2012 at an exercise price of $7.28 per Share, all of which are vested and exercisable as of the Resignation Date. The closing of the repurchase of the Stock Options shall occur within 30 days following the Resignation Date, at which time the Company shall pay the aggregate purchase price to Executive in cash. For the avoidance of doubt, all other outstanding equity-based awards held by Executive which are not vested or exercisable as of the Resignation Date shall be cancelled for no consideration. 5. Retirement Plans. Executive shall be entitled to receive his vested accrued benefits, if any, under the NCI Information Systems, Inc. 401(k) Profit Sharing Plan and the NCI Nonqualified Executive Deferred Compensation Plan in accordance with the terms and conditions of such plans. 6. Continuation of Certain Benefit Plans. The Company will provide Health and Welfare Coverage and Executive’s Executive Long Term Disability Coverage (for the plans and options currently in effect as elected by Executive) at no additional cost to Executive from the date hereof through October 31, 2017, subject to the terms of the applicable plans. Except for the foregoing or as otherwise specifically provided herein or as required by the Consolidated Omnibus Reconciliation Act or other applicable law, Executive shall not be entitled to any other benefits or to participate in any past, present or future employee benefit plans, programs or arrangements of the Company Group on or 7. Release. 7.1 General Release. In consideration of the Company’s obligations under this Agreement and for other valuable consideration, Executive hereby releases and forever discharges the Company Group and each of their respective officers, employees, directors, shareholders and agents (collectively, the “Released Parties”) from any and all claims, actions and causes of action (collectively, “Claims”), including, without limitation, any Claims arising under (a) the 1057 of the Dodd-Frank Wall Street and Consumer Protection Act (the “Dodd Frank excluding from this release any right Executive may have to receive a monetary award from the Securities and Exchange Commission (the “SEC”) as an SEC Whistleblower, pursuant to the bounty provision under Section 922(a)-(g) of the state agency pursuant to a similar program, or (b) any applicable federal, state, local or foreign law, that Executive may have, or in the future may possess arising out of (x) Executive’s employment relationship with and service as a director, employee, officer or manager of the Company Group, and the termination of such relationship or service, or (y) any event, condition, date hereof; provided, however, that the release set forth in this Section 7.1 shall not apply to the obligations of the Company to continue to provide director and officer indemnification to Executive as provided in the articles of incorporation, bylaws or other governing documents for the Company   3 or the Company’s obligations under this Agreement. Executive further agrees that the payments and benefits described in this Agreement shall be in full Executive’s employment relationship, Executive’s service as a director, The provision of the payments and benefits described in this Agreement shall not be deemed an admission of liability or wrongdoing by the Company Group. This Section 7.1 does not apply to any Claims that Executive may have as of the date Executive signs this Agreement arising under the federal Age Discrimination in promulgated thereunder (“ADEA’’). Claims arising under ADEA are addressed in 7.2 Specific Release of ADEA Claims. In consideration of the payments and benefits provided to Executive under this Agreement, Executive hereby releases and forever discharges the released Parties from any and all Claims that Executive may have as of the date Executive signs this Agreement arising under ADEA. By signing this Agreement, Executive hereby acknowledges and confirms the following: (a) Executive was advised by the Company in connection with Executive’s termination to consult with an attorney of Executive’s choice prior to signing this Agreement and to have such attorney explain to Executive the Executive’s release of claims arising under ADEA; (b) Executive has been given a consult with an attorney of Executive’s choosing with respect thereto; and Section 7.2 only in exchange for consideration in addition to anything of value to which Executive is already entitled. 7.3 Representation. Executive hereby represents that Executive (a) has not instituted, assisted or otherwise participated in connection with, any action, complaint, claim, charge, grievance, arbitration, lawsuit or administrative agency proceeding, or action at law or otherwise against any of the Released Parties and (b) shall not solicit or encourage any of the Company’s employees to litigate claims or file administrative charges against any of the Released Parties. Notwithstanding the foregoing, nothing in this Section 7.3 is intended to restrict Executive from providing testimony or documents pursuant to a lawful subpoena or other compulsory legal process or from providing truthful information upon request in connection with a governmental investigation or legal proceeding that has been independently initiated by another individual or governmental body. 7.4 Cessation of Payments. In the event that Executive (a) files any charge, claim, demand, action or arbitration with regard to Executive’s employment, compensation or termination of employment under any federal, state or local law, or an arbitration under any industry regulatory entity, except in either case for a claim for breach of this Agreement or failure to honor the obligations set forth therein or (b) materially breaches any of the covenants or obligations payments due pursuant to Sections 2 and 3 of this Agreement (other than the Accrued Obligations), and Executive shall be required to promptly repay any such payments previously made by the Company pursuant to Sections 2 and 3 (other than the Accrued Obligations).   4 7.5 Voluntary Assent. Executive affirms that Executive has read this Agreement, set forth in Section 7.1. Executive further acknowledges that (a) Executive has voluntarily entered into this Agreement; (b) Executive has not relied upon any (c) the only consideration for signing this Agreement is as set forth herein; and (d) this document gives Executive the opportunity and encourages Executive to have this Agreement reviewed by Executive’s attorney and/or tax advisor. 7.6 Revocation. This Agreement may be revoked by Executive within the seven- day period commencing on the date Executive signs this Agreement (the “Revocation the Company under this Agreement shall terminate and be of no further force and effect as of the date of such revocation. No such revocation by Executive shall be effective unless it is in writing and signed by Executive and received by the Company prior to the expiration of the Revocation Period. 8. Covenants. 8.1 Confidential Information. Subject to Section 9, Executive agrees that Executive shall not at any time, except with the prior written consent of the Company or as required by applicable law or legal process, directly or indirectly, (a) use, disseminate, disclose or publish, whether for Executive’s Confidential Information (as defined below) or (b) deliver to any person, firm, similar repository of or containing any Confidential Information. “Confidential Information” means (x) confidential or proprietary information or trade secrets of or relating to the Company Group including, without limitation, intellectual thereof, ideas, inventions, works, discoveries, improvements, information, materials, in each case, that are confidential and/or proprietary and owned, developed or possessed by the Company Group, whether in tangible or intangible form or (y) confidential or proprietary information with respect to the Company Group’s operations, processes, products, inventions, business practices, or other tennis of employment. 8.2 Confidentiality of this Agreement. Subject to Section 9, Executive agrees that, except to enforce the terms of this Agreement or as may be required by applicable law or legal process, Executive shall not disclose the terms of this Agreement to any person other than Executive’s accountants, financial advisors, attorneys or spouse; provided that such accountants, financial advisors, attorneys and spouse agree not to disclose the terms of this Agreement to any 8.3 Return of Property. All files, records, documents, manuals, books, forms, all physical items related to the business of the   5 Company, whether of a public nature or not, and whether prepared by Executive or not, are and shall remain the exclusive property of the Company, and shall not be removed from its premises, except as required in the course of Executive’s employment by the Company, without the prior written consent of the Company. No later than five business days after the Resignation Date, such items, including Executive to the Company (or, if requested by the Company, destroyed by Executive). 8.4 Non-Solicitation. Executive agrees that, during the for the 12-month period following the Resignation Date (the “Restricted Period”), Executive shall not, directly or indirectly, (a) solicit, induce or attempt to solicit induce any at any time during the six months prior to the Resignation Date (each, a “Protected Employee”) to leave the employ of, or engagement with, the Company Group, or in any way interfere with the relationship between any member of the Company Group and any Protected Employee (it being understood that this Section 8.4(a) shall not be violated by the placement of general advertisements and public announcements not targeted at employees or independent contractors of the Company Group), (b) hire directly or through another entity any Protected Employee, or (c) solicit, induce or attempt to solicit or induce any customer, supplier, licensee or other business relation of the Company Group to cease doing business or terminate any contract with the Company Group. As used herein, the term “indirectly” shall include, without limitation, Executive’s permitting the use of Executive’s name by any competitor of the Company Group to induce or interfere with any employee, officer, representative or agent of any member of the Company Group. 8.5 Non-Disparagement. Subject to Section 9, Executive agrees to refrain from writing, orally or electronically (a) any derogatory comment concerning the Company Group or any of its current or former directors, officers, employees or shareholders or (b) any other comment that could reasonably be expected to be materially detrimental to the business or financial prospects or reputation of the Company Group. In addition, the Board and the Company’s executive officers shall refrain from making, directly or indirectly, now or at any time in the future, whether in writing, orally or electronically (x) any derogatory comment concerning Executive or (y) any other comment that could reasonably be expected to be materially detrimental to Executive’s financial prospects or reputation. Nothing in the foregoing shall preclude Executive or the Company Group from providing truthful disclosures required by applicable law or legal process. Further, nothing in this Section 8.5 or this Agreement shall prevent Executive or the Company from answering inquiries or questions about, and providing honest opinions about and/or comparing the services offered by the Company to the services offered by any person or entity for whom Executive works. The Company shall provide Executive with a positive letter of recommendation at any time upon his request. 8.6 Remedies. Executive acknowledges that Executive has carefully read and restraints imposed upon him pursuant to Sections 8.1 through 8.5. Executive Information and other legitimate interests of the Company Group; that each and aggregate, shall not prevent   6 Executive is bound by these restraints. Without intending to limit the remedies available to the Company, Executive agrees that a breach (or threatened breach) of any of the covenants contained in Sections 8.1 through 8.5 may result in thereof, the Company shall be entitled to seek a temporary restraining order or restraining Executive from engaging in activities prohibited by the covenants contained in Sections 8.1 through 8.5 or such other relief as may be required specifically to enforce any of the covenants contained in this Agreement. Such injunctive relief in any court shall be available to the Company in lieu of, or prior to or pending determination in, any proceeding. 8.7 Extension of Restricted Period. In addition to the remedies the Company may seek and obtain pursuant to Section 8.6, the Restricted Period shall be extended by any and all periods during which Executive is in breach of Section 8.4. 9. Confidential Disclosure in Reporting Violations of Law or in Court Filings. Executive acknowledges and the Company agrees that Executive may disclose Department of Justice, the SEC, the Congress, and any agency Inspector General suspected violation of law or regulation or making other disclosures that are protected under the whistleblower provisions of state or federal laws or regulations. Executive may also disclose Confidential Information in a document seal. Nothing in this Agreement is intended to conflict with federal law protecting confidential disclosures of a trade secret to the government or in a shall be interpreted and construed consistent with that intent. No expenses such right to reimbursement or right to in-kind benefits shall be subject to from service” under Section 409A. If amounts payable under this Agreement do not qualify for exemption from Section 409A at the time of Executive’s separation from service and therefore are deemed deferred compensation subject to the requirements of Section 409A on the date of such separation from service, then if Executive is a “specified employee” under Section 409A on the date of Executive’s separation from service, payment of the amounts hereunder shall be delayed for a period of six months from the date of Executive’s separation from service if required by Section 409A.   7 The accumulated postponed amount shall be paid in a lump sum within 30 days of Section 409A shall be paid to Executive’s estate within 30 days after the 11. Change in Control Agreement. For the avoidance of doubt, the Executive Change in Control and Severance Agreement, dated as of March 9, 2012, between Executive and the Company shall terminate effective as of the Resignation Date and shall be of no further force and effect. 12. Miscellaneous. 12.1 Severability. As the provisions of this Agreement are independent of and make it enforceable. 12.2 Notice. For purposes of this Agreement, notices, demands and all other return receipt requested, postage prepaid, and via e-mail, to the following addresses: NCI, Inc. 11730 Plaza American Drive, Suite 700 Reston, Virginia 20190 NCI, Inc. Reston, Virginia 20190 Attention: General Counsel and Washington, DC 20036   8 Brian J. Clark Email: clarkbj@gmail.com at the address set forth in the employment records of the Company Clouse Dunn LLP 120 I Elm Street Suite 5200 Dallas, TX 75270 Attention: Rogge Dunn Email: dunn@rushtowork.com Section 12.2 by providing written notice of such change to the other party. 12.3 Governing Law. This Agreement shall be governed by and construed in 12.4 Benefits; Binding Effect; Assignment. This Agreement shall be binding upon Executive shall not assign this Agreement. 12.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties, and all prior understandings, agreements or undertakings between the parties concerning Executive’s employment, termination of employment or the other subject matters of this Agreement are superseded in their entirety by this Agreement (including, without limitation, the “Resignation Terms for Brian Clark” presented to Executive on October 21, 2016). 12.6 Waivers and Amendments. This Agreement may be amended, superseded, power or privilege. instrument. 12.8 Interpretation. As both parties having had the opportunity to consult with   9 12.9 Withholding. Any payments made to Executive under this Agreement shall be 12.10 Survivability. Those provisions and obligations of this Agreement which are intended to survive shall survive notwithstanding termination of Executive’s   10   NCI, INC. By:   LOGO [g328524stp024.jpg] Name:   Michele R. Capello Title:   General Counsel   Brian J. Clark   [Signature Page to Separation and Transition Agreement]     Name:     Title:     LOGO [g328524stp025.jpg] Brian J. Clark  

Exhibit 10.1 SECURITIES PURCHASE AGREEMENT 2009 between Lightpath Technologies, Inc., a Delaware corporation (the as follows: ARTICLE I. DEFINITIONS Securities Act. to Section 2.1. “Company Counsel” means Baker & Hostetler LLP, with offices located at 200 South Orange Avenue, SunTrust Center, Suite 2300, Orlando, FL 32801. “Disclosure Schedules” shall mean Disclosure Schedules referred to in Section 3.1. “Effective Date” means the earlier of the date that (a) the registration statement pursuant to which all of the Registrable Securities (as defined in the Registration Rights Agreement) have been registered for resale by the holders thereof is declared effective by the Commission or (b) all of the Registrable restrictions. hereof, by and among the Company, the Placement Agent and the Escrow Agent “Exempt Issuance” means the issuance of: (a) shares of Common Stock, options, restricted stock units and awards and similar issuances to employees, officers, directors or consultants (provided that issuances to consultants shall not exceed 200,000 shares in any 12 month period (subject to adjustment for reverse and forward stock splits,   2 recapitalizations and the like)) of the Company pursuant to any stock option, stock purchase, stock award or similar plan or arrangement duly adopted by a securities; (c) shares of Common Stock issuable upon the exercise of any stock options, warrants, or similar rights outstanding as of the date hereof or which the Company is obligated to issue under any agreement or other arrangement currently in effect as set forth on Schedule 1.1 hereto; (d) securities issued through its subsidiaries, an operating company and in which the Company receives securities; provided, however, the prior written consent of those Purchasers holding at least a majority in interest of the Securities then outstanding will be required if the merger/acquisition is priced below the exercise price of the Warrants, (e) for purposes of Section 4.13 only, options or warrants (not to and forward stock splits, recapitalizations and the like)) to purchase Common Stock issued to commercial lenders, equipment lessors, vendors or suppliers of the Company, (f) for purposes of Section 4.13 only, options or warrants (not to Stock issued to underwriters, brokers or finders for payment of reasonable and customary fees in connection with fundraising (debt or equity) activities, including the sale of the Securities and (g) with the prior written consent of Garden State, up to an amount of common stock and warrants equal to the difference between 1,300,000 shares and the aggregate number of shares subscribed for hereunder, on the same terms and conditions and prices as hereunder (provided, however, the prices of such securities shall be greater than the prices hereunder to the extent necessary that such issuance(s) qualify as an “at-market” transaction for purposes of Nasdaq’s corporate governance rules), with investors executing definitive agreements for the purchase of such securities and such transactions having closed on or before the earlier of (ii) the date that the Initial Registration Statement (as defined in the Registration Rights Agreement) is actually filed with the Commission. “Force Majeure” shall mean the following acts or omissions provided that they are beyond the direct control of the Company: an act of God, an act of war, terrorism, natural disaster or prolonged and systematic failure of communication or electrical services. Force Majeure shall not include any act or omission by the Commission or the Trading Market.   3 “Garden State” means Garden State Securities, Inc. “Knowledge of the Company”, “the Company’s Knowledge” and terms and phrases of similar import, whether or not capitalized, means (i) actual knowledge, awareness or belief possessed the executive officers and directors of the Company, and (ii) the knowledge, awareness or belief that the executive officers and directors would have possessed by using reasonable care and diligence under the circumstances. “Per Share Purchase Price” equals $1.26 1, subject to adjustment for reverse and of any kind.   1 80% of the average of the closing bid prices for the 5 Trading Days immediately prior to the date of the first Purchase Agreement.   4 Section 4.13(e). attached hereto. regulations promulgated thereunder.   5 funds. trading. Rights Agreement, the Escrow Agreement, all exhibits and schedules thereto and transactions contemplated hereunder. “Transfer Agent” means Registrar and Transfer Agent Company, the current transfer agent of the Company, with a mailing address of 10 Commerce Drive, Cranford, NJ 07016 and a facsimile number of (908) 497-2310, and any successor time)), (b) if the OTC Bulletin   6 Warrants shall be exercisable as set forth therein and have a term of exercise expiring 5 years from their initial date of exercise, in the form of Exhibit B attached hereto. Warrants. ARTICLE II. PURCHASE AND SALE 1,300,000 of Shares and Warrants. Each Purchaser shall deliver to the Company 2.2 Deliveries. attached hereto;   7 an exercise price equal to $1.732, subject to adjustment therein; and and 2.3 Closing Conditions. (iii) the minimum aggregate Subscription Amount hereunder shall be $800,000; and this Agreement.   2 110% of the average of the closing bid prices for the 5 Trading Days immediately prior to the date of the first Purchase Agreement.   8 this Agreement; (v) the minimum aggregate Subscription Amount hereunder shall be $800,000; and ARTICLE III. REPRESENTATIONS AND WARRANTIES to each Purchaser:   9 and thereof, will, subject to the satisfaction of and obtaining the Required Approvals, constitute the valid and binding obligation of the Company it is a   10 (iii) subject to the satisfaction and obtaining the Required Approvals, conflict under applicable state securities laws and (v) other consents, waivers, authorizations or orders, or notice to, or filings or registrations with other Persons which have already been obtained, delivered or made and set forth on of   11 the Securities Act. The financial statements of   12 option plans and stock purchase plans. The Company does not have pending before the issuance of the Securities contemplated by this Agreement and the consummation of the transactions contemplated by the Transaction Documents or as representation is made.   13 respective businesses as   14 Material Permit. as set forth on Schedule 3.1(n) and except for Liens as do not materially affect Adverse Effect. amounts as are reasonably believed by the Company and this Subsidiaries to be insurance coverage at least equal to $5,000,000. Neither the Company nor any of   15 most recently filed periodic SEC Report, the Company is in material compliance as of the Closing Date. Except as set forth in the most recently filed periodic SEC Report, the Company and the Subsidiaries maintain a system of internal to any fees or with respect to any claims   16 Transaction Documents. of any securities of the Company other than registrations that are currently effective. listed or quoted to the effect that the Company is not in material compliance requirements. the Purchasers or   17 might constitute material, nonpublic information. The Company understands and furnished by the Company to the Purchasers regarding the Company, its business hereof.   18 Indebtedness. Company, any Person acting on behalf of the Company has offered or sold any of Act. amended. statements to be included in the Company’s Annual Report for the year ended   19 Transaction Documents. soliciting purchases of, any of the Securities, or   20 Securities Act. date therein):   21   22 ARTICLE IV. 4.1 Transfer Restrictions. approval of the Company and no legal opinion of legal   23 thereunder. (unless a delay is a result of a Force Majeure, provided that the Company continues to use commercially reasonable efforts to ultimately perform its obligations hereunder), deliver or cause to be delivered to such Purchaser a forth in this Section 4. Certificates for Shares and Warrant Shares subject to   24 for each $1,000 of Shares or Warrant Shares, as applicable (based on the VWAP of Agent) delivered for removal of the restrictive legend and subject to fourth Trading Day following the Legend Removal Date until such certificate is injunctive relief. including, without limitation, its obligation to issue the Warrant Shares Securities, the Company covenants maintain the registration of the Common Stock   25 Securities under Rule 144 and, upon the request of any Purchaser, furnish such information to such Purchaser. The Company further covenants that it will take information requirement under Rule 144(c) and there is not then on file with the Commission a currently effective Registration Statement and current prospectus available thereunder covering such Securities (a “Public Information Failure”) Public Information Failure Payments are incurred and (ii) the third injunctive relief. transaction.   26 Transaction Documents. 4.6 Securities Laws Disclosure; Publicity. The Company shall (1) by 8:30 a.m. issue a press release, disclosing the material terms of the transactions contemplated hereby, and (2) by 5:00 p.m. (New York City time) on the Trading (b).   27 withheld or   28 Party in this Agreement or in the other Transaction Documents, or conduct which constitutes fraud, gross negligence, willful misconduct or malfeasance of such Purchaser Party. 4.12 Listing of Common Stock. The Company hereby agrees to use best efforts to   29 time) on the 10th Trading Day after the Pre-Notice is deemed given pursuant to Section 5.4 to all of the Purchasers that the Purchaser is willing to participation, and representing and warranting that the Purchaser has such funds Subsequent Financing Notice. Purchasers participating under this Section 4.13 plus the aggregate subscription clause (e) in the definition of Exempt Issuance that are participating in such under such agreements that are substantially similar to this Section 4.13. Stock.   30 Stock or Common Stock Equivalents; provided, however, that the ninety (90) day Shares and Warrant Shares. holds any of the Securities and (ii) three years from the Closing Date, the Exempt Issuance. 4.15 Equal Treatment of Purchasers. No consideration (including any modification 4.16 Certain Transactions and Confidentiality. Each Purchaser, severally and not such time that the transactions contemplated by this Agreement are   31 announced as described in Section 4.6; except that, until the expiration of the 6 month period immediately following the date hereof, such Purchaser severally Affiliate acting on its behalf or pursuant to any understanding with it, shall knowingly engage in any Short Sales, except on those days (each a “Permitted Day”) on which the aggregate short position with respect to the Common Stock of such Purchaser prior to giving effect to any Short Sales by such Purchaser on such Permitted Day does not exceed such Purchaser’s Permitted Share Position (as defined below) on such Permitted Day; provided, however, that a Purchaser will only be entitled to engage in transactions that constitute Short Sales on a Permitted Day to the extent that following such transaction, the aggregate short position with respect to the Common Stock of such Purchaser does not exceed such Purchaser’s Permitted Share Position. For purposes of this Section 4.16, a Purchaser’s “Permitted Share Position” means, with respect to any date of determination, the number of shares of Common Stock owned by such Purchaser (including Shares and Warrant Shares and shares purchased in the open market, prior transactions with the Company or otherwise) plus the maximum number of shares of Common Stock that such Purchaser has a right to convert or exercise into pursuant to any outstanding securities of the Company (whether or not exercised or converted and without regard to any exercise caps or other exercise restrictions applicable to the Warrants) held by such Purchaser. Notwithstanding of any Purchaser.   32 4.19 Delivery of Securities After Closing. The Company shall deliver, or cause ARTICLE V. MISCELLANEOUS August 31, 2009; provided, however, that such termination will not affect the Garden State the non-accountable sum of $25,000 for its legal fees and expenses, $10,000 of which has been paid prior to the Closing. Except as expressly set hereto, except as the same may be changed by a party hereto by delivering notice to the Purchasers, in the case of a change of address by the Company, and to the Company, in the case of a change of address by   33 any Purchaser, in each case in accordance with the terms hereof, such change of address to be effective on the later of the date set forth in such notice, or ten (10) days after such notice is deemed given hereunder. 5.5 Amendments; Waivers. Except as expressly set forth herein, no provision of Purchasers holding at least 67% in interest of the Shares then outstanding or, provisions hereof. “Purchasers.” such suit, action or proceeding by mailing   34 limitations.   35 satisfactory to the Company of such loss, theft or destruction (including customary indemnity reasonably acceptable to the Company). The applicant for a WS does not represent any of the Purchasers and only represents Garden State, as the placement agent for the transaction. The Company has elected to provide all Purchasers.   36 TRIAL BY JURY.   37   Address for Notice: 2603 Challenger Tech Court Suite 100 Orlando, FL 32826 Fax: 407-382-4007 By:       Name:   J. James Gaynor     Title:   Chief Executive Officer     Baker & Hostetler LLP 200 South Orange Avenue Suite 2300 Orlando, FL 32801 Fax: 407-841-0168   38 [PURCHASER SIGNATURE PAGES TO LPTH SECURITIES PURCHASE AGREEMENT]   Name of Purchaser:                notice): Subscription Amount:              Shares:              Warrant Shares:              EIN Number or Social Security:                        39   Name of Purchaser:    Mark Grinbaum     Mark Grinbaum       Name of Purchaser:    Eric G. Handorf   /s/    Eric G. Handorf   Eric G. Handorf       Name of Purchaser:    Manickam Ganesh   /s/    Manickam Ganesh   Mark Grinbaum       Name of Purchaser:    Paul Fisher   /s/    Paul Fisher   Paul Fisher       Name of Purchaser:    Michael V. Dyett   /s/    Michael V. Dyett   Michael V. Dyett       Name of Purchaser:    David A. Dent     David A. Dent       Name of Purchaser:    David Chornota   /s/    David Chornota   David Chornota       Name of Purchaser:    Nicholas Carosi III   /s/    Nicholas Carosi   Nicholas Carosi       Name of Purchaser:    Terry R. Brenneman   /s/    Terry R. Brenneman   Terry R. Brenneman       Name of Purchaser:    Kenneth A. Ikemiya   /s/    Kenneth A. Ikemiya   Kenneth A. Ikemiya       Name of Purchaser:    Ben Johnston   /s/    Ben Johnston   Ben Johnston       Name of Purchaser:    Yi H. Kao & Marianne Kao   /s/    Yi H. Kao & Marianne Kao         Name of Purchaser:    Evelyn Kossak   /s/    Evelyn Kossak   Evelyn Kossak       Name of Purchaser:    John E. Kyees     John E. Kyees       Name of Purchaser:    William S. Lapp     William S. Lapp       Name of Purchaser:    Richard J. Lemming & Emily M. Lemming   /s/    Richard J. Lemming & Emily M. Lemming         Name of Purchaser:    Robert A. Melnick   /s/    Robert A. Melnick   Robert A. Melnick       Name of Purchaser:    Brett Moyer     Brett Moyer       Name of Purchaser:    David S. Petterson   /s/    David S. Petterson   David S. Petterson       Name of Purchaser:    Ami Silberman   /s/    Ami Silberman   Ami Silberman       Name of Purchaser:    Douglas A. Twiddy   /s/    Douglas A. Twiddy   Douglas A. Twiddy       Name of Purchaser:    Heller Capital Investments     Ronald I. Heller      CIO   Name of Purchaser:    Octagon Capital Partners     Steven Hart   General Partner   Name of Purchaser:    Stephen E. Jacobs   /s/    Stephen E. Jacobs   Stephen E. Jacobs       Name of Purchaser:    Cranshire Capital LP     Keith A. Goodman   COO of Downsview Capital, Inc., General Partner of Cranshire Capital LP   Name of Purchaser:    Thomas Mezger   /s/    Thomas Mezger   Thomas Mezger       Name of Purchaser:        Manager       Name of Purchaser:    Larry Kubinski   /s/    Larry Kubinski   Lary Kubinski       Name of Purchaser:    Marshall Chandler   /s/    Marshall Chandler   Marshall Chandler       Name of Purchaser:    Courtney Chandler   /s/    Courtney Chandler   Courtney Chandler       Name of Purchaser:    Paul Dapolito, III   /s/    Paul Dapolito, III   Paul Dapolito, III       Name of Purchaser:    Glenn P. Meade     Glenn P. Meade       Name of Purchaser:    Pat Kinney   /s/    Pat Kinney   Pat Kinney    

      Exhibit 10.5   SECOND AMENDMENT TO AGREEMENT   THIS AMENDMENT, made effective March 1, 2011, by and between Audio Products (“API”), a wholly owned subsidiary of Klipsch Group, Inc. (“KGI”) and Oscar Bernardo (“Employee”).   WITNESSETH THAT:   WHEREAS, Audiovox Corporation (“Audiovox”), through its wholly owned subsidiary, Soundtech LLC, has purchased or will purchase all of the issued and outstanding stock of KGI; and   and Amendment effective July 1, 2009 (the “Agreement”), whereby Employee is employed by API; and   WHEREAS, Employee desires to continue in the employ of API and has agreed to amend and add a certain provision to the Agreement;     1.Section 2.7 as follows is added to the Agreement:     2.7 Employee shall have the following described Put Option:   KGI will be calculated on a monthly basis according to GAAP and will bear bank.   Employee may at the end of any month following the 30th month anniversary of the definitive agreement between Soundtech LLC and KGI, request KGI to pay him in one lump sum up to 80% of .25% of the aggregate cumulative after tax net profit or loss of KGI (the “Put Price”), and KGI will pay such amount to Employee.  Such a request may not be made within 60 months of Employee’s previous request.   Any unpaid Put Price will be paid promptly to Employee or his heirs as the case may be if Employee’s employment is terminated for any reason.             Commencement value-0-   Net profits after 12 months$10,000,000   Put Price (.25%)$25,000   Net loss in 13th month$1,000,000   Put Price (.25%)$22,500       2. shall be incorporated by reference.     3. The provisions of this Amendment shall be effective March 1, 2011.   IN WITNESS WHEREOF, the parties have duly executed this Second Amendment.     AUDIO PRODUCTS INTERNATIONAL   By: /s/ Fred Klipsch Fred Klipsch, CEO     /s/ Oscar Bernardo Oscar Bernardo, Employee  

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Title: Went in for an oil change, two weeks later my engine blows from no oil in car. Question:I admittedly know almost nothing about cars. On May 5 i went to one of those major chain oil changing shops. I was charged $79.43 for the high mileage service. On May 20 on my way to work my engine blows in the middle of the interstate. I call my uncle(a mechanic) after getting the car towed back to my place and when he checked there was no oil in the engine. Is there anything that i can be done? What actions should i take? Answer #1: Have you driven your car since the oil change? Because you wouldn't get anywhere period without oil. So if you have driven around any where in the last two weeks, then you probably have an oil leak. But I'd be very shocked if they drained you and didn't fill you up. The motor would literally seize up on your drive home from the shop you got the oil change from.

AGREEMENT AND PLAN OF REORGANIZATION This Agreement and Plan of Reorganization (“Agreement”) is made as of January 8, 2013, by and between Buffalo Funds, a Delaware statutory trust (the “Trust”), on behalf of its series the Buffalo China Fund (the “Target Fund”) and the Trust, on behalf of its series the Buffalo International Fund (the “Acquiring Fund” and, together with the Target Fund, the “Funds”).Kornitzer Capital Management, Inc. is a party to this Agreement solely for purposes of paragraph 8.2.All agreements, representations, actions and obligations described herein made or to be taken or undertaken by the Acquiring Fund or the Target Fund are made and shall be taken or undertaken by the Trust on behalf of the Acquiring Fund and Target Fund. This Agreement is intended to be and is adopted as a “plan of reorganization” within the meaning of Section368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).The reorganization will consist of the transfer of all of the assets of the Target Fund to the Acquiring Fund in exchange solely for shares of beneficial interest of the Acquiring Fund (the “Acquiring Fund Shares”), the assumption by the Acquiring Fund of all liabilities of the Target Fund, and the distribution of the Acquiring Fund Shares to the shareholders of the Target Fund in redemption of all outstanding Target Fund Shares (as defined below) and in complete liquidation of the Target Fund, all upon the terms and conditions hereinafter set forth in this Agreement (the “Reorganization”). WHEREAS, the Target Fund is a series of a registered open-end management investment company, and the Acquiring Fund is a series of a registered open-end management investment company, and the Target Fund owns securities which are assets of the character in which the Acquiring Fund is permitted to invest; WHEREAS, both the Target Fund and the Acquiring Fund are authorized to issue their shares of beneficial interest; WHEREAS, the Board of Trustees of the Trust has determined, with respect to the Target Fund, that (1)participation in the Reorganization is in the best interests of the Target Fund and its shareholders, and (2)the interests of the existing shareholders of the Target Fund would not be diluted as a result of the Reorganization; and WHEREAS, the Board of Trustees of the Trust has determined, with respect to the Acquiring Fund, that (1)participation in the Reorganization is in the best interests of the Acquiring Fund and its shareholders, and (2)the interests of the existing shareholders of the Acquiring Fund would not be diluted as a result of the Reorganization; NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: ARTICLE I THE REORGANIZATION AND FUND TRANSACTIONS 1.1The Reorganization.Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, at the Effective Time (as defined in paragraph3.1), the Trust shall assign, deliver and otherwise transfer the Assets (as defined in paragraph1.2) of the Target Fund to the Acquiring Fund, and the Trust shall assume the Liabilities (as defined in paragraph1.3) of the Target Fund on behalf of the Acquiring Fund.In consideration of the foregoing, at the Effective Time, the Acquiring Fund shall deliver to the Target Fund full and fractional Acquiring Fund Shares (to the third decimal place).The number of Acquiring Fund Shares to be delivered shall be determined as set forth in paragraph2.3. 1.2Assets of the Target Fund.The assets of the Target Fund to be acquired by the Acquiring Fund shall consist of all assets and property, including, without limitation, all cash, cash equivalents, securities, receivables (including securities, interests and dividends receivable), commodities and futures interests, rights to register shares under applicable securities laws, any deferred or prepaid expenses shown as an asset on the books of the Target Fund at the Valuation Time, books and records of the Target Fund, and any other property owned by the Target Fund at the Valuation Time (collectively, the “Assets”). 1.3Liabilities of the Target Fund.The Target Fund will use commercially reasonable efforts to discharge all of its known liabilities and obligations prior to the Valuation Time consistent with its obligation to continue to pursue its investment objective and strategies in accordance with the terms of its prospectus.The Acquiring Fund will assume all of the Target Fund’s liabilities and obligations of any kind whatsoever, whether known or unknown, absolute, accrued, contingent or otherwise, in existence on the Closing Date (collectively, the “Liabilities”). 1.4Distribution of Acquiring Fund Shares.At the Effective Time (or as soon thereafter as is reasonably practicable), the Target Fund will distribute the Acquiring Fund Shares received from the Acquiring Fund pursuant to paragraph1.1, pro rata to the record holders of the shares of the Target Fund determined as of the Effective Time (the “Target Fund Shareholders”) in complete liquidation of the Target Fund.Such distribution and liquidation will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Target Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Target Fund Shareholders.The aggregate net asset value of the Acquiring Fund Shares to be so credited to Target Fund Shareholders shall be equal to the aggregate net asset value of the then outstanding shares of beneficial interest of the Target Fund (the “Target Fund Shares”) owned by Target Fund Shareholders at the Effective Time.All issued and outstanding shares of the Target Fund will simultaneously be redeemed and canceled on the books of the Target Fund.The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares in connection with such exchange. 1.5Recorded Ownership of Acquiring Fund Shares.Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s Transfer Agent (as defined in paragraph3.3). 1.6Filing Responsibilities of Target Fund.Any reporting responsibility of the Target Fund, including, but not limited to, the responsibility for filing regulatory reports, tax returns, or other documents with the Securities and Exchange Commission (“Commission”), any state securities commission, and any Federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Target Fund. ARTICLE II VALUATION 2.1Net Asset Value of the Target Fund.The net asset value of the Target Fund Shares shall be the net asset value computed as of the Valuation Time, after the declaration and payment of any dividends and/or other distributions on that date, using the valuation procedures of the Target Fund. 2.2Net Asset Value of the Acquiring Fund.The net asset value of the Acquiring Fund Shares shall be the net asset value computed as of the Valuation Time, after the declaration and payment of any dividends and/or other distributions on that date, using the valuation procedures of the Acquiring Fund. 2.3Calculation of Number of Acquiring Fund Shares.The number of Acquiring Fund Shares to be issued (including fractional shares (to the third decimal place), if any) in connection with the Reorganization shall be determined by dividing the value of the per share net asset value of the Target Fund Shares participating therein, determined in accordance with the valuation procedures referred to in paragraph 2.1, by the net asset value per share of the Acquiring Fund, determined in accordance with the valuation procedures referred to in paragraph 2.2.The parties agree that the intent of this calculation is to ensure that the aggregate net asset value of the Acquiring Fund Shares to be so credited to Target Fund Shareholders shall be equal to the aggregate net asset value of the then outstanding shares of beneficial interest of the Target Fund Shares owned by Target Fund Shareholders at the Effective Time. 2.4Determination of Value.All computations of value hereunder shall by made in accordance with each Fund’s regular practice and the requirements of the Investment Company Act of 1940, as amended (the “1940 Act”), and shall be subject to confirmation by each Fund’s respective independent registered public accounting firm upon reasonable request of the other Fund.The Trust and Target Fund agree to use all commercially reasonable efforts to resolve prior to the Valuation Time any material pricing differences for prices of portfolio securities of the Target Fund which are also held by the Acquiring Fund. 2.5Valuation Time.The Valuation Time shall be the time at which the Funds calculate their net asset values as set forth in their respective prospectuses (normally the close of regular trading on the New York Stock Exchange (“NYSE”)) on the business day immediately preceding the Closing Date (as defined in paragraph3.1) (the “Valuation Time”). ARTICLE III CLOSING 3.1Closing.The Reorganization, together with related acts necessary to consummate the same (“Closing”), shall occur at the principal office of the Trust on or about January 25, 2013, or at such other place and/or on such other date as to which the parties may agree (the “Closing Date”).All acts taking place at the Closing shall be deemed to take place immediately prior to the opening of business on the Closing Date unless otherwise provided herein (the “Effective Time”). 3.2Transfer and Delivery of Assets.The Trust shall direct U.S. Bank National Association (“U.S. Bank”), as custodian for the Target Fund, to deliver, at the Closing, a certificate of an authorized officer stating that (i)the Assets were delivered in proper form to the Acquiring Fund at the Effective Time, and (ii)all necessary taxes in connection with the delivery of the Assets, including all applicable Federal and state stock transfer stamps, if any, have been paid or provision for payment has been made.The Target Fund’s portfolio securities represented by a certificate or other written instrument shall be presented by U.S. Bank, on behalf of the Target Fund, to U.S. Bank, as custodian for the Acquiring Fund.Such presentation shall be made for examination no later than five (5) business days preceding the Effective Time and shall be transferred and delivered by the Target Fund as of the Effective Time for the account of the Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof.U.S. Bank, on behalf of the Target Fund, shall deliver to U.S. Bank, as custodian of the Acquiring Fund, as of the Effective Time by book entry, in accordance with the customary practices of U.S. Bank and of each securities depository, as defined in Rule 17f-4 under the 1940 Act, in which the Target Fund’s Assets are deposited, the Target Fund’s Assets deposited with such depositories.The cash to be transferred by the Target Fund shall be delivered by wire transfer of Federal funds at the Effective Time. 3.3Share Records.The Trust shall direct U.S. Bancorp Fund Services, LLC, in its capacity as transfer agent for the Target Fund (the “Transfer Agent”), to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Target Fund Shareholders and the number and percentage ownership of outstanding Target Fund Shares owned by each such Target Fund Shareholder immediately prior to the Closing.The Acquiring Fund shall issue and deliver to the Secretary of the Target Fund prior to the Effective Time a confirmation evidencing that the appropriate number of Acquiring Fund Shares will be credited to the Target Fund at the Effective Time, or provide other evidence satisfactory to the Target Fund as of the Effective Time that such Acquiring Fund Shares have been credited to the Target Fund’s accounts on the books of the Acquiring Fund. 3.4Postponement of Valuation Time.In the event that at the Valuation Time the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Target Fund (each, an “Exchange”) shall be closed to trading or trading thereupon shall be restricted, or trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board of Trustees of the Trust, accurate appraisal of the value of the net assets of the Target Fund or the Acquiring Fund, respectively, is impracticable, the Valuation Time shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1Representations and Warranties of the Target Fund.Except as has been fully disclosed to the Acquiring Fund in a written instrument executed by an officer of the Trust, the Target Fund represents and warrants to the Acquiring Fund as follows: 4.1.1The Target Fund is a duly established series of the Trust, which is a business trust duly organized, validly existing and in good standing under the laws of the State of Delaware, with power under its Declaration of Trust and By-Laws, each as amended from time to time, to own all of its properties and assets and to carry on its business as it is presently conducted. 4.1.2The Trust is registered with the Commission as an open-end management investment company under the 1940 Act, and the registration of the Target Fund Shares under the Securities Act of 1933, as amended (the “1933 Act”), is in full force and effect. 4.1.3No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Target Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act, and such as may be required under state securities laws. 4.1.4The current prospectus, statement of additional information, shareholder reports, marketing and other related materials of the Target Fund and each prospectus and statement of additional information of the Target Fund used at all times prior to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading. 4.1.5At the Effective Time, the Target Fund will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer and deliver such Assets hereunder free of any liens or other encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof other than such restrictions as might arise under the 1933 Act. 4.1.6The Target Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i)a violation of Delaware law or a material violation of the Declaration of Trust and By-Laws, or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Target Fund is a party or by which it is bound, or (ii)the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Target Fund is a party or by which it is bound. 4.1.7All material contracts or other commitments of the Target Fund (other than this Agreement and certain investment contracts, including options, futures, forward contracts and other similar instruments) will terminate without liability or obligation to the Target Fund on or prior to the Effective Time. 4.1.8Except as otherwise disclosed to and accepted by the Acquiring Fund in writing, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Target Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business.The Target Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions herein contemplated. 4.1.9The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets, and Schedule of Investments of the Target Fund at March 31, 2012 have been audited by Ernst & Young LLP, independent registered public accounting firm, and are in accordance with accounting principles generally accepted in the United States of America (“GAAP”) consistently applied, and such statements (copies of which have been furnished to the Acquiring Fund) present fairly, in all material respects, the financial condition of the Target Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Target Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein. 4.1.10Since March 31, 2012, there has not been any material adverse change in the Target Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Target Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Acquiring Fund in writing.For the purposes of this subparagraph4.1.10, a decline in net asset value per share of Target Fund Shares due to declines in market values of securities held by the Target Fund, the discharge of the Target Fund’s liabilities, or the redemption of the Target Fund’s shares by shareholders of the Target Fund shall not constitute a material adverse change. 4.1.11At the Effective Time, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Target Fund required by law to have been filed by such date (including any extensions, if any) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof and no such return is currently under audit and no assessment has been asserted with respect to such returns. 4.1.12At the end of its first taxable year since its commencement of operations, the Target Fund properly elected to be treated as a “regulated investment company” under SubchapterM of the Code.The Target Fund has met the requirements of SubchapterM of the Code for qualification and treatment as a regulated investment company within the meaning of Section851 et seq. of the Code in respect of each taxable year since its commencement of operations, will continue to meet such requirements at all times through the Closing Date and will have distributed substantially all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date, and before the Closing Date will have declared dividends sufficient to distribute substantially all of its investment company taxable income and net capital gain for the period ending at the Closing Date.The Target Fund has not at any time since its inception been liable for, nor is now liable for, any material income or excise tax pursuant to Sections 852 or 4982 of the Code.There is no other tax liability (including, any foreign, state, or local tax liability) except as set forth and accrued on the Target Fund’s books.The Target Fund has no earnings or profits accumulated with respect to any taxable year in which the provisions of Subchapter M of the Code did not apply.The Target Fund will not be subject to corporate-level taxation on the sale of any assets currently held by it as a result of the application of Section337(d) of the Code and the regulations thereunder.All dividends paid by the Target Fund at any time prior to the Closing Date shall have been deductible pursuant to the dividends paid deduction under Section562 of the Code.The Target Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its shares of beneficial interest and has withheld in respect of dividends and other distributions and paid to the proper taxing authorities all taxes required to be withheld, and is not liable for any penalties which could be imposed thereunder. 4.1.13All of the issued and outstanding shares of the Target Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the Transfer Agent, on behalf of the Target Fund, as provided in paragraph3.3.The Target Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Target Fund, nor is there outstanding any security convertible into any of the Target Fund’s shares. 4.1.14The execution, delivery and performance of this Agreement will have been duly authorized prior to the Effective Time by all necessary action, if any, on the part of the Trustees of the Trust, on behalf of the Target Fund, and this Agreement will constitute a valid and binding obligation of the Target Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles. 4.1.15The Information Statement (as defined in paragraph5.5), insofar as it relates to the Target Fund, will, at the Effective Time (i)not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading, and (ii)comply in all material respects with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder; provided, however, that the representations and warranties of this subparagraph4.1.15 shall not apply to statements in or omissions from the Information Statement made in reliance upon and in conformity with information that was furnished by the Acquiring Fund for use therein. 4.2Representations and Warranties of the Acquiring Fund.Except as has been fully disclosed to the Target Fund in a written instrument executed by an officer of the Trust, the Acquiring Fund represents and warrants to the Target Fund as follows: 4.2.1The Acquiring Fund is a duly established series of the Trust, which is a business trust duly organized, validly existing, and in good standing under the laws of the State of Delaware with power under its Declaration of Trust and By-Laws, each as amended from time to time, to own all of its properties and assets and to carry on its business as it is presently conducted. 4.2.2At the Effective Time, the Trust will be registered with the Commission as an open-end management investment company under the 1940 Act, and the registration of the Acquiring Fund Shares under the 1933 Act will be in full force and effect. 4.2.3No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required under state securities laws. 4.2.4The current prospectus, statement of additional information, shareholder reports, marketing and other related materials of the Acquiring Fund and each prospectus and statement of additional information of the Acquiring Fund used at all times prior to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading. 4.2.5At the Effective Time, the Acquiring Fund will have good and marketable title to the Acquiring Fund’s assets, free of any liens or other encumbrances. 4.2.6The Acquiring Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i)a violation of Delaware law or a material violation of the Declaration of Trust and By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund is a party or by which it is bound, or (ii)the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquiring Fund is a party or by which it is bound. 4.2.7Except as otherwise disclosed to and accepted by the Target Fund in writing, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to the Acquiring Fund’s knowledge, threatened against the Acquiring Fund, or any of the Acquiring Fund’s properties or assets that, if adversely determined, would materially and adversely affect the Acquiring Fund’s financial condition or the conduct of its business.The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects the Acquiring Fund’s business or its ability to consummate the transactions herein contemplated. 4.2.8The Statement of Assets and Liabilities, Statements of Operations and Changes in Net Assets, and Schedule of Investments of the Acquiring Fund at March 31, 2012 have been audited by Ernst & Young LLP, independent registered public accounting firm, and are in accordance with GAAP consistently applied, and such statements (copies of which have been furnished to the Target Fund) present fairly, in all material respects, the financial condition of the Acquiring Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Acquiring Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein. 4.2.9Since March 31, 2012, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Target Fund in writing.For the purposes of this subparagraph4.2.9, a decline in net asset value per share of Acquiring Fund Shares due to declines in market values of securities held by the Acquiring Fund, the discharge of the Acquiring Fund’s liabilities, or the redemption of the Acquiring Fund’s shares by shareholders of the Target Fund shall not constitute a material adverse change. 4.2.10At the Effective Time, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Acquiring Fund required by law to have been filed by such date (including any extensions, if any) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof to the best of the knowledge of the Acquiring Fund, and no such return is currently under audit and no assessment has been asserted with respect to such returns. 4.2.11At the end of its first taxable year since its commencement of operations, the Acquiring Fund properly elected to be treated as a “regulated investment company” under SubchapterM of the Code.The Acquiring Fund has met the requirements of SubchapterM of the Code for qualification and treatment as a regulated investment company within the meaning of Section851 et seq. of the Code in respect of each taxable year since its commencement of operations, and will continue to meet such requirements at all times through the Closing Date.The Acquiring Fund has not at any time since its inception been liable for, nor is now liable for, any material income or excise tax pursuant to Sections 852 or 4982 of the Code.There is no other tax liability (including, any foreign, state, or local tax liability) except as set forth and accrued on the Acquiring Fund’s books.The Acquiring Fund has no earnings or profits accumulated with respect to any taxable year in which the provisions of Subchapter M of the Code did not apply.The Acquiring Fund will not be subject to corporate-level taxation on the sale of any assets currently held by it as a result of the application of Section337(d) of the Code and the regulations thereunder.All dividends paid by the Acquiring Fund at any time prior to the Closing Date shall have been deductible pursuant to the dividends paid deduction under Section562 of the Code.The Acquiring Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its shares of beneficial interest and has withheld in respect of dividends and other distributions and paid to the proper taxing authorities all taxes required to be withheld, and is not liable for any penalties which could be imposed thereunder. 4.2.12 The execution, delivery and performance of this Agreement will have been duly authorized prior to the Effective Time by all necessary action, if any, on the part of the Trustees of the Trust, on behalf of the Acquiring Fund, and this Agreement will constitute a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles. 4.2.13The Acquiring Fund Shares to be issued and delivered to the Target Fund, for the account of the Target Fund Shareholders, pursuant to the terms of this Agreement, will at the Effective Time have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, will be fully paid and non-assessable by the Trust and will have been issued in every jurisdiction in compliance in all material respects with applicable registration requirements and applicable securities laws.The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Acquiring Fund, nor is there outstanding any security convertible into any of the Acquiring Fund’s shares. 4.2.14The Information Statement, insofar as it relates to the Acquiring Fund and the Acquiring Fund Shares, will, and at the Effective Time (i)not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading, and (ii)comply in all material respects with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder; provided, however, that the representations and warranties of this subparagraph4.2.14shall not apply to statements in or omissions from the Information Statement made in reliance upon and in conformity with information that was furnished by the Target Fund for use therein. ARTICLE V COVENANTS AND AGREEMENTS 5.1Conduct of Business.The Acquiring Fund and the Target Fund each will operate its business in the ordinary course consistent with the Trust practice between the date hereof and the Effective Time, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable. 5.2No Distribution of Acquiring Fund Shares.The Target Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement. 5.3Information.The Target Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Target Fund Shares. 5.4Other Necessary Action.Subject to the provisions of this Agreement, the Acquiring Fund and the Target Fund will each take, or cause to be taken, all action, and do or cause to be done all things, reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement. 5.5Information Statement.The Target Fund will provide the Acquiring Fund with information regarding the Target Fund, and the Acquiring Fund will provide the Target Fund with information regarding the Acquiring Fund, reasonably necessary for the preparation of an information statement on Schedule 14C (the “Information Statement”), in compliance with the 1934 Act and the 1940 Act. 5.6Liquidating Distribution.As soon as is reasonably practicable after the Closing, the Target Fund will make a liquidating distribution to its respective shareholders consisting of the Acquiring Fund Shares received at the Closing. 5.7Best Efforts.The Acquiring Fund and the Target Fund shall each use their reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent set forth in ArticleVI to effect the transactions contemplated by this Agreement as promptly as practicable. 5.8Other Instruments.The Target Fund and the Acquiring Fund, each covenant that it will, from time to time, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the other party may reasonably deem necessary or desirable in order to vest in and confirm (a)the Target Fund, title to and possession of the Acquiring Fund Shares to be delivered hereunder, and (b)the Acquiring Fund, title to and possession of all the Assets and otherwise to carry out the intent and purpose of this Agreement. 5.9Regulatory Approvals.The Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as may be necessary in order to continue its operations after the Effective Time. ARTICLE VI CONDITIONS PRECEDENT 6.1Conditions Precedent to Obligations of Target Fund.The obligations of the Target Fund, to consummate the transactions provided for herein shall be subject, at the Trust’s election, to the following conditions: 6.1.1All representations and warranties of the Acquiring Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Effective Time, with the same force and effect as if made on and as of the Effective Time. 6.1.2The Acquiring Fund shall have delivered to the Target Fund a certificate executed in the name of the Acquiring Fund by its President or Vice President and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Trust, and dated as of the Effective Time, to the effect that the representations and warranties of the Trust, on behalf of the Acquiring Fund, made in this Agreement are true and correct at and as of the Effective Time, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Trusts shall reasonably request. 6.1.3The Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquiring Fund, on or before the Effective Time. 6.1.4The Target Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph2.3. 6.2Conditions Precedent to Obligations of Acquiring Fund.The obligations of the Acquiring Fund to complete the transactions provided for herein shall be subject, at the Trust’s election, to the following conditions: 6.2.1All representations and warranties of the Target Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Effective Time, with the same force and effect as if made on and as of the Effective Time. 6.2.2The Trust shall have delivered to the Acquiring Fund a statement of the Target Fund’s Assets and Liabilities, as of the Effective Time, which is prepared in accordance with GAAP and certified by the Treasurer of the Trust. 6.2.3The Target Fund shall have delivered to the Acquiring Fund a certificate executed in the name of the Target Fund by its President or Vice President and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Acquiring Fund and dated as of the Effective Time, to the effect that the representations and warranties of the Target Fund, made in this Agreement are true and correct at and as of the Effective Time, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Trust shall reasonably request. 6.2.4The Target Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Target Fund, on or before the Effective Time. 6.2.5The Target Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph2.3. 6.3Other Conditions Precedent.If any of the conditions set forth in this paragraph6.3 have not been satisfied on or before the Effective Time, the Target Fund or the Acquiring Fund shall, at its option, not be required to consummate the transactions contemplated by this Agreement. 6.3.1The Agreement and the transactions contemplated herein shall have been approved by the Board of Trustees of the Trust and certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund.Notwithstanding anything herein to the contrary, the Trust, on behalf of either the Target Fund or the Acquiring Fund, respectively, may not waive the conditions set forth in this paragraph6.3.1. 6.3.2At the Effective Time, no action, suit or other proceeding shall be pending or, to the knowledge of the Trust, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein. 6.3.3All consents of other parties and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Trust to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Target Fund, provided that either party hereto may for itself waive any of such conditions. 6.3.4The Trust shall have received an opinion of Godfrey & Kahn, S.C., as to federal income tax matters substantially to the effect that, based on the facts, representations, assumptions stated therein and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes: (a)The Reorganization will constitute a tax-free reorganization within the meaning of Section368(a) of the Code, and the Target Fund and the Acquiring Fund will each be a party to a reorganization within the meaning of Section368(b) of the Code. (b)No gain or loss will be recognized by the Target Fund upon the transfer of all of its assets to the Acquiring Fund in exchange solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the Target Fund’s liabilities or upon the distribution of the Acquiring Fund Shares to the Target Fund’s shareholders in exchange for their shares of the Target Fund, except for (1) any gain or loss recognized on (i) “Section 1256 contracts” as defined in Section 1256(b) of the Code or (ii) stock in a “passive foreign investment company” as defined in Section 1297(a) of the Code, and (2) any other gain or loss required to be recognized by reason of the reorganization (i) as a result of the closing of the tax year of the Target Fund, (ii) upon termination of a position, or (iii) upon the transfer of an asset regardless of whether such transfer would otherwise be a nontaxable transaction under the Code. (c)No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the assets of the Target Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Target Fund. (d)The aggregate tax basis of the assets of the Target Fund received by the Acquiring Fund will be the same as the aggregate tax basis of such assets to the Target Fund immediately prior to the Reorganization. (e)The holding period of the assets of the Target Fund received by the Acquiring Fund, other than any asset with respect to which gain or loss is required to be recognized as described in (b), above, will include the holding period of those assets in the hands of the Target Fund immediately prior to the Reorganization. (f)No gain or loss will be recognized by the shareholders of the Target Fund upon the exchange of their Target Fund Shares for the Acquiring Fund Shares (including fractional shares to which they may be entitled). (g)The aggregate tax basis of the Acquiring Fund Shares received by the shareholders of the Target Fund (including fractional shares to which they may be entitled) pursuant to the Reorganization will be the same as the aggregate tax basis of the Target Fund Shares held by the Target Fund’s shareholders immediately prior to the Reorganization. (h)The holding period of the Acquiring Fund Shares received by the shareholders of the Target Fund (including fractional shares to which they may be entitled) will include the holding period of the Target Fund Shares surrendered in exchange therefore, provided that the Target Fund Shares were held as a capital asset on the Closing Date. Such opinion shall be based on customary assumptions, limitations and such representations as Godfrey & Kahn, S.C., may reasonably request, and the Target Fund and Acquiring Fund will cooperate to make and certify the accuracy of such representations.Such opinion may contain such assumptions and limitations as shall be in the opinion of such counsel appropriate to render the opinions expressed therein.Notwithstanding anything herein to the contrary, neither party may waive the condition set forth in this paragraph6.3.4. 6.3.5U.S. Bank shall have delivered such certificates or other documents as set forth in paragraph3.2. 6.3.6The Transfer Agent shall have delivered to the Trust a certificate of its authorized officer as set forth in paragraph3.3. 6.3.7The Acquiring Fund shall have issued and delivered to the Secretary of the Target Fund the confirmation as set forth in paragraph3.3. 6.3.8Each party shall have delivered to the other such bills of sale, checks, assignments, receipts or other documents as reasonably requested by such other party or its counsel. ARTICLE VII INDEMNIFICATION 7.1Indemnification by the Acquiring Fund.The Trust, solely out of the Acquiring Fund’s assets and property, agrees to indemnify and hold harmless the Target Fund, and its trustees, officers, employees and agents (the “Trust Target Fund Indemnified Parties”) from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which the Trust Target Fund Indemnified Parties may become subject, insofar as such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on (a)any breach by the Acquiring Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement or (b)any act, error, omission, neglect, misstatement, materially misleading statement, breach of duty or other act wrongfully done or attempted to be committed by the Acquiring Fund or the members of the Acquiring Fund’s Board or its officers prior to the Closing Date, provided that this indemnification shall not apply to the extent such loss, claim, damage, liability or expense (or actions with respect thereto) shall be due to any negligent, intentional or fraudulent act, omission or error of the Target Fund or its trustees, officers or agents. 7.2Indemnification by the Target Fund.The Trust, solely out of the Target Fund’s assets and property, agrees to indemnify and hold harmless the Acquiring Fund, and its trustees, officers, employees and agents (the “Trust Acquiring Fund Indemnified Parties”) from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which the Trust Acquiring Fund Indemnified Parties may become subject, insofar as such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on (a)any breach by the Target Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement or (b)any act, error, omission, neglect, misstatement, materially misleading statement, breach of duty or other act wrongfully done or attempted to be committed by the Target Fund or the members of the Target Fund’s Board or its officers prior to the Closing Date, provided that this indemnification shall not apply to the extent such loss, claim, damage, liability or expense (or actions with respect thereto) shall be due to any negligent, intentional or fraudulent act, omission or error of the Acquiring Fund or its trustees, officers or agents. 7.3Liability of the Trust.The Trust understands and agrees that the obligations of either the Target Fund or the Acquiring Fund under this Agreement shall not be binding upon any trustee, shareholder, nominee, officer, agent or employee of the Trust personally, but bind only the Target Fund and the Target Fund’s property or the Acquiring Fund and the Acquiring Fund’s property.Moreover, no series of the Trust other than the Target Fund or Acquiring Fund shall be responsible for the obligations of the Trust hereunder, and all persons shall look only to the assets of the Target Fund to satisfy the obligations of the Target Fund and to the assets of the Acquiring Fund to satisfy the obligations of the Acquiring Fund hereunder.The Trust represents that it has notice of the provisions of the Declaration of Trust of the Trust disclaiming such shareholder and trustee liability for acts or obligations of the Target Fund or Acquiring Fund. ARTICLE VIII BROKERAGE FEES AND EXPENSES 8.1No Broker or Finder Fees.The Acquiring Fund and the Target Fund represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein, 8.2Expenses of Reorganization.The expenses relating to the proposed Reorganization, whether or not consummated, will be borne by Kornitzer Capital Management, Inc.The costs of the Reorganization shall include, but not be limited to:costs associated with obtaining any necessary order of exemption from the 1940 Act, preparing, printing and distributing the Information Statement and prospectus supplements of the Target Fund relating to the Reorganization, and winding down the operations and terminating the existence of the Target Fund; legal fees of counsel to each of the Target Fund and Acquiring Fund, including those incurred in connection with the preparation of legal opinions, and accounting fees with respect to the Reorganization and the Information Statement; and all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps.Notwithstanding any of the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by another person of such expenses would result in the disqualification of such party as a “regulated investment company” within the meaning of Section851 of the Code. ARTICLE IX AMENDMENTS AND TERMINATION 9.1Amendments.This Agreement may be amended, modified or supplemented in such manner as may be deemed necessary or advisable by the authorized officers of the Trust or the Trust, on behalf of either the Target Fund or the Acquiring Fund, respectively; provided, however, that following the approval of this Agreement by the Board of Trustees of the Target Fund pursuant to paragraph6.3.1 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to the Target Fund Shareholders under this Agreement to the detriment of such shareholders without the Board of Trustees’ further approval. 9.2Termination.This Agreement may be terminated and the transactions contemplated hereby may be abandoned by resolution of the Board of Trustees of the Trust on behalf of the Target Fund or the Acquiring Fund, respectively, at any time prior to the Effective Time, if circumstances should develop that, in the opinion of such Board of Trustees, make proceeding with the Agreement inadvisable. ARTICLE X NOTICES Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by facsimile, electronic delivery (i.e., e-mail) personal service or prepaid or certified mail addressed as follows: If to the Trust: Buffalo Funds Trust 615 East Michigan Street Milwaukee, WI 53202 Attention:Rachel A. Spearo, Esq. Secretary With copies (which shall not constitute notice) to: Godfrey & Kahn, S.C. 780 North Water Street Milwaukee, WI 53202 Attention: Carol A. Gehl, Esq. If to Kornitzer Capital Management, Inc: Kornitzer Capital Management, Inc. 5420 W. 61st Place Shawnee Mission, KS 66205 Attention: Kent W. Gasaway ARTICLE XI MISCELLANEOUS 11.1Entire Agreement.The Trust agrees that it has not made any representation, warranty or covenant, on behalf of either the Acquiring Fund or the Target Fund, respectively, not set forth herein, and that this Agreement constitutes the entire agreement between the parties. 11.2Survival.The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith, and the obligations with respect to indemnification of the Target Fund and Acquiring Fund contained in paragraphs7.1 and 7.2, shall survive the Closing. 11.3Headings.The Article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 11.4Governing Law.This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its principles of conflicts of laws. 11.5Assignment.This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party.Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 11.6Counterparts.This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all taken together shall constitute one agreement. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the 8th day of January, 2013. BUFFALO FUNDS ON BEHALF OF THE BUFFALO INTERNATIONAL FUND By: /s/ Kent W. Gasaway Name: Kent W. Gasaway Title: President and Treasurer BUFFALO FUNDS ON BEHALF OF THE BUFFALO CHINA FUND By: /s/ Kent W. Gasaway Name: Kent W. Gasaway Title: President and Treasurer Solely for purposes of paragraph 8.2 KORNITZER CAPITAL MANAGEMENT, INC. By: /s/ John C. Kornitzer Name: John C. Kornitzer Title: President and Chief Executive Officer