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Exhibit 10.1 among PBF LOGISTICS GP LLC and PBF LOGISTICS LP TABLE OF CONTENTS   ARTICLE I DEFINITIONS   2    1.1 Definitions   2    ARTICLE II BUSINESS OPPORTUNITIES   5    2.1 Restricted Activities   5    2.2 Permitted Exceptions   6    2.3 Procedures   7    2.4 Scope of Prohibition   7    2.5 Enforcement   7    ARTICLE III CORPORATE SERVICES   8    3.1 General.   8      10    4.1 4.2 Taxes   10      10    5.1   10    5.2 Procedures   11      13    6.1 Grant of License   13    6.2 6.3 Covenants and Indemnification   14    ARTICLE VII MISCELLANEOUS   14    7.1 7.2 Arbitration Provision   15    7.3 Notice   15    7.4 Entire Agreement   16    7.5 Termination of Agreement   17    7.6 Amendment or Modification   17    7.7 Assignment   17    7.8 Counterparts   17    7.9 Severability   17    7.10 Further Assurances   17    7.11 SCHEDULES   Schedule 6.1 General and Administrative Services ROFO Assets PBF Logistics IP RECITALS:   provided herein;   Partnership.       defined herein).   follows: ARTICLE I DEFINITIONS Agreement.   2 amended.   3   4 ARTICLE II BUSINESS OPPORTUNITIES   5 traded entity; Group; storage facilities; and   6 2.3 Procedures.   7 ARTICLE III CORPORATE SERVICES 3.1 General.   8 the Partnership Group; Group’s benefit.   9 perform such services. ARTICLE IV CAPITAL AND OTHER EXPENDITURES by applicable law. ARTICLE V RIGHT OF FIRST OFFER Entities.   10 5.2 Procedures. will   11 therewith; and   12 applicable. ARTICLE VI PBF Logistics IP.   13 Entities. Partnership. duly registered. otherwise ARTICLE VII MISCELLANEOUS   14   15 PBF Holding Company LLC Parsippany, NJ 07054 PBF Energy Company LLC Parsippany, NJ 07054 PBF Logistics GP LLC PBF Logistics LP Parsippany, NJ 07054 contained herein.   16 terms. such transactions.   17   Secretary   Secretary   Vice President   its general partner General and Administrative Services                 ROFO Assets     Schedule 6.1 PBF Logistics IP   Trademark Registration Date      Renewal Date   PBF ENERGY    United States of    United States of    United States of Schedule 6.1-1

Name: Council Regulation (EEC) No 3179/85 of 11 November 1985 on the application of Decision No 1/85 of the EEC-Norway Joint Committee altering the limits expressed in ECU in Article 8 of Protocol 3 concerning the definition of the concept of originating products and methods of administrative cooperation Type: Regulation Subject Matter: international trade; Europe; monetary economics; monetary relations; executive power and public service; international affairs Date Published: nan

Exhibit 10.4   LICENCE AGREEMENT   MEMORANDUM OF AGREEMENT ENTERED INTO BETWEEN:   THE CSIR   a statutory council, duly established under Act 46 of 1988, through its Operating Unit of Defence Peace Safety & Security (DPSS) herein represented by Andre Nepgen in his capacity as Executive Director and he being duly authorised thereto   (hereinafter referred to as “the LICENSOR”)   and   FORCE PROTECTION TECHNOLOGIES INC. (Registration No. Nevada C18478-2002)   a company incorporated under the laws of Nevada with its principal place of business at 9801 Hwy 78, Ladson, South Carolina 29456, United States of America, herein represented by Mr. Gordon McGilton in his capacity as President and he being duly authorized thereto   (hereinafter referred to as “the LICENSEE”)   WHEREAS:   a)                                      the LICENSOR has developed technology for the protection of wheeled and tracked vehicles against landmines and improvised explosive devices (“IED’s”) (herein referred to as “the TECHNOLOGY”), which specifically means the invention forming the subject matter of the PATENT, and which is under the control of the LICENSOR at the COMMENCEMENT DATE of this agreement;   b)                                     the LICENSEE is desirous of obtaining a licence from the LICENSOR to perform internal research and development (which rights extend to tests and assessment of the potential market for products utilizing the TECHNOLOGY at PROOF OF CONCEPT stage) and after PROOF OF CONCEPT to EXPLOIT the PATENT in the TERRITORY;   c)                                      the PARTIES negotiated and reached agreement regarding the intellectual property rights to be licensed to the LICENSEE; the EXPLOITATION of the PATENT by the LICENSEE; and the consideration payable by the LICENSEE to the LICENSOR.   NOW WHEREFORE the PARTIES hereby record their agreement as follows:     1.                                       PREAMBLE   The PARTIES confirm the correctness of the preamble to this agreement, which forms an integral part thereof.   2.                                       SCOPE OF THIS AGREEMENT   2.1                               This agreement sets out the terms for the granting of:   2.1.1                      A fully paid up sole license (“License 1”) is granted to LICENSEE for internal use and development purposes. Under this License 1, the LICENSEE has the sole right (i.e. other than LICENSOR) to perform research and development, and/or conduct tests to verify, test or develop any aspect of the TECHNOLOGY and to assess the market for products utilizing the TECHNOLOGY at “Proof of Concept” stage. License 1 comes into effect upon satisfaction of the suspensive condition stipulated in clause 4 below and expires after 12 months or at PROOF OF CONCEPT, whichever comes earliest, unless extended in writing between the PARTIES.   2.1.2                      Subject to the provisions of clause 5, an exclusive license (Licence 2) will be granted to LICENSEE to EXPLOIT the PATENT in the TERRITORY. License 2 comes into effect upon the PARTIES agreeing in writing that PROOF OF CONCEPT has been attained.   2.2                                The PARTIES enter into this agreement as independent contractors and nothing herein contained shall be interpreted as establishing a partnership or joint venture between the PARTIES.   2.3                                Neither PARTY shall be entitled to present itself as the agent or representative of the other PARTY and neither PARTY shall enter into any agreement or incur any liability on behalf of the other PARTY, unless specifically authorised thereto.   3.                                      DEFINITIONS AND INTERPRETATION   3.1                                In this agreement, unless inconsistent with or otherwise indicated by the context:   3.1.1                       “COMMENCEMENT DATE” shall mean the date from which this agreement will be effective, being the date of fulfilment of the suspensive conditions as provided for in clause 4;   3.1.2                      “EXPLOIT” shall mean the manufacture, marketing, sale, offer for sale, use and import of the PRODUCTS in commercial quantities through the application of the TECHNOLOGY by the LICENSEE, and “EXPLOITATION” and “EXPLOITING” shall have corresponding meanings;   2   3.1.3                      “PARTIES” shall mean the LICENSOR and the LICENSEE, respectively, and “PARTY” shall have a corresponding meaning;   3.1.4                      “PATENT” shall mean LICENSOR’s “Track and wheel protection against landmines” patent as described in PCT Patent Application PCT/IB2004/001717, and all subsequent patent applications in the TERRITORY dependent on this patent application or deriving priority from this patent application, all patents issued in the TERRITORY from any of the foregoing applications, and all reissues and extensions of any such patents.   3.1.5                      “PRODUCTS” shall mean a wheel or track that incorporates or employs the TECHNOLOGY in any way.   3.1.6                      “PROOF OF CONCEPT” shall mean test piece manufacture of part of a wheel and/or a complete wheel, the testing of such test pieces, and/or the quantification or demonstration of the level of protection provided to demonstrate the principle of operation of the TECHNOLOGY, but does not include optimization of a prototype or the determination of the limits of protection performance;   3.1.7                       “ROYALTY YEAR” shall mean a period of 12 (twelve) calendar months, starting on the first day of April of each calendar year;   3.1.8                      “SALES” shall mean sales of the PRODUCT by the LICENSEE or any of its affiliates, partners, sub-contractors or the like, to a third party and shall include PRODUCTS sold, rented, leased or otherwise exchanged for value and such PRODUCTS employ the TECHNOLOGY as part of the design; or rendering of commercial services using the TECHNOLOGY in any manner.   3.1.9                      “TECHNOLOGY” shall mean processes, know-how and technologies pertaining to the protection of wheeled and tracked vehicles against landmines and IED’s as disclosed and claimed in the PATENT.   3.1.10                “TERRITORY” shall mean, for purposes of License 2, the United States of America, its territories and possessions (“USA”), Canada, the United Kingdom (“UK”), France, Germany, Israel and the Republic of South Africa (“RSA”), or as amended from time to time in terms of the provisions of this agreement.   3.2                                 In this agreement, unless the context otherwise indicates:   3.2.1                       the headings to clauses of this agreement are inserted for reference purposes only and shall in no way govern or affect the interpretation thereof;   3   3.2.2                      any annexures to this agreement form an integral part hereof and words and expressions defined in this agreement shall, unless the context otherwise requires, bear the same meaning in such schedules;   3.2.3                      unless the context clearly indicates a contrary intention, words importing the singular shall include the plural and vice versa;   3.2.4                      reference to any one gender shall include the other gender and any reference to a natural person shall include a legal persona and vice versa;   3.2.5                      where the day on or by which anything is to be done is not a business day, it shall be done on or by the first day thereafter;   3.2.6                       any number of days is prescribed in this agreement, these shall be reckoned as calendar days, exclusively of the first, inclusively of the last day, unless the last day falls on a weekend or on a public holiday, in which case the last day shall be the next succeeding day which is not a weekend or a public holiday.   4.                                       SUSPENSIVE CONDITIONS   4.1                               This Agreement is subject to the following suspensive condition:   4.1.1                      That all approvals required by the South African Reserve Bank for the rights granted in terms of this agreement are obtained within 6 (six) months from the date of signature of this agreement. The date of fulfilment of the suspensive condition, shall be the COMMENCEMENT DATE of this agreement.   4.1.2                      The suspensive condition is established for the benefit of the LICENSOR, and no waiver of the suspensive condition or any part thereof shall be binding, unless similarly reduced to writing and signed by the PARTIES.   4.1.3                      Should the suspensive conditions not be fulfilled within the specified time period, or any mutually agreed written extension thereof, this agreement shall be null and void ab initio, and no obligations shall lie reciprocally between the PARTIES, save for the LICENSEE being required to immediately return all matter relating to the TECHNOLOGY and the intellectual property of the LICENSOR, which may have been delivered to LICENSEE by LICENSOR.   5.                                       LICENCED RIGHTS   5.1                               The LICENSOR hereby grants to the LICENSEE License 1 as provided for in clause 2.1.1.   5.2                               The LICENSOR hereby grants to the LICENSEE, subject to PROOF OF CONCEPT, License 2 as set out in clause 2.1.2, being:   4   5.2.1                        an exclusive licence to EXPLOIT the PATENT in the USA, Canada, the UK, France, Germany and Israel; and   5.2.2                        a non-exclusive licence to EXPLOIT the PATENT in the RSA   subject to the terms and conditions as set out in this agreement.   5.3                               The license allows for the manufacturing and sale of PRODUCTS in any country forming part of the TERRITORY, save for the RSA where any PRODUCTS sold must also be at least manufactured in part, or assembled, in the RSA. Export by or for LICENSEE of PRODUCTS from a country in the TERRITORY to a country outside the TERRITORY shall be subject to the prior written approval of LICENSOR and such approval shall only be denied in the event that:   5.3.1                      LICENSOR has granted exclusive rights in that country to a third party with respect to the PATENT or the TECHNOLOGY and such third party’s rights may be infringed by LICENSEE’s intended export to that country, or   5.3.2                      Statutory or regulatory restriction on defence-related technology supply to the specific country outside the TERRITORY prevents such exports.   5.4                               Should the LICENSEE fail to achieve a consistent level of sales as set out in the table below (“the minimum royalty”) through the application of the TECHNOLOGY and fail to pay over to the LICENSOR the balance between actual sales achieved and the specific minimum royalty fee, the LICENSOR shall have the right to, in its sole discretion, convert the exclusive nature of License 2 for a specific country in the TERRITORY as provided for in 5.2.1 to a non-exclusive license, or terminate the license.   Countries forming part of the TERRITORY   Minimum royalty payments to retain exclusivity USA Canada   US$ 100 000 in year 1 of the Licence US$ 120 000 in year 2 of the Licence US$ 150 000 per annum thereafter UK France Germany   US$ 100 000 total by end of year 2 US$ 100 000 in year 3 of the Licence US$ 120 000 per annum thereafter Israel   US$ 50 000 in year 1 of the Licence US$ 100 000 per annum thereafter South Africa   No minimum royalty fee due to non-exclusivity of the licence   5.4.1                      For the first 3 (three) years after the COMMENCEMENT DATE, royalty payments from any one country in the TERRITORY in excess of that country’s minimum royalty payment, may be calculated towards the   5   minimum royalty payment of any other country in the TERRITORY where the minimum royalty payment has not been attained in that ROYALTY YEAR. Thereafter, each country’s minimum royalty must be attained from sales in that country in order to maintain exclusivity of this licence.   5.5                                 The LICENSOR is entitled to call from time to time for information on the endeavours being made by the LICENSEE and is entitled on reasonable notice and by appointment to enter the premises of the LICENSEE to inspect work being done and to receive information in reply to any relevant inquiry made by it.   5.6                                 On the termination of this agreement:   (i)                                   The LICENSEE must do all things reasonably required by the LICENSOR to protect its rights, titles and interests in the PATENT and other intellectual property owned by LICENSOR;   (ii)                                All improvements made to the TECHNOLOGY by either PARTY and which form the subject of any claim in a patent or patent application anywhere in the world that is dependent on the PATENT, and/or any investments made by LICENSOR in the course thereof, will remain the property of the LICENSOR and the LICENSEE may make no claim in respect of them;   (iii)                             or at any time before such termination at the request of the LICENSOR, the LICENSEE must promptly return to the LICENSOR:   (a)                                  all specifications, samples, drawing, films, pamphlets, catalogues, advertising material and other materials, documents and papers of any nature sent to the LICENSEE by the LICENSOR relating to the TECHNOLOGY or the business of the LICENSOR (other than correspondence between the PARTIES) which the LICENSEE may have in its possession or under its control; and   (b)                                 a copy of separate books of account and records relating to the licence kept in accordance with clause 11 suitable for the purpose of LICENSOR keeping record of the parties and countries whom PRODUCTS were sold to. For the avoidance of doubt it is specifically recorded that this provision 5.6 (iii) (b) does not include the original records and books of the LICENSEE but pertains to copies of records required to be kept for regulatory and statutory purposes.   5.7                               Within 30 days after the date on which termination of this agreement takes effect, the LICENSEE must, at its own cost, promptly return to the LICENSOR or otherwise dispose of as the LICENSOR instructs, those of the PRODUCTS and specifications and any parts which the LICENSEE may have in its possession or under its control and which are the property of the LICENSOR.   6   5.8                               If, on termination of this agreement, LICENSEE has PRODUCTS in stock that are the property of LICENSEE or a LICENSEE customer, LICENSEE may sell or deliver, as the case may be, such PRODUCTS in the TERRITORY within 12 (twelve) months after such termination provided LICENSEE pays to LICENSOR applicable royalties under clause 9.3.   6.                                      TITLE TO THE INTELLECTUAL PROPERTY   6.1                               The LICENSEE acknowledges that all right, title and interest in and to the PATENT vests in the LICENSOR and that it has no claim of any nature in and to the PATENT or any other intellectual property owned by LICENSOR. The LICENSEE shall not at any time during or after termination or cancellation of this agreement dispute the validity or enforceability of such rights or of the PATENT, or cause to be done any act contesting or in any way impairing or tending to impair any part of that right, title and interest in the PATENT and shall not counsel or assist any other person to do so.   6.1.1                      LICENSOR will have first right of refusal to patent an improvements made by LICENSEE to the TECHNOLOGY at its own cost, in those countries forming part of the TERRITORY where LICENSEE has EXPLOITATION rights. LICENSOR shall grant LICENSEE an exclusive royalty-free licence under such patents in all countries in the TERRITORY except RSA and a non-exclusive, royalty-free licence in RSA on condition that LICENSEE contributes 50% (fifty per cent) of the bona fide patenting expenses in each such country where a royalty-free licence is granted. In the event that LICENSOR elects not to apply for or to maintain patents in the TERRITORY on improvements made by LICENSEE, then LICENSEE may apply for, own and maintain such patents.   6.1.2                      LICENSOR will own all improvements made by it. Such improvements made by LICENSOR and related patents will, subject to any statutory or regulatory approvals required be licensed to LICENSEE in the TERRITORY, subject to the terms of this agreement including the royalty provisions, provided the PARTIES are able to agree on the minimum royalty payable in respect of the licence to such improvements.   6.2                                The LICENSOR does, however, grant the LICENSEE the right, where and when necessary, to modify the TECHNOLOGY for its specific needs and applications subject to the following conditions:   6.2.1                      Such modifications of the TECHNOLOGY will not remove any obligations or benefits of the LICENSOR and LICENSEE in terms of this agreement.   6.2.2                      The LICENSEE will provide the LICENSOR with copies or drawings of the final TECHNOLOGY for each case.   7   7.                                      DELIVERY OF INTELLECTUAL PROPERTY   It is recorded that the LICENSOR has simultaneously with the signing of this agreement, delivered to the LICENSEE one current copy of the PATENT LICENSEE acknowledges that it is fully acquainted with the TECHNOLOGY and the PATENT and need no further information or assistance from LICENSOR to be able to EXPLOIT the PATENT.   8.                                      OBLIGATIONS ON LICENSEE   The LICENSEE undertakes to use its best endeavours to EXPLOIT the PATENT by means of manufacturing and selling of PRODUCTS based on the TECHNOLOGY to create and satisfy the market for the PRODUCTS throughout the TERRITORY to the extent of at least meeting minimum royalty payments to LICENSOR as provided for in clause 5.4.   9.                                      ROYALTIES AND MARKET REPORTS   9.1                               In consideration for the rights granted to it in terms of License 1, the LICENSEE shall invest capital and resources equal to a minimum of US$500,000.00 (five hundred thousand United States dollars) to test and develop the TECHNOLOGY, calculated from 1 January 2005, the PARTIES hereby recording that the LICENSEE has prior to the COMMENCEMENT DATE invested in development and research in the technical field covered by the TECHNOLOGY, which the LICENSOR shall receive the benefit of.   9.2                               In consideration for the rights granted to it in terms of License 2 as per clause 5.2.1, the LICENSEE shall pay the LICENSOR a once-off exclusivity fee in the amount of US$200,000.00 (two hundred thousand United States dollars), which amount shall be paid in accordance with clause 9.2.1 as of date of first SALES achieved provided that the full amount is paid on or before the third anniversary of the COMMENCEMENT DATE of this agreement or the date of termination of this agreement, whichever comes soonest, whether any SALES have been achieved or not.   9.2.1                      The once-off exclusivity fee provided for in this clause 9.2 shall be paid as a “double royalty”, which the PARTIES agree is an additional amount or amounts equal to and under similar payment frequency as the royalties payable in terms of clause 3 hereafter.   9.3                                 As from the date on which any SALES of the PRODUCTS are achieved, the LICENSEE shall further pay the LICENSOR a royalty equivalent to:   •                                         US$250.00 (two hundred and fifty United States dollars) per PRODUCT sold by or for LICENSEE in any country if the applicable PRODUCT is a wheel, and   8   •                                         US$1,000 (one thousand United States dollars) per PRODUCT sold by or for LICENSEE in any country if the applicable PRODUCT is a vehicle track.   The aforesaid royalty shall be paid for the life of the PATENT in any country in the TERRITORY, regardless of the royalty’s country of origin in the TERRITORY.   LICENSEE may deduct from such royalty payments a pro rata portion of:   •                                         Bona fide trade or quantity discounts that are standard in the industry and that are given with respect to such SALES, and   •                                         Sales, tariff, import, export or excise duties or taxes imposed on such SALES and paid by LICENSEE in circumstances where it cannot be accounted to the end user.   9.3.1                       For the purpose of clause 9.3, PRODUCTS are sold when shipped or invoiced, whichever occurs first.   9.3.2                       If this agreement is terminated for any reason during a ROYALTY YEAR then, for the purpose of this clause, the date of termination will be regarded the end of that ROYALTY YEAR.   9.4                               The PARTIES shall, in good faith, review the royalty after a period of 2 (two) years from the COMMENCEMENT DATE in order to, for example, agree on inflation-driven adjustments if needed.   9.5                               The LICENSEE shall within 30 (thirty) days after the end of each ROYALTY YEAR provide the LICENSOR with a statement of all sales of the PRODUCT for that ROYALTY YEAR, together with the LICENSEE’s payment in respect of royalties due to the LICENSOR. Such a statement shall include the number of PRODUCTS manufactured and the number sold for each month during the year and an enumeration of any deductions from the royalty.   9.6                               Within 60 (sixty) days of the end of the LICENSEE’s financial year, the LICENSEE shall deliver to the LICENSOR an audited statement in respect of all sales of the PRODUCTS for the previous ROYALTY YEAR. Such audited statement shall be accompanied by payment to the LICENSOR of any shortfall in respect of royalties due to the LICENSOR. Any overpayment in respect of royalties shall be deducted from the royalties due to the LICENSOR for the next ROYALTY YEAR.   10.                                 LIABILITY FOR INTEREST ON LATE PAYMENTS   10.1                           All amounts which the LICENSEE is required to pay to the LICENSOR in terms of this Agreement and which are not paid on due date shall bear interest at the   9   prime overdraft rate charged by ABSA Bank Ltd. from time to time to its preferred clients.   10.2                          The said interest shall be calculated and compounded monthly in advance from the due date to date of payment.   10.3                          The LICENSOR’s rights to charge interest on outstanding amounts shall not detract from any other rights that the LICENSOR may have in terms of this agreement.   11.                                ACCOUNTING RECORDS   11.1                         The LICENSEE shall keep full, true and accurate books of account and records in accordance with generally accepted accounting practice containing all particulars that may be necessary for the purpose showing the amount of royalties payable to the LICENSOR in terms of this agreement. Such books of account and records shall be kept at the premises where the LICENSEE’s business is carried on.   11.2                         The LICENSEE shall permit the LICENSOR at any time during business hours, but not more frequently than once in each ROYALTY YEAR, to have a representative of the LICENSOR’s selection, provided than he/she is a qualified chartered accountant or lawyer and is reasonably acceptable to LICENSEE, examine all of the aforementioned books of account and records (including information stored in computer readable form) and to take copies of all such documents, books and records to determine whether all appropriate accounting of royalties hereunder and payments thereof have been made. The representative shall retain all information examined or copied in confidence and shall disclose to LICENSOR only the accuracy of the payments made under this Agreement. The examination may only consider books and records for transactions that occurred three years or less before the date of such examination.   11.3                         The records and documentation required by this clause 11 must be kept by the LICENSEE for 3 years from the termination of this agreement. LICENSOR may conduct one examination under clause 11.2 within 90 (ninety) days after termination of this agreement.   12.                                WARRANTIES BY THE LICENSOR   12.1                           The LICENSOR warrants and represents that:   12.1.1                it is free to grant the licence conferred by this agreement;   12.1.2                that it is the owner of the PATENT but does not warrant the validity and/or merchantability thereof to produce or market the PRODUCTS, nor that the PRODUCTS will obtain any regulatory approval that may be required, the LICENSOR hereby expressly excluding any other warranties, whether implied or by law.   10   13.                                CONFIDENTIALITY   13.1                         The PARTIES undertake to maintain the confidentiality of all of the information imparted to each other pursuant to this agreement, including the TECHNOLOGY. Neither PARTY may divulge, or permit to be divulged to any person any aspect of such confidential information otherwise than for the purposes of this agreement.   13.2                         The LICENSEE shall use the information imparted to it for the EXPLOITATION of the TECHNOLOGY pursuant to this agreement and for no other purposes.   13.3                         If LICENSEE uses any proprietary technology or know-how of any third party other than that licensed to the LICENSEE by this agreement in the manufacture of the PRODUCTS without the prior written consent of the LICENSOR, which consent shall not be unreasonably withheld, the use of such third party technology and know-how shall not have any effect on the royalties payable to the LICENSOR in terms of Clause 9 above.   14.                                INFRINGEMENT   14.1                         If during the currency in force of this agreement any infringement or illegal use of the TECHNOLOGY or the PATENT in the TERRITORY by any third party should come to the attention of the LICENSEE, then and in such event the LICENSEE shall notify the LICENSOR of such infringement or illegal use.   14.2                         It shall be within the discretion of the LICENSOR to determine what steps shall be taken against an infringer and the LICENSEE shall co-operate fully with the LICENSOR in whatever measures, including legal action, are taken to bring any infringement or illegal use to an end.   14.3                         Any amount of damages awarded in, or license income derived from, such action as contemplated in 14.2 above shall, after deduction of all legal costs incurred and which could be shown to the satisfaction of the LICENSOR as not having been recovered from the infringing party, be payable to the LICENSEE, which amount shall be reflected as income from SALES in the next ROYALTY YEAR statement as contemplated in Clause 9.6 above, and royalty payable on this amount shall be calculated by using the average sales price of PRODUCTS in the ROYALTY YEAR to determine the equivalent number of PRODUCTS.   14.4                         Should the LICENSOR refuse to institute action as contemplated in 14.2 above, the LICENSEE may after indemnifying the LICENSOR against any costs, bring any proceedings of whatever nature arising out of the infringement or illegal use of the PATENT or the TECHNOLOGY with the prior written consent of the LICENSOR, which consent shall not be unreasonably withheld. LICENSOR will cooperate in any such action, including being named as a party if necessary to permit the action to proceed.   11   14.5                         The LICENSEE shall be entitled to any damages awarded in or license income derived from proceedings instituted in terms of Clause 14.4.   15.                                CESSION AND ASSIGNMENT   The rights and obligations of the LICENSEE are personal and may not be ceded, assigned, let or otherwise disposed of in any manner whatsoever without the prior written consent of the LICENSOR, provided, however, that LICENSEE may assign this agreement and the rights granted herein, subject to South African regulatory approval and approval by the LICENSOR which approval shall not unreasonably be withheld or delayed, to a third party who acquires substantially all of LICENSEE’S assets associated with practice under this agreement.   16.                                SUBLICENSING OR SUBCONTRACTING   The LICENSEE shall not have the right to grant sub-licenses in any country in the world under this agreement without prior written consent from the LICENSOR who may not withhold consent unreasonably, and which consent shall in any event be subject to obtaining any required statutory or regulatory approvals and the terms relating to royalty payments as provided for in this agreement.   17.                                INDEMNITY AND LIABILITY   17.1                         The LICENSEE shall indemnify the LICENSOR against all claims of whatsoever nature and provide guarantees to LICENSOR to that effect, which may be made against it arising out of the EXPLOITATION by LICENSEE of the PATENT or the TECHNOLOGY or the manufacture, sale or use of PRODUCTS.   17.2                         Any claims for damages that may be instituted by LICENSEE against the LICENSOR in terms of this agreement, shall be limited to an amount equal to the actual amount of direct damages, or the aggregate amount of all payments made to the LICENSOR under the terms of this agreement, whichever is the least. This maximum liability shall be an aggregate liability for all claims howsoever arising, whether by contract, in delict or otherwise. Neither PARTY shall be liable to the other for any consequential or indirect damages arising from this agreement.   18.                                FORCE MAJEURE   18.1                         A PARTY is not liable for a failure to perform any of its obligations under this agreement insofar as it proves:   18.1.1                that the failure was due to an impediment beyond its control;   18.1.2                that it could not reasonably be expected to have taken the impediment and its effects upon the party’s ability to perform into account at the time of the conclusion of the contract; and   12   18.1.3                 that it could not reasonably have avoided or overcome the impediment or at least its effects.   18.2                           An impediment in Clause 18.1 may result from events such as the following, this enumeration not being exhaustive:   18.2.1                 war, whether declared or not, civil war, civil violence, riots and revolution, acts of piracy, acts of sabotage;   18.2.2                natural disasters such as violent storms, cyclones, earthquakes, tidal waves, floods, destruction by lightning;   18.2.3                 explosions, fire, destruction of machines, of factories and of any kind of installations;   18.2.4                boycotts, strikes and lock-outs of all kinds, go-slows, occupation of factories and premises, and work stoppages;   18.2.5                acts of authority, whether lawful of unlawful, apart from acts for which the party seeking relief has assumed the risk by virtue of any other provisions of this agreement and apart from the matters mentioned in Clause 18.3.   18.3                          For the purposes of Clause 18.1, “impediment” does not include lack of authorisations, of licenses, or permits or of regulatory or other approvals necessary in any country in the TERRITORY for the performance of this licence.   18.4                          Relief from liability for non-performance by reason of the provisions of Clause 18 shall commence on the date upon which the PARTY seeking relief gives notice of the impediment relied upon and shall terminate upon the date upon which such impediment ceases to exist; provided that if such impediment continues for a period of more than 6 (six) Months either PARTY shall be entitled to terminate this agreement by written notice to the other PARTY.   19.                                DISPUTE RESOLUTION AND GOVERNING LAW   19.1                         In the event of any dispute arising between the PARTIES as a result of this agreement, the dispute will be referred to the executive management of the respective PARTIES to attempt to resolve the dispute. The executive management of the PARTIES have the option to agree on mutually acceptable mediation or arbitration proceedings, failing which the dispute will be subject to Clause 19.2 below.   19.2                         This agreement shall be governed by and interpreted in accordance with the laws of the Republic of South Africa and any dispute arising therefrom shall be adjudicated by a competent high court in South Africa to which exclusive jurisdiction the PARTIES hereby agree (unless otherwise agreed to between the PARTIES at the time).   13   19.3                         The provisions of this Clause 19 shall survive   20.                                CANCELLATION   20.1                         Should a PARTY be in breach of any of the terms or conditions hereof and fail to remedy such breach within 30 (thirty) days after the receipt of written notice, then the aggrieved PARTY shall be entitled at such PARTY’s option to institute proceedings immediately for enforcement of the terms of this agreement, or alternatively and without further notice to declare this agreement cancelled; all of which may be done without prejudice to any claim the aggrieved PARTY may have for damages arising from breach of contract or any other cause.   20.2                           Any PARTY may terminate this agreement at any time by giving to the other (“the defaulting PARTY”) notice of such termination if:   20.2.1                the defaulting PARTY is, other than for the purposes of reconstruction or amalgamation, placed under voluntary or compulsory liquidation or under judicial management or under receivership or under the equivalent of   20.2.2                 a final and unappeasable judgement against the defaulting PARTY remains unsatisfied for a period of 30 (thirty) days or more after it comes to the notice of the management of the defaulting PARTY;   20.2.3                the defaulting PARTY makes any arrangement or compromise with its creditors generally, or ceases, or threatens to cease, to carry on business.   20.3                         Any termination of this agreement shall not absolve the PARTIES from the obligation to observe the confidentiality measures and other restraints as set out herein.   20.4                         LICENSEE may terminate or cancel this agreement without cause at any time upon 60-days advance written notice to LICENSOR. In such event, the exclusivity fee payable under Clause 9.2 above shall remain fully payable regardless of the timing of the termination by LICENSEE, and the minimum royalties for each ROYALTY YEAR up to such termination will also be payable under Clauses 5.4 and 9.3.2 above.   21.                                WHOLE AGREEMENT   21.1                         This document constitutes the whole of the agreement (to the exclusion of all else) between the PARTIES relating to the subject matter hereof, and also supersedes all previous agreements pertaining to the same subject matter, whether written or otherwise, between the PARTIES.   21.2                         No amendment, alteration, addition, variation or consensual cancellation of this document will be valid unless in writing and signed by the PARTIES.   14   22.                                WAIVER   22.1                         No waiver of any of the terms or conditions of this agreement will be binding for any purpose unless expressed in writing and signed by the PARTY giving the same and any such waiver will be effective only in the specific instance and for the purpose given.   22.2                         No failure or delay on the part of either PARTY in exercising any right, power or privilege will operate as a waiver, nor will any privilege.   23.                                DOMICILIUM AND NOTICES   The PARTIES hereby choose domicilium citandi et executandi for all purposes in terms hereof as follows:   The CSIR, The Executive Director: Defence, Peace, Safety & Security, Meiring Naude Road, Scientia, Pretoria, 0002   FORCE PROTECTION TECHNOLOGIES INC, The President Force Protection Technologies Inc 9801 Highway 78 Ladson South Carolina 29456   23.1                         Either PARTY shall be entitled to change its domicilium citandi et executandi by giving written notice thereof to the other, provided that such change shall not take effect until receipt by the other PARTY of such notice.   23.2                         All notices to be given by hand by the PARTIES to each other in terms hereof shall be given to the aforesaid addresses by delivery thereto, or if by posting by prepaid registered mail, or by telefax to the following addresses:   The CSIR P O Box 395 Pretoria 0001 Fax No. :+ 27 12 841-3803   15   FORCE PROTECTION TECHNOLOGIES INC VP: Legal Affairs 9801 Highway 78 Ladson SC 29456 United States of America Fax No. :  (+1) 843 553-1311   24.                                 NOTICES   24.1                         All notices in terms of this agreement shall be in writing addressed to the chosen address of the PARTY and shall be sent by prepaid registered post or courier, or shall be physically delivered, or shall be sent by facsimile to the numbers as set out in Clause 23 above (or to any replacement number), provided that proof of delivery can be provided.   24.2                         Posted and couriered notices shall be deemed to have been received on the 5th business day following posting.   25.                                SEVERABILITY   In the event that any of the provision of this agreement are found to be invalid, unlawful or unenforceable, such terms shall be severable from the   26.                                COSTS   Each PARTY shall bear its own costs in regard to the negotiations and finalisation of this license agreement.   Signed at Pretoria  on this 6th day of July  2007.   As witnesses:       1. /s/ illegible             2. /s/ illegible   /s/ J. Strydan       For CSIR     Signed at Charleston, S.C. on this 29th day of May 2007.   As witnesses:       1.             2. /s/ John Wall III____         For FORCE PROTECTION TECHNOLOGIES INC.   16

Exhibit 10.5   [g301081kii001.jpg]   2019 DIRECTOR COMPENSATION POLICY     PURPOSE:                                The Director Compensation Policy (“Policy”) establishes meeting fees that the Federal Home Loan Bank of New York (“FHLBNY”) will pay to the Board of Directors (collectively, the “Board”; each member individually or severally, the “Directors”) of the FHLBNY and also sets forth the types of Director expenses that may be reimbursed.  The activities referred to in this Policy are those as to which the Board believes Director attendance is necessary and appropriate and which may be compensated.  The Policy has been prepared in accordance with Section 7 of the Federal Home Loan Bank Act (“Bank Act”) and the regulations of the Federal Housing Finance Agency (“FHFA”) regarding Director compensation and expenses.   I.                                  2019 DIRECTOR FEES   A.                        Board Chairman   The maximum fee opportunity for 2019 for the Chair of the Board shall be $133,000.   B.                        Board Vice Chairman   The maximum fee opportunity for 2019 for the Vice Chair of the Board shall be $118,000.   C.                        Committee Chairs   The maximum fee opportunity for 2019 for a Director serving as a Committee Chair shall be $112,500, except for the Audit Committee Chair, whose maximum fee opportunity shall be $116,000; however, such Director shall not receive any additional fee opportunity if he or she serves as Chair of more than one Committee.  The Board Chair and Board Vice Chair shall not receive any additional fee opportunity for serving as a Chair of one or more Board Committees.   D.                        Other Directors   The maximum fee opportunity for 2019 for Directors other than the Chair, the Vice Chair, and the Committee Chairs shall be $102,500.   E.                        Payments and Attendance   Each Director shall be paid an amount equal to approximately one-eighth of such Director’s maximum fee opportunity as described above for each Board meeting that is attended by said Director in 2019.  This formulation is based on nine scheduled Board meetings in 2019.  In addition, although attendance is expected at all Board meetings as per the FHLBNY’s Corporate Governance Guidelines, this formulation allows for one absence.  Such fees are to be paid on a quarterly basis in arrears.   FEDERAL HOME LOAN BANK OF NEW YORK · 101 PARK AVENUE · NEW YORK, NY 10178 · T: 212.681.6000 · WWW.FHLBNY.COM     Attendance at meetings by telephonic means shall be deemed acceptable for purposes of receiving compensation.   Directors may, in their sole discretion, elect to not receive meeting fees by notifying the Corporate Secretary.   F.                         Payments and Performance   Payments to Directors may be reduced in the sole judgment of the Board Chair if the Chair determines such director’s Board performance to be significantly deficient.  The Board’s Corporate Governance and External Affairs Committee is authorized to, by a majority vote, make similar decisions pertaining to the performance of the Board Chair.   G.                 Fees Pertaining to Leadership Roles Relating to the Council of Home Loan Banks   In addition to the above compensation, a Director who serves as Chair of the Council of Federal Home Loan Banks or who serves as Chair of the Chair/Vice Chair Committee of the Council of Federal Home Loan Banks will receive a $10,000 stipend per year of service.  The stipend will be paid through quarterly payments of $2,500.   II.                             2019 DIRECTOR EXPENSES   A.                        General Reimbursement Principles   1.                    Directors may be reimbursed for reasonable travel, performance of their official duties only as specified in the FHLBNY’s current policy covering the reimbursement of travel and other business-related items incurred by Directors.  However, under no circumstances shall Directors be reimbursed for gift or entertainment expenses.  (The principles in this Section II pertaining to permitted reimbursements shall also apply to those expenses paid for directly by the Bank to vendors and allocated to individuals in accordance with FHFA directives or guidance which may be issued from time to time.)   B.                        Board and Board Committee Meetings   1.                    Reimbursement of reasonable expenses may be provided to Directors in connection with attendance at Board and Committee meetings as established herein.   C.                        Stockholders’ Meetings   1.                    Reimbursement of reasonable expenses incurred by Directors attending FHLBNY stockholders’ meetings is permitted.   2   D.                        Industry Meetings   1.                    Reimbursement of Independent Directors’ expenses incurred while attending industry meetings or annual conventions of trade associations on a national level is permitted provided that a specific objective has been identified and that attendance has been specifically pre-approved by the Board of Directors.  Independent Directors attending industry events on behalf of the FHLBNY should register and identify themselves as Directors of the FHLBNY.   2.                    Reimbursement of Member Directors’ expenses incurred while in attendance at industry meetings or annual conventions of trade associations on a national level is not permissible, unless such attendance is incidental to a FHLBNY Board or Committee meeting.   E.                        Meetings Called by the Federal Housing Finance Agency   all Directors participating in any meetings called by the FHFA.   F.                         Other Bank System Meetings   all Directors who are invited to attend meetings of Federal Home Loan Bank System committees; Federal Home Loan Bank System director orientation meetings; and meetings of the Council of Federal Home Loan Banks and Council committees (e.g., the Chair/Vice Chair Committee).   G.                       Expenses of Spouses/Guests   1.                    Expenses incurred by a Director’s spouse/guest while accompanying the Director to a meeting will not be reimbursed.   III.                        PROCEDURES AND ADMINISTRATIVE MATTERS   A.                        Directors’ requests for reimbursement should be submitted to the Office of the Corporate Secretary within 90 days of incurring the reimbursable item(s).   B.                        Payment for and reimbursement of allowable business expenses of the Directors will require the approval of the Corporate Secretary or such officers designated by the Corporate Secretary.   C.                        Meetings of the Board and Committees thereof should usually be held within the district served by the FHLBNY.  Under no circumstances shall such meetings be held in any location that is not within the district without prior approval of the Board.  FHFA regulations prohibit any meetings of the Board of Directors (including committee, planning, or other business meetings) to be held outside the United States or its possessions and territories.   3   IV.                         METHODOLOGY   In determining the appropriate and reasonable fee opportunities available to FHLBNY Directors for 2019 as described herein, the Board has taken into consideration the following factors:   ·                              the desire to attract and retain highly qualified and skilled individuals in order to help guide a complex and highly-regulated financial institution that is subject to a variety of financial, reputational and other risks;   ·                              the highly competitive environment for talent in the New York City metropolitan area — a center of world finance in which stock exchanges, securities companies and other sophisticated financial institutions are located;   ·                              the demands of the Director position, including the time and effort that Directors must devote to FHLBNY and Board business — demands that have grown over the past several years;   ·                              the overall performance of the FHLBNY, an institution that is a Federal Home Loan Bank System leader, a strong financial performer, a reliable source of liquidity for its customers, and a provider of a consistent dividend — and an institution which wishes to maintain this performance;   ·                              information pertaining to compensation opportunities available to directors of other Federal Home Loan Banks; and   ·                              director compensation surveys performed over time by outside compensation consulting firm McLagan, most recently in 2017 — surveys which have provided the Directors with the ability to compare Director compensation opportunities with compensation opportunities available at other institutions.   The Board will review the issue of appropriate and reasonable Director fee opportunities on an annual basis.   4

Exhibit 10.01 STATE AUTO FINANCIAL CORPORATION AMENDMENT NO. 2 TO THE The 2009 Equity Incentive Compensation Plan (the “Plan”) is hereby amended 1.    Definitions: For the purposes of the Plan and this amendment, all capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. 2.    Additional Shares: Subject to shareholder approval, the first paragraph of Section 4. of the Plan is hereby amended by adding the following language to the end thereof: “Subject to shareholder approval and effective upon such approval, an additional 1,000,000 Shares, shall be authorized for Awards granted under the Plan. Each Share issued or transferred pursuant to an Award of Stock Options will reduce the aggregate Plan limit described in this Section by one (1) Share. Each Share issued or transferred (and in the case of Restricted Shares, released from all substantial risk of forfeiture) pursuant to an Award other than Stock Options shall reduce the aggregate Plan limit described in this Section by: (A) one (1) Share if issued or transferred pursuant to an Award granted prior to the effective date of this Amendment; and (B) three (3) Shares if issued or transferred pursuant to an Award granted on or after the effective date of this Amendment.” 3.    Replacing / Repricing Stock Options: In order to verify the Company’s intent concerning replacing or repricing Stock Options, a new paragraph is hereby added to the end of Section 5. of the Plan to read as follows: “Except in connection with a corporate transaction involving the Company split-up, spin-off, compensation or exchange of Shares), the terms of outstanding Stock Options or cancel outstanding Stock Options in exchange for cash, other Awards or Stock Options with an exercise price that is less than the exercise price of the original Stock Options without shareholder approval.” 4.    Stock Options Vesting: In order to clarify the Company’s administration of the Plan’s vesting provisions with regard to Stock Options, the third sentence of the first paragraph of Section 6.(B) of the Plan is hereby amended to read as follows: “Each Stock Option shall become vested with respect to Shares subject to that Stock Option on such date or dates and on the basis of such other criteria, including, without limitation, the performance of the Company, as the Committee Stock Option Award Agreement; provided, however, that each Stock Option shall be subject to a minimum three (3)-year vesting period.” 5.    Retirement: In order to clarify the Plan’s definition of “retirement,” the first sentence of Section 6.(C)(3) of the Plan is hereby amended to read as follows: “If a Participant who was granted a Stock Option terminates employment due to retirement, as such term is defined in the State Auto Insurance Companies Employee Retirement Plan (the “Retirement Plan”) (regardless of whether such Participant is eligible to retire from the Retirement Plan), the Stock Options shall immediately vest and must be exercised as follows: (a) ISOs must be exercised within 90 days of such termination (but no later than the Expiration Date) and (b) NQSOs must be exercised on or before the Expiration Date.” 6.    Restricted Shares Vesting: In order to clarify the Company’s administration of the Plan’s vesting provisions with regard to Restricted Shares, a new second sentence is hereby added to Section 7.(B) of the Plan to read as follows: “Notwithstanding the foregoing, each Restricted Share shall have a minimum three (3)-year vesting period.” 7.    Dividends on Performance Shares: In order to clarify the Company’s intent regarding dividends and dividend rights related to Performance Shares, the second sentence of the first paragraph of Section 8.(D) of the Plan is hereby “Furthermore, the Committee shall have the authority, in its sole discretion, to determine the voting rights (which may be full or limited), dividend rights (which may be full or limited), or other shareholder rights associated with the Performance Shares during the Restriction Period, which rights shall be set forth in the applicable Performance Share Award Agreement; provided, however, that dividends and/or dividend rights shall not be granted in connection with unearned Performance Shares.” 8.    Vesting Upon a Change in Control or Potential Change in Control: In order to clarify the Company’s administration of the Plan’s Change in Control and Potential Change in Control provisions, a new subsection (c) is hereby added to the end of Section 11.(B)(1) of the Plan to read as follows: “(c) In the event of a Change in Control or a Potential Change in Control, as defined herein, the accelerated vesting provided above shall occur only if the Participant incurs a termination of employment with the Company and any related entity within one (1) year of the Change in Control or Potential Change in Control; provided, however, that if the Change in Control or Potential Change in Control involves a change in the ownership of the Company and the successor entity does not provide benefits of equal or greater value at the time of the transaction, the Participant’s Award(s) shall automatically vest upon the close of the Change in Control or Potential Change in Control transaction. For purposes of the Plan, “termination of employment” means a separation from service as defined in Code Section 409A, as amended.” 9.    Potential Change in Control: In order to make the Plan’s definition of a Potential Change in Control consistent with other Company plans, the reference to 20% in Section 11.(B)(3)(b) is hereby changed to 30%. 10.    Effective Date; Construction: This amendment shall be deemed to be a part of the Plan as of the shareholder approval date. In the event of any inconsistency between the provisions of the Plan and this amendment, the James A. Yano, Vice President May 15, 2013                     Date

Title: Weezer only covered Toto's "Africa" after a fan-initiated social media campaign. It's their first number one single in a decade. Could that fan sue to gain earnings? Question:Specifically, the fan has been identified by name as a 14 year old resident from Cleveland. So it's known who she is. The band only covered the song after this back and forth, and it ended up being their first number one single in a decade, including a limited edition 7 inch vinyl pressing and multiple online digital sales and Youtube views. I am sure that made the band at least a cool million. Could that person sue for being the sole reason they pursued that idea in the first place?

Exhibit 10.59 REIMBURSEMENT AGREEMENT THIS AGREEMENT (this "Agreement") is executed and delivered on the 29th day of June, 2010, by and between The Sentient Group ("TSG") and Natural Soda Holdings, Inc., a Colorado corporation ("NSHI"). RECITALS: WHEREAS, NSHI anticipates that TSG and one or more affiliates of Sentient USA Resources Fund, LP ("SURF"), a shareholder of NSHI (collectively "Sentient") will provide services and/or will incur certain costs and expenses directly allocable to NSHI and NSHI's subsidiary, Natural Soda, Inc. ("NSI"). WHEREAS, Sentient will use reasonable efforts to advise management and the Board of Directors of NSHI in advance of providing such services or incurring any such costs and expenses; WHEREAS, Sentient will attempt to have any third party providers of goods or services to contract with NSHI and/or NSI concerning such goods and services rather than have Sentient pay the bills and seek reimbursement for such amounts, and WHEREAS, NSHI has agreed to reimburse Sentient and/or one or more of its affiliates for such services, costs and expenses provided that they are reasonable in amount, were incurred in good faith, and are approved by a majority of the disinterested members of the Board of Directors and/or the Shareholders of NSHI as required by the Colorado Business Corporations Act for conflicting interest transactions. NOW, THEREFORE, in consideration of the foregoing premises, the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1.Reimbursement Of Costs and Expenses. From time to time, no less frequently than on a quarterly basis, Sentient will prepare and submit a detailed request to NSHI for reimbursement of: (a)The cost to Sentient of providing services to NSHI and/or NSI, including, but not limited to travel and accommodations associated with the provision of such services (costs of employees or contractors of Sentient will be based on the actual cost to Sentient of providing such services); and (b)The cost of goods and services provided by third parties to or for the benefit of NSHI and/or NSI, but billed to and paid by Sentient or billed to NSHI and/or NSI and paid by Sentient on behalf of NSHI and/or NSI. Such requests shall be reasonable in detail and in such form as may be reasonably required by NSHI. At a minimum, such requests shall be reasonably sufficient to satisfy the requirements of the Sarbanes_Oxley Act of 2002 (or as such act might be modified in the future) and the requirements of the Internal Revenue Service to permit NSHI and/or NSI to deduct such payments for United States Income Tax purposes. Sentient will provide NSHI with reasonable backup documentation for each request for reimbursement and a representative of Sentient will be available to discuss the request for reimbursement as needed by management, the Board of Directors or shareholders of NSHI. Reimbursements shall be paid from available cash within a reasonable time after being approved. Cost Reimbursement Agreement Page 1 2.Prior Consent. Sentient will use reasonable efforts to obtain prior authorization before performing or retaining any services that may be the subject of any reimbursement hereunder or incurring any cost or expense for the benefit of NSHI or NSI. Failure to obtain any such authorization shall not affect Sentient's right to seek reimbursement, but is intended to provide NSHI and NSI with information that will better enable it to understand the value and necessity of such items and to budget for such items. 3.Currency. All references to "dollars" or "$" herein or in any budget shall mean lawful currency of the United States of America. 4.Headings. The subject headings of the Sections and Subsections of this Agreement and the Paragraphs and Subparagraphs of the Exhibits to this Agreement are included for purposes of 5.Dispute Resolution. (a) All claims, disputes or other controversies arising out of, or relating to, this Agreement and any other claims, disputes or controversies arising out of or relating to the management or operations of NSHI or NSI (hereinafter collectively referred to as a "Dispute") shall initially be submitted to a senior officer or a member of the board of directors from each party to a Dispute for resolution by mutual agreement between said officers (which senior officers or director will not be a Person who is involved in the regular operations of NSHI or NSI). Any mutual determination by the senior officers shall be reduced to writing and become final and binding upon the parties. However, should such senior officers fail to arrive at a mutual decision as to the Dispute within 20 days after notice to the senior officers of the Dispute, the parties shall then attempt to resolve such Dispute by mediation in accordance with the terms and provisions set forth in the following paragraph. (b) The parties agree that if the Senior Officers are unable to resolve the Dispute pursuant to the preceding paragraph, either party may submit the Dispute to JAMS, Inc. (www.jamsadr.com and 949-224-1810, "JAMS"), or its successor, for mediation, and if the Dispute is not resolved through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration. Any party to this Agreement may commence mediation by providing to JAMS and the other parties a written request for mediation, setting forth the subject of the Dispute and the relief requested. The parties will cooperate with JAMS and with one another in selecting a mediator from JAMS' panel of neutrals, and in scheduling the mediation proceedings promptly, not later than 20 days after such request for mediation. The parties covenant that they will participate in the mediation in good faith, and that they will share equally in its costs. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Any party may initiate arbitration with respect to the Disputes submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or 45 days after the date of filing the written request for mediation, whichever occurs first. The mediation may continue after the commencement of arbitration if the parties so desire. -Unless otherwise agreed by the parties, the mediator shall be disqualified from serving as arbitrator in the case. The provisions of this Clause may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys' fees, to be paid by the party against whom enforcement is ordered. Cost Reimbursement Agreement Page 2 6.Further Assurances. Each of the parties shall take, from time-to-time and without additional consideration, such further actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Agreement. 7.Entire Agreement; Successors and Assigns. This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings between the parties relating to the subject matter hereof. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties. 8.Counterparts. This Agreement may be executed in any number of counterparts, and it shall not be necessary that the signatures of more than one party be contained on any counterpart. Each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. NATURAL SODA HOLDINGS, INC THE SENTIENT GROUP By: /s/ Brad F. Bunnet By: /s/ Gregory Link Name: Brad F. Bunnet Name: Gregory Link Title: President Title: Director Date: 30 June 2010 Date: 30 June 2010 Cost Reimbursement Agreement Page 3

Exhibit 10.2   AMENDMENT TO CO-EXECUTIVE CHAIRMAN COMPENSATION PLAN   This Amendment (this “Amendment”) to the Co-Executive Chairman Compensation Plan and Robert B. Fagenson (the “Executive”) dated June 20, 2013, including the Annexes thereto (the "Agreement") is entered into and effective on the 6th day of June 2014.     Agreement; and   WHEREAS, pursuant to the Agreement, the Executive has the right and obligation to serve as one of only two members of the Executive Committee of the Company (with Mark D. Klein serving as the other Executive Committee member); and   WHEREAS, the Board of Directors of the Company desires to appoint Mark Goldwasser as a third member of the Executive Committee for a period of time beginning on June 6, 2014 and ending November 15, 2014 (the "applicable period"); and   WHEREAS, the Executive desires to consent to Mr. Goldwasser's appointment to the Executive Committee for the applicable period; and   WHEREAS, the parties desire to amend the Agreement to reflect this change to the composition of the Executive Committee for the applicable period; and   WHEREAS, the parties desire to confirm such change for the applicable period shall not constitute a breach of the Agreement giving rise to a Good Reason event as defined under Annex D, Section 1.k. of the Agreement.       1.            The Section titled "Executive Committee" shall be amended by deleting the last sentence and inserting in lieu thereof, the following:   The only other Members of such Executive Committee shall be Mark D. Klein and, for the period beginning June 6, 2014 and ending no later than November 15, 2014, Mark Goldwasser; provided, that, Mark Goldwasser’s service on the Executive Committee shall automatically expire on November 15, 2014 or earlier termination of his employment with the Company for any reason, without any further action of the Board of Directors of the Company. To the extent the Executive at any time becomes the sole member of the Executive Committee, the Executive Committee shall be automatically terminated and the Executive shall     1      2.            Section 1(k)(v) of Annex D of the Agreement is amended and   (v)     the Company’s material breach of this Agreement (including, without limitation, failing to arrange for a purchaser of all or substantially all of the Company’s assets or other successor to assume this Agreement, any failure to pay compensation when due or the Board's appointment of Mark Goldwasser to the Executive Committee for any period after November 15, 2014), other than an isolated, insubstantial and inadvertent breach not occurring in bad faith that is remedied by the Company promptly following receipt of written notice thereof given by the Executive (provided that the appointment of Mr. Goldwasser to the Executive Committee for any period after November 15, 2014 without the Executive's prior written consent will be deemed to be a material breach, will not be subject to cure under this Section 1(k) and will not be considered an isolated, insubstantial or inadvertent breach not occurring in bad faith). For the avoidance of doubt, the appointment of Mr. Goldwasser to the Executive Committee through November 15, 2014 shall not constitute a material breach of this Agreement.   3.             Except as specifically amended hereby, the Agreement shall remain   instrument.           NATIONAL HOLDINGS CORPORATION             /s/ Alan Levin                              By: Alan Levin                          Its:  Chief Financial Officer                    Date: June 6, 2014                             EXECUTIVE               Robert B. Fagenson     Date:  June 6, 2014    2

Exhibit 10.1 August 21, 2015 Mr. Richard J. Alario 1301 McKinney Street Suite 1800 Houston, Texas 77010   RE: Letter Agreement Regarding Continued Employment Terms Dear Mr. Alario: Key Energy Services, Inc. (the “Parent”) and Key Energy Services, LLC (the “Company”) wish to enter into this letter agreement (the “Letter Agreement”) with you (“you” or “Executive”) in order to address the circumstances of your continued employment and future retirement from employment with the Parent and the Company and the benefits due upon such retirement. Please carefully review this Letter Agreement, and, if you agree, return a signed copy of your acceptance as indicated below to Dwight W. Rettig, Interim General Counsel. The Parent, the Company and Executive are parties to that certain Amended and Restated Employment Agreement, entered into as of December 31, 2007, as amended (the “Employment Agreement”). The Parent, the Company and Executive agree that the Employment Agreement shall be amended and superseded as necessary to give full effect to the terms and provisions of this Letter Agreement. Capitalized terms not defined in this Letter Agreement shall have the meaning assigned to In consideration of the mutual agreements set forth herein and in the Employment sufficiency of which are hereby acknowledged, the Parent, the Company and Executive hereby agree as follows, effective as of August 21, 2015:     1. Employment Position; Resignation as Chairman. The Parent agrees to continue to employ Executive as its Chief Executive Officer, and Executive hereby accepts such employment. Effective as of the date hereof, Executive resigns as Chairman of the Board of Directors of Parent (the “Board”), but agrees to remain a member of the Board.     2. Term of Employment. Executive’s employment hereunder shall continue from the date hereof until December 31, 2016 or such earlier date as the Board requests Executive’s resignation (the “Retirement Date”). Effective on the Retirement Date, Executive hereby resigns from his position as Chief Executive Officer of the Parent, as a member of the Board and from any other officer or director positions of any direct or indirect subsidiary of the Parent. Executive agrees to take any and all further acts necessary to accomplish these resignations.   1   3. Compensation Prior to the Retirement Date. During Executive’s employment under the Letter Agreement, Executive shall be entitled to compensation and benefits that are no less favorable to Executive than those provided to Executive immediately prior to the date of this Letter Agreement, including, without limitation, Base Salary, Equity-Based Incentives and incentive opportunities under Performance Cash Compensation Plans.     4. Good Reason Waiver. Executive hereby consents to, and shall not have Good Reason as a result of, Executive’s replacement as the Chairman of the Board, Executive’s retirement as Chief Executive Officer of the Parent and any other resignations made pursuant to Section 2 of this Letter Agreement.     5. Change in Control. Notwithstanding any of the provisions of this Letter Agreement to the contrary, if a Change in Control occurs prior to the Retirement Date, the following provisions shall apply: (i) upon a Change in Control Executive shall be entitled to the benefits provided in Section 5(e) of the Employment Agreement, as applicable, and (ii) if Executive’s employment is terminated by Executive for Good Reason, by the Company not for Cause or by the Company for Disability, any of which occur within one year after a Change in Control, or if the Retirement Date occurs within one year after a Change in Control, then upon termination of employment Executive shall be entitled to (A) the same amount and form of the benefits provided under Section 6 of this Letter Agreement and (B) an additional amount (the “Enhanced Severance Payment”) equal to one (1) times the Base Salary paid in a lump sum on the date that is sixty (60) days after the date of Executive’s termination. If Executive’s termination is due to Disability, the amount of the Enhanced Severance Payment shall be reduced by disability insurance proceeds as provided in Section 5(d)(iii) of the Employment Agreement.     6. Compensation and Benefits Due Upon the Retirement Date. Upon the Retirement Date and subject to Executive’s execution of a release in a manner consistent with Section 5(d)(iv) of the Employment Agreement, Executive shall be entitled to the following:     (a) Severance compensation in an aggregate amount equal to three (3) times the Base Salary (at the rate in effect as of the date of termination, but not less than $865,000 per year), payable in thirty-six (36) substantially equal monthly installments commencing at the end of the calendar month in which the date of termination occurs. Each subsequent monthly installment payment shall be paid on or about the first day of the month to which it relates.     (b) Continuation of benefits as provided in Section 5(f) of the Employment Agreement;     (c) Equity-Based Incentives held by Executive as of the Retirement Date shall be treated as provided in Section 5(e)(i) of the Employment Agreement, with any outstanding award of Performance Units becoming vested and paid as provided in Section 5(b) of the applicable Performance Unit Award Agreement; and     (d) Executive shall be eligible for payments under Performance Cash Compensation Plans as if Executive satisfied all service requirements applicable thereunder with respect to the calendar year in which the Retirement Date occurs.   2 For the avoidance of doubt, as of the Retirement Date, the Parent, the Company and Executive anticipate that the level of Executive’s services to the Company and its affiliates will permanently decrease such that Executive shall be considered to have incurred a “separation from service” with the Parent, the Company and their affiliates within the meaning of Treas. Reg. § 1.409A-1(h)(1)(ii) as of the Retirement Date.     7. Termination of Employment Prior to December 31, 2016. If the Board requests Executive’s resignation prior to December 31, 2016, or if Executive terminates his employment for Good Reason (taking into account the waiver in Section 4 of this Letter Agreement) prior to December 31, 2016, then Executive shall be entitled to the compensation and benefits provided in Section 6; provided, however, that if the Board has requested Executive’s resignation, the severance amount in Section 6(a) shall be increased by the Base Salary at the rate in effect at the time of resignation that would have been paid to Executive from the date of termination through December 31, 2016 had Executive remained employed through December 31, 2016; provided further that in no event shall the severance amount in Section 6(a) be increased by more than 6 months Base Salary.     8. No Adverse Cooperation. Executive agrees not to act in any manner that might damage the business of the Parent, the Company and their partners, subsidiaries, affiliates, and related companies and any predecessors thereto, and its and their present and former agents, employees, officers, directors, owners, stockholders, attorneys, insurers, plan fiduciaries, successors and assigns, whether in their individual or official capacities (collectively, the “Key Parties”). Executive further agrees that Executive will not knowingly complaints by any third party against any of the Key Parties unless under a or other court order to the Company. If approached by anyone for counsel or grievances, claims, charges or complaints against any of the Key Parties, This provision does not apply to any assistance or cooperation that Executive may be asked to provide to the U.S. Securities and Exchange Commission (“SEC”) or the U.S. Department of Justice (“DOJ”) in connection with the investigations that are discussed in the Parent’s Form 10-K for the year ended December 31, 2014.   3   9. Cooperation. Executive agrees to cooperate, at the reasonable request of the Key Parties, in the defense and/or prosecution of any charges, claims, investigations (internal or external), administrative proceedings, and/or lawsuits relating to matters occurring during Executive’s period of employment, including, but not limited to, the investigations that are discussed in the Parent’s Form 10-K for the year ended December 31, 2014, and to make himself reasonably available upon request for interviews by the Parent and/or its outside counsel as necessary to accomplish this requirement. Executive further agrees to consider, in good faith, in consultation with his counsel as applicable, requests from the SEC and/or DOJ, as well as from outside counsel of the Parent, to cooperate with the SEC and/or DOJ in connection with any investigations, including, but not limited to, investigations that are discussed in the Parent’s Form 10-K for the year ended December 31, 2014, in such form and extent that are required for the purposes of such investigations, and during the entire period of their duration. The Company agrees to reimburse Executive for travel costs and reasonable incidental expenses incurred in connection with such cooperation. Executive acknowledges that any payment, advancement, or reimbursement of legal fees incurred in connection with such cooperation will be governed by the advancement and indemnification provisions of the Parent’s Directors’ and Officers’ insurance policy, the Company’s charter documents, and Maryland law. In performing Executive’s obligations under this paragraph to testify or otherwise provide information, Executive will honestly, truthfully, forthrightly, and completely provide the information requested. The parties agree that notwithstanding any provision of this Letter Agreement or the Employment Agreement to the contrary, neither this Letter Agreement nor the Employment Agreement shall prevent Executive from disclosing information to governmental authorities.     10. Effect on Employment Agreement. The terms and provisions of the Employment Agreement, including but not limited to Sections 6 through 16 and Sections 18 through 22, shall continue in effect; provided, however, that to the extent that this Letter Agreement conflicts with the Employment Agreement, this Letter Agreement shall supersede the Employment Agreement. For the avoidance of doubt, this Letter Agreement shall not result in any duplication of benefits under the Employment Agreement.     11. Amendment; Governing Law. This Letter Agreement may not be amended, supplemented, cancelled or discharged except by a written instrument executed by the parties hereto. This Letter Agreement shall, in all respects, be interpreted, enforced, and governed under the laws of the State of Texas, in the federal or state courts in Harris County. Signature Pages Follow   4 Robert Drummond President & Chief Operating Officer KEY ENERGY SERVICES, LLC By:   Robert Drummond President & Chief Operating Officer   5 Executive’s Acceptance As evidenced by my signature below, I hereby agree to the terms and provisions Agreed this 21st day of August, 2015.   Richard J. Alario   6

  EXHIBIT 10.2 EXECUTION COPY EMPLOYMENT AGREEMENT      EMPLOYMENT AGREEMENT (“Agreement”) dated as of November 30, 2006 by and between GMAC LLC (the “Company”) and Eric Feldstein (the “Executive”) (each a      WHEREAS, the Executive has been employed by General Motors Acceptance Corporation (“GMAC”) as Chairman, GMAC Financial Services;      WHEREAS, a Purchase and Sale Agreement, dated as of April 2, 2006, was entered into between FIM Holdings LLC (“Holdings”), GMAC, General Motors Corporation, and the other parties thereto (the “Purchase Agreement”);      WHEREAS, prior to the Closing Date (as defined in the Purchase Agreement), GMAC shall be converted into the Company;      WHEREAS, the Parties desire the Executive to continue employment with the Company upon the terms set forth herein. the Executive shall accept employment, subject to the terms of this Agreement, on the Closing Date (the “Effective Date”). serve in the capacity of Chief Executive Officer, and shall report solely and a Chief Executive Officer, of a company in similar lines of business as the by the Board. The Executive will devote substantially all of his full     incapacity) to the performance of such duties and to the promotion of the business and interests of the Company and its subsidiaries. Provided that the following activities do not materially interfere with the Executive’s duties and responsibilities as Chief Executive Officer (as determined by the Company), the base salary of not less than $1,200,000, payable in accordance with the           4.2 Retention Bonus. The Company will pay to the Executive a retention bonus of $1,000,000 (the “Retention Bonus”), payable in four (4) equal quarterly installments, the first of which to occur three (3) months following the on the date of each installment, except as set forth in Section 5.2.           4.3 Bonuses. The Executive shall be eligible to receive an annual formula.           4.4 Long-Term Incentive Compensation. as practicable following the third anniversary of the date of grant (the “Payment Date”). In addition, subject to his continued employment with the Company (except as set forth in Section 5.2 hereof), on the third anniversary of the date of grant, or as soon as practicable thereafter, the Executive shall be granted an additional award with an Award Percentage equal to 0.125% payable, subject to the Executive’s continued employment with the Company, as soon as practicable following the third anniversary of the date of the grant of such award.                (b) Subject to the terms and conditions set forth on Exhibit A attached hereto, the Amended and Restated Limited Liability Company Operating Agreement of 2   the Company, and the GMAC Management LLC Class C Membership Interest Plan and award agreement, the Executive shall be granted on, or as soon as practicable following, the Effective Date, directly or indirectly, 0.50% of the Class C Membership Interests of the Company. benefit plans and perquisite programs of the Company, which may be available to executives. The Executive shall be entitled to the same perquisites the           4.6 Vacation. The Executive shall be entitled to five (5) weeks of paid vacation. The Executive shall not be entitled to payment for unused vacation days upon the termination of his employment except as set forth in Section 5 below. The carry-over and accrual of vacation days shall be in           4.7 Expense Reimbursement. The Executive shall be entitled to receive or Due to Death or Disability. If: (i) the Executive’s employment terminates due to his death; (ii) the Company terminates the Executive’s employment with the Company for Cause (as defined below); (iii) the Company terminates the Executive’s employment with the Company due to the Executive’s Disability (as defined below); or (iv) the Executive terminates his employment without Good Reason (as defined below) the Executive or the Executive’s legal representatives benefit plans;                (c) payment for accrued unused vacation days, payable in 3                  (d) expenses reimbursable under Section 4.6 above incurred but not yet reimbursed to the Executive to the date of termination. in good faith. Reason. Company terminates the 4   Executive’s employment without Cause, and upon execution without revocation of a valid release agreement substantially in the form attached hereto as Exhibit B (except that the Company shall, in its sole discretion, have the right to amend the release agreement to take into account changes in law effective subsequent to the Effective Date), the Executive shall receive the following incremental severance payments set forth in this Section 5.2 (in addition to the payments upon termination specified in Section 5.1):                (a) continued payment of any unpaid installments of the Retention Bonus, if any (the sum of the unpaid installments, the “Unpaid Retention Bonus”);                (b) an amount equal to the excess of (x) the product of (1) the Severance Multiplier (as defined below) multiplied by (2) the Executive’s Base Salary over (y) the Unpaid Retention Bonus, such amount payable in equal monthly following such termination of employment equal to the Severance Multiplier; employees; period; and                (f) reimbursement of the employer portion of the cost (consistent with the Company’s policy for active employees) of continuation coverage of Act of 1985, as amended (“COBRA”) for a number of months equal to the lesser of (x) the Severance Multiple and (y) eighteen (18), to the extent the Executive elects such continuation coverage and is eligible for such coverage and subject to the terms of the plan and the law. Notwithstanding the 5        For purposes of this Agreement, (x) the “Severance Multiplier” shall equal Section 6.           5.3 Continued Employment Beyond the Expiration of the Term. Unless the Parties otherwise agree in writing, continuation of the Executive’s employment either the Executive or the Company; provided that the provisions of hereunder. mitigation or offset.           5.6 Nondisparagement. The Executive agrees that he will not at any applicable 6   law, rules or regulations, or (b) disclosing information concerning the Executive or the termination of Executive’s employment to officers of the           6.1 Confidentiality. (a) During the course of the Executive’s employment by the Company (prior to and during the Term), the Executive has had and will have access to certain trade secrets and confidential information relating to the Company and its subsidiaries (the “Protected Parties”) which is and/or 7   to advance the Executive’s tax, financial and other personal planning (each an defined in Section 6.3 hereof), as well as all customer lists, specific customer subsidiaries all copies and embodiments, in whatever form, of all Confidential Information in the Executive’s possession or within his control (including, but by the Company, the Executive will provide the Company with written confirmation twelve (12) months following the termination of the Executive’s employment for any reason, the Executive shall not (a) directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (x) any party who is a customer of the Company or its subsidiaries, who was a customer of the Company prior to the date the Executive’s employment terminates or who is a prospective customer that has been identified and targeted by the Company or its interfere with any agreement 8   or contract between the Company or any subsidiary and such supplier or (b) directly or indirectly solicit or attempt to solicit any employee of the a similar relationship with the Executive, or any other person or any entity or hire any employee or Former Employee, provided, however, that Current Employees and Former Employees do not include the Executive’s personal assistant(s) or his administrative support personnel. Subsidiaries. employment with the 9   possession or control. Section 5.2. executive officers.           9.1 Notices. Any notice or other communication required or which may deemed given when so delivered personally, telegraphed, 10   the date of mailing or one (1) day after overnight mail, as follows: Mail Drop 482-B09-B11     Detroit, MI 48265     Attention: General Counsel     Telephone: (313) 665-6128     Fax: (313) 665-6189               With copies to:       Attention:   Ronald Richman                   and       NY 10171     Attention:   Lenard Tessler     in the Company’s records and with copies to:               Michael A. Nemeroff, Esq.     Vedder, Price, Kaufman & Kammholz, P.C.     222 North LaSalle Street     Chicago, IL 60601     Telephone:   (312) 609-7500                 and                   Stewart Reifler, Esq.     Vedder, Price, Kaufman & Kammholz, P.C.     805 Third Avenue     New York, NY 10022 11                 Telephone:   (212) 407-7700     Fax:   (212) 407-7799 with the laws of the State of New York applicable to agreements made and not to enforced in or by such courts. In addition, the parties agree to waive trial by jury. the Company. 12   the same instrument. contained herein. withholding taxes. termination under Section 5 hereof will result in additional tax or interest to the Executive under Section 409A, he will not be entitled to receive such payments until the date which is six (6) months after the termination of the Executive’s employment for any reason, other than as a result of the Executive’s death or disability (as such term is defined in Section 409A). In addition, if any provision of this Agreement would subject the Executive to any additional tax or interest under Section 409A, then the Company shall reform such provision; provided that the Company shall (x) maintain, to the maximum extent the Executive to such additional tax or interest and (y) not incur any additional compensation expense as a result of such reformation. 13   mentioned.                   EXECUTIVE                                 Name: Eric Feldstein                       GMAC LLC                       By:                           Name:         Title:         Exhibit A Equity Interest Term Sheet       Term   Provision Equity   The Executive will be granted restricted stock in a corporation (the “Management Corporation”) that holds a profits interest in GMAC, LLC (“GMAC”). As of the Closing Date (as defined below), GMAC will issue profits interests in the form of units to the Management Corporation representing an interest in the operating profits and realized appreciation of GMAC above the value of GMAC as of the Closing Date (derived based on the purchase price of the equity interest purchased in connection with the acquisition) plus a 10% preferred annual return to the Investors (as defined below) on their common equity beginning on the Closing Date, compounded annually (the “Hurdle”).           With respect to distributions to the Investors (including distributions of preferred equity in lieu of cash following the Closing Date) on their common equity, a portion of such distributions equal to the amount of federal, state and local income taxes (net of all tax credits) that would be payable by a New York City individual resident on all the taxable income allocated to all Investors for all periods on account of the common equity, as determined by the Board (as defined below) in good faith, shall be deemed a Tax Distribution and shall not be applied to the Hurdle, and the amount of such distributions in excess of the Tax Distribution, if any, shall be applied to the Hurdle.           In connection with the grant of the restricted stock, the Executive will make an 83(b) election. GMAC represents that the fair market value of the restricted stock is $5,563.0569 per share. GMAC will provide the Executive with a gross-up payment with respect to all income taxes (including Medicare, but not social security) required to be paid by the Executive as a result of the 83(b) election.       Vesting   Fifty percent of the restricted shares shall vest based on the Executive’s continued employment (the “Time-Based Shares”) and fifty percent of the restricted shares shall vest based on the achievement of performance targets (the “Performance-Based Shares”), as more fully described below.           The Time-Based Shares shall vest with respect to 20% of the Time-Based Shares on the first anniversary of the date of grant and with respect to an additional 20% on each of the next four anniversaries thereafter, subject to the Executive’s continued employment with GMAC and its affiliates.           The Performance-Based Shares shall vest with respect to twenty percent (20%) of the Performance-Based Shares on December 31, 2007 and with respect to an additional twenty percent (20%) on each of the next four anniversaries of such date (December 31, 2007 and each such anniversary, a “Performance Vesting Date”), subject to GMAC’s attainment of performance targets established by the Board for the calendar year in which such Performance Vesting Date occurs (the “Performance Targets”) and subject to the Executive remaining employed by GMAC or its subsidiaries on each applicable Performance Vesting Date; provided, however, that in the event GMAC does not attain the Performance Target for an applicable calendar year (a “Missed Year”), but achieves the Performance Targets with respect to a subsequent calendar year, the restricted shares that did not vest with respect to the Missed Year shall vest as of the Performance Vesting Date applicable to the subsequent calendar year in which the Performance Targets are achieved. All Performance-Based Shares that have not vested as of the December 31, 2011, shall terminate.         below) or an IPO of an affiliate of GMAC in which, as of the date of either of such event, the Hurdle has been achieved, the Time-Based Shares that have not vested (the “Accelerated Shares”), to the extent not previously forfeited, shall immediately vest; provided, however, that if the Executive is terminated (x) by GMAC for Cause (other than due to death or disability) or (y) by the Executive without Good Reason (other than due to death or disability), prior to the date the Accelerated Shares would otherwise have vested had no IPO or Change in Control occurred, the Executive shall forfeit the           Term   Provision     Accelerated Shares without the payment of consideration.       Termination of Employment   Upon a termination of employment, all unvested restricted shares (and the underlying profits interests) will be forfeited; provided, however, that if the Executive is terminated (x) by GMAC without Cause (other than due to death or disability) or (y) by the Executive for Good Reason (other than due to death or disability), the Time-Based Shares (and the underlying profits interests) that would have vested on the next anniversary of the date of grant shall immediately vest. In addition, if the Executive is terminated (x) by GMAC for Cause (other than due to death or disability) or (y) by the Executive without Good Reason (other than due to death or disability), in each case, prior to the third anniversary of the Closing Date, all the shares (and the underlying profits interests), whether vested or unvested, will be forfeited.       Call/Put Rights   At any time within 120 days following the Executive’s termination of employment with GMAC for any reason, GMAC shall have the right, but not the obligation, to cause the Executive to sell, or the Management Corporation to redeem, the shares. The purchase price for the shares shall equal the fair market value of the shares, as determined in good faith by the Board and pursuant to a consistent methodology (the “Purchase Price”). If GMAC does not exercise its right to repurchase or cause the Management Corporation to redeem, the Investors shall have the right, for a period of 30 calendar days after the expiration of the applicable 120-day period set forth above, to repurchase the shares, upon the terms and conditions set forth above.           To the extent that (i) the Executive is terminated after the fifth anniversary of the Closing Date, (ii) GMAC or the Investors exercise their right to call the shares or cause the redemption of the shares, (iii) within 12 months following such termination of employment, there is (x) an IPO of an affiliate of GMAC or (y) a Change in Control and (iv) the imputed price per share in connection with such IPO or the imputed purchase price per share in connection with such Change in Control (either such price, the “IPO/CIC Price”) exceeds the Purchase Price, then the Executive shall be entitled to an additional cash payment equal to the product of (x) the excess of the IPO/CIC Price over the Purchase Price multiplied by (y) the number of shares subject to the call right.           If there has not been an IPO or Change in Control, an Executive (or his estate or legal guardian) shall have the right to sell the shares to GMAC, and, if offered, GMAC or the Investors shall buy such shares or cause the Management Corporation to redeem such shares (i) upon the death of the Executive for a period of one year following the Executive’s death, (ii) two years following a termination of the Executive’s employment due to Disability for a period of one year following the second anniversary of such termination or (iii) ten years following the Closing Date for a period of 150 days following such ten year anniversary. The purchase price per share shall be the fair market value of a share as determined in good faith by the Board and pursuant to a consistent methodology.           Upon the purchase or sale of the shares, the underlying profits interests will be forfeited.       Tax Distributions   GMAC will make tax distributions to Management Corporation in an amount necessary for Management Corporation to pay income tax on income allocated to it by GMAC. This tax distribution will be treated as an advance against future distributions payable to Management Corporation and will reduce the next distributions to Management Corporation (other than tax distributions) on a       IPO   In the event of an IPO of an affiliate of GMAC (the “IPO Company”), the shares held by the Executive will be equitably converted (based on the fair market value of the shares), as determined by the Board, into shares of the IPO Company registered in connection with such IPO and such shares shall vest in accordance with their terms, including, if any, accelerated vesting upon such IPO.       Transfer   No shares may be transferred by the Executive prior to the later to occur of (x) five years following the Closing Date and (y) two years following the IPO of the IPO Company; provided, however, that, if such IPO occurs prior to the third anniversary of the Closing Date, following the second anniversary of the IPO, the Executive may transfer his vested shares with respect to the same percentage of equity transferred by the Investors.           The shares and the underlying profits interest shall be subject to customary tag-along and drag-along rights.           Term   Provision Adjustment   In the event of any change in the capitalization of GMAC or the Management Corporation by reason of any, reorganization, recapitalization, merger, consolidation, spin-off, combination or any transaction similar to the foregoing, the Board shall make such substitution or adjustment, if any, as it deems to be equitable, to (i) the number or kind of restricted shares or underlying profits interests and/or (iii) any other affected terms of such restricted shares or underlying profits interests.       Definitions   “Board” shall mean the Board of Managers of GMAC.           “Change in Control” shall mean (1) if any person (other than an Investor) combined voting power of the then issued and outstanding securities of GMAC or business and assets of GMAC, whether by sale of assets, merger or otherwise (determined on a consolidated basis) to another person other than a transaction in which the survivor or transferee is a person controlling, controlled by, or under common control with, directly or indirectly, the Investors.           “Closing Date” shall mean the closing date of the transaction in which General Motors sells a fifty-one percent (51%) interest in GMAC.           “Investors” shall mean all members of GMAC as of the Closing Date.     Exhibit B GENERAL RELEASE      I, ___, in consideration of and subject to the terms and conditions set forth in the Employment Agreement dated as of November 30, 2006 (the “Employment Agreement”) to which this General Release is attached, and other good and valuable consideration, do hereby release and forever discharge GMAC LLC (the “Company”) and its current and former officers, directors, partners, members, shareholders, investors, employees, attorneys, agents, predecessors, successors, affiliates, assigns and legal representatives (together, the “Company Released Parties”), from any and all claims, charges, manner of actions and causes of judgments, charges, claims, and demands whatsoever which I, my heirs, executors, administrators and assigns have, or may hereafter have against the Company Released Parties arising out of or by reason of any cause, matter or thing whatsoever, whether known or unknown, from the beginning of the world to the date hereof (“Claims”) in connection with or relating to, my employment or termination of employment with the Company and its subsidiaries, the Employment Agreement, all employment-related matters arising under any federal, state or local statute, rule or regulation or principle of contract law or common law and any claims of employment discrimination, unlawful harassment or retaliation claims and claims arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., the Fair Labor Standards Act (to the extent allowed by law), 29 U.S.C. § 201 et seq., Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq., the Reconstruction Era Civil Rights Act, 42 U.S.C. § 1981 et seq., the Americans with Disabilities Act of 1993, 42 U.S.C. § 12900 et seq., the Family and Medical Leave Act of 1990 (to the extent allowed by law), 42 U.S.C. § 12101, et seq., the New York State Human Rights Law, N.Y. Exec. Law § 290 et seq., the New York State Labor Law, N.Y. Labor Law § 1 et seq., and the New York City Human Rights Law, N.Y.C. Admin. Code § 8-107 et seq., provided, that this General Release shall not constitute a release of any Claims that arise from a breach of Sections 5, 8 and/or 9 of the Employment Agreement.      I acknowledge that I have been advised to consult with legal counsel. I acknowledge that I have been provided with the opportunity to review and consider this General Release for twenty-one (21) days from the date it was provided to me. If I elect to sign before the expiration of the twenty-one (21) days, I acknowledge that I will have chosen, of my own free will without any duress, to waive my right to the full twenty-one (21) day period. I understand that I may revoke this General Release within seven (7) days after my execution by sending a written notice of revocation to ___ at the Company at ___, received within the seven-day revocation period.      I acknowledge that I have not relied on any representations or statements not set forth in the Employment Agreement or in this General Release. Unless otherwise publicly-filed by the Company, I will not disclose the contents or substance of this General Release to any third parties, other than my attorneys, accountants, or as required by law, and I will instruct each of the foregoing not to disclose the same. I am signing this General Release knowingly, voluntarily and with full understanding of its terms and effects.      This General Release will be governed by and construed in accordance with the laws of the State of [New York]. If any provision in this General Release is held invalid or     unenforceable for any reason, the remaining provisions shall be construed as if the invalid or unenforceable provision had not been included.      In witness hereof, I have executed this General Release this ___ day of ___, 200_.                 [Executive]      

Title: [California]Received a subpoena to produce documents to someone I never rented to Question:A few weeks ago I received a call from an attorney's office asking about a person who had rented my home. I told them that the name didn't ring a bell and they likely had the wrong person. A few days later they called me back and stated that their client wanted to move forward a subpoena for information about a rental property. They stated the client had financial records proving that they had done business with me or something to that effect. I tried to explain again that I never rented or did business with that individual but it wasn't much use so I told them to do what they needed to do. Fast forward to this morning I finally get served the subpoena ("for production of business records") and it's requesting: > any and all documents regarding rental/lease at property [my home address] by plaintiff including but not limited to application, payment history, complaints, collections, correspondence, and litigation(s). I've only lived in my home a few years and it has not been rented out. I do not recognize the name of the plaintiff. The defendant/respondent listed in the subpoena papers is the name of an apartment complex/company. Does this mean they're trying to prove they lived somewhere during some period of time for another case and want me to testify/produce documents on behave of the plaintiff? The location where I'm supposed to deliver these documents is some legal photocopy place. Am I supposed to show up empty handed? Should I consult an attorney to try and get this sorted out? I'm weary of dealing with the plaintiff's attorney as I'm sure they only have their best interest and not mine. What type of attorney or where's a good place to start to find one that could deal with these types of matters? Answer #1: You can pay a lawyer to send a response for the subpoena stating you have no such documentation. Maybe the previous owner rented your place out before you purchased it? Answer #2: If you don't have documents, you can't produce them, obviously. You should produce a document reflecting that, however. Getting an attorney wouldn't be a bad idea.

Exhibit 10.7 FORM OF RESTRICTED STOCK AWARD AGREEMENT – EXECUTIVE OFFICERS GUARANTY FEDERAL BANCSHARES, INC. 2 Name of Participant: Date of Award: Total Shares of Restricted Stock: This Agreement evidences the grant by Guaranty Federal Bancshares, Inc. (the “Company”) of shares of restricted Common Stock ("Restricted Shares") to the “Participant” named above pursuant to the Guaranty Federal Bancshares, Inc. 2010 Equity Plan (the “Plan”). The terms and provisions of the Plan are hereby incorporated into this Agreement by reference. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Plan. 1.Vesting.The Restricted Shares shall vest in accordance with the following vesting schedule: Period of Service from Date of Award Vesting Percentage Less than 2 years 0% 2 years 100% All further vesting shall cease upon Participant's termination of service with the Company and its Subsidiaries and any non-vested Restricted Shares shall be forfeited upon such termination. 2.Acceleration of Vesting Upon Death or Disability or Retirement. Notwithstanding paragraph 1 to the contrary, the Restricted Shares shall become 100% vested upon Participant’s termination of service with the Company and its Subsidiaries due to death or disability (as defined in Section 22(e)(3) of the Internal Revenue Code). 3.Issuance of Restricted Shares. Restricted Shares will be issued in a nominee account with Participant being named the beneficial owner, except that the nominee shall be instructed to follow the sale and transfer requirements set forth in the Plan and this Award Agreement. When the prohibited sale and transfer restrictions lapse with respect to the Restricted Shares the Company shall prepare and deliver to Participant a stock certificate for the shares represented by the Restricted Shares. Notwithstanding the foregoing, if the Company requires reimbursement of any tax required by law to be withheld with respect to the delivery of shares pursuant to this Award, the Secretary of the Company shall not deliver such shares until the required payment is made. 4.Voting and Other Rights of Restricted Shares. Upon the issuance of the Restricted Shares, Participant shall have all of the rights of a stockholder of the Company, including the right to receive dividends and to vote the Restricted Shares. 5.3-Year Holding Period.By accepting the Restricted Shares under this Agreement, Participant agrees not to sell, transfer or otherwise dispose of such shares for a period of three (3) years from the date of this Award Agreement.Any purported transaction that violates this paragraph shall be null and void ab initio.Exceptions to such restriction on sale, transfer or disposition may be granted for hardship circumstances to be determined by the Committee. 6.Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach. 7.Participant’s Undertaking. Participant hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or affect one or more of the obligations or restrictions imposed on Participant pursuant to the express provisions of this Agreement and the Plan. Participant further agrees that if he or she is or becomes an insider of the Company for purposes of any applicable securities or other law or the Company’s insider trading policy, then the disposal of shares acquired pursuant to this Agreement shall be subject to restrictions under such law or policy. 8.Modification of Rights. The rights of Participant under this Agreement are subject to modification and termination in certain events as provided herein and/or the Plan. 9.Governing Law. This Agreement shall be governed under the laws of the State of Missouri without regard to the principles of conflicts of laws. 10.Entire Agreement/Severability. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. If any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date of this Award agreement. This Award agreement may be executed in counterparts. GUARANTY FEDERAL BANCSHARES, INC. By: Title: PARTICIPANT

Title: My first traffic stop has left me charged with a few felonies, including 'Impersonating an officer' (CT) Question:I just recently moved to a new town in the middle of nowhere after having lived around cities my whole life. It's a beautiful place, nice change of scenery, couldn't complain. However, I'm very quickly learning that the police around here are not so much in the "there's bigger fish to fry" mindset that cops in a city where dismembered limbs occasionally turn up are. So, my car is a 2005 Ford Crown Victoria Police Interceptor. I bought the car about a year ago because it was cheap, reliable, and has plenty of space, which is good because I enjoy backpacking, and not many vehicles short of a crew pickup can haul 5 guys and their gear comfortably for two hours. Anyway, I had bought it from another guy who had bought it from an auction in VT. It used to be a state police car up there (the rust certainly confirms that), and was originally painted forest green like all the other VT State Police cars. The last owner, to help avoid confusion, plastidipped the entire car which made it a horrible peely-gray color that looks like someone had tried to spray paint it with dollar store matte spray paint. In addition to this, I painted my pushbar silver and added some fog lights to differentiate even further. I didn't want to just take it off because it left holes, and I'm 18 so naturally my friends and I all think it looks cool. I was stopped while leaving town to get on the highway, and head back down to my old hometown to visit with friends, being that it's Christmas Break. The cop had followed me from the gas station, and I didn't break any other traffic violations to my knowledge. Upon being stopped I reached into my center console to grab my registration and insurance, which I'm now finding out wasn't a good idea. The officer knocked on my passenger side window, and I rolled it down. He seemed a bit uneasy and the first thing he said was "Are you a police officer?". I was confused, and gave him a bit of a sideways glance, but answered no. He then asked for my license and registration, and as I began to get it out of the envelope he asked if there were any weapons in the vehicle. I wasn't really sure if there was or not because like I said, I go backpacking a lot, and at all times keep at least a shovel, hatchet, and machete in my car, as well as plenty of other tools/knives/etc. So, I paused for a bit to think, followed by a bit of an "uhhhhhh" before answering "maybe?". This had stopped me as I was handing over my registration and insurance, so he asked for it again. I reached over for it again, fumbling around a bit, and I was told to put my hands on the steering wheel. I did as he said, and he asked me again if there were any weapons in the vehicle, I told him again that I wasn't entirely sure, and he asked me to step out of the vehicle. Once I got out, he asked if it would be okay to detain me for his own safety and I told him that wasn't a problem, and that I understood why he was doing so. He asked if I would be comfortable with him searching my car. I told him no, not really. I had just finished several weeks of moving, and there was still a lot of stuff in my car that I wasn't looking forward to organising again. At this point I realised that at least another cruiser had pulled up behind the first officer's. He asked me a few basic questions, where I was from, where I was going, et cetera and brought to my attention the specific reason that he'd pulled me over. My girlfriend had given me a bumper sticker (about a year ago) that read in white letters 'UNMARKED POLICE CAR'. He explained that he believed that this fit the criteria for 'impersonating a police officer' so he stopped me. Another officer came over, and started talking to me. Nothing important really, almost just regular smalltalk, except that I was handcuffed. It was actually kind of pleasant, he seemed like a nice guy, asked how I liked the area, school, etc. Then the first officer came back from the front of my car holding a knife that he found in the center console. I usually carried it for backpacking and general excursions into the woods because it was over 4" and was a fixed blade, which is just uncomfortable to carry around in most cases anyway. I stood around for 5-10 more minutes while they continued to search further. They turned up a half a bottle of alcohol, and less than a gram of marijuana. I was then escorted to the first officer's cruiser (I got to ride shotgun! woo!) where I was placed under arrest. At some point prior, and again now, I was read my rights. As I was sitting there, admiring the much nicer looking crown vic's interior, I noticed them open up my trunk. First they went for my backpacking bag, finding nothing significant (undoing my sleeping bag though :( that thing's a pain to put back). Then they started pulling things out of a box that was left over from moving. It was basically just scrap, I like to tinker, so it was things like a DVD player case, some old motherboards, electric motors, and unfortunately for me, bb gun parts. I'm certain that none of them are functional, else they wouldn't be in my box of scrap, but they pulled out two or three guns that looked more or less intact and told me that I was in possession of facsimile firearms. They also brought a piece of barrel that I had cut off to make repairs, acknowledging that this section of barrel had an orange tip (It was far more than just the orange tip, it was almost all of the barrel assembly). Anyway, I was brought back to the state trooper barracks, and processed. I have had no past incidents with the police in any manner, I had never even received so much as a parking ticket. Regardless, I'm now being charged with 1. Impersonating a police officer 2. Possession of alcohol by a minor 3. Possession of less than a half ounce of marijuana 4. Possession of a weapon in a vehicle 5. Sale and possession of facsimile firearms. I'm really more confused about how I got into this mess than anything else, but I really don't have too much money to spare for a lawyer, but three of those offences are Class D Felonies. I really don't want to go to prison obviously, and I certainly would like to avoid any serious fines because again, I don't have that much money and I don't want to burden my family with something that's my responsibility. Any advice about what I should do next, the severity of my situation, and what mistakes I made that I should have avoided (other than having marijuana and alcohol, I *am* in college after all, not that that's going to do me well as an excuse). Thanks in advance, and wish me luck :( Topic: Searches and Seizures Answer #1: For god's sake get off Reddit and get a lawyer *today*. Don't talk to the police any more, let your lawyer handle it.Answer #2: The only question I can answer is the one where you asked what mistake you made that you could avoid in the future. I wouldn't drive around an ex-police car with a bumper sticker that says "unmarked police car." Good luck. Answer #3: you talk to the police to much. The answer when they ask you is "no I don't have any weapons" they are talking about guns. This cop is an extreme asshole for trying to get you for impersonating an officer, but you WERE acting weird. The sad state of affairs is that you can't really talk to police.Answer #4: You need a lawyer at this point. If you need help finding one, contact your state bar association. A lawyer will be best able to walk you through this.Answer #5: You said you're in school, no? Your school may have a legal aid type service for students, especially if there's a law school associated with it. Worth asking about. Otherwise yeah, start looking around. And you may have to bring your parents in on this one- with the right judge, right lawyer, right tie, haircut, and demeanor this might be a "holy shit, that was close" moment. Or it might be a "my whole life changed right there" experience. Pay what you need to so that it's the first.

EXHIBIT 32.1 CERTIFICATIONS PURSUANT TO SECTION -OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with the Annual Report of Trex Acquisition Corp, a Nevada corporation (the “Company”), on Form 10-K for the year ended June 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), Warren Gilbert, President and Chief Executive Officer of the Company does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge: The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: September 30, 2014 By: /s/ Warren Gilbert Name: Warren Gilbert Title: President, Chief Executive Officer/Principal Financial Officer [A signed original of this written statement required by Section 906 has been provided to Trex Acquisition Corp and will be retained by Trex Acquisition Corp and furnished to the Securities and Exchange Commission or its staff upon request.]

Title: Questions regarding child custody Question:I’m going to seek an attorney, but i thought i might throw my situation out there and see what others think. I live in Oregon. I (18/F) am currently 15 weeks pregnant. I recently left the father(16/M) after he failed a drug test for methamphetamine. We started our relationship prior to me turning 18, and with his parents consent he lived with me due to having a VERY unstable home life(never having a place to live, if they did it was trashed and rodent infested). He lived with me the entire relationship up until i drug tested him. He is now threatening to charge me with Statutory rape, as i do not believe he should be involved in my child’s life, due to his drug abuse, and lack of effort in anything, school, job, etc. He has a history of not going to school/expelled for physical violence, run ins with the law(being in juvenile as well), and drug abuse. His father is a registered SO and if in prison for beating his mother in-front of children. And has been in and out of prison throughout his whole life. His mother is a drug dealer, and is unstable financially wise. They live in a two bedroom house with 10 people, but i believe we’re evicted this past week. The parents have 7 children, only two have graduated, the rest including the youngest, who is 11, do not attend school because they aren’t forced too. Two of the older brothers have drug addiction problems regarding meth as well. I, have no record, never even had detention, never had a ticket, and have a 1300/month income and own a 3 bedroom house. (My father took his life and i inherited the house as i am his only child). The fathers family has a really bad reputation in my county, and with police. And i have photo evidence and video evidence of him tweaking, the drug test, meth(which he kept in his wallet behind the ultrasound photo), pipe and a home made meth bong made out of a baby bottle. I do not plan on having him on the birth certificate, and the whole family is currently blocked on social media due to harassment and lies. I already plan on informing staff and security while I’m in labor to not allow them in if they attempt to come to the hospital. My question is, should i be concerned that he could use statutory rape against me in court, would that increase his chances of winning the custody battle? What questions should i be prepared for, and have ready for the attorney? I have never had a legal issue before, and am very new to all of this, so any advice, thoughts are appreciated. thank you in advance, And i apologize if this is all over the place, my brain is scattered trying to process this all. Answer #1: While the age of consent in Oregon is 18, they have a “Romeo & Juliet” exception as long as both parties are over the age of 14 and the difference between the two parties ages is no more than three years. So you can tell him to pound (or smoke) sand. Once the child is born, either of you can seek to legally establish his paternity of the child. This would entitle you (as custodial parent) to child support, but also give him the right to seek some level of visitation or custody, so it would be good to speak to a lawyer before making that decision.

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 20, 2011 Kangye International Holdings, Inc. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) Nevada 000-54040 27-3819708 (State or other jurisdiction of incorporation or organization) (Commission File Number) (IRS Employer Identification No.) Xinghuacun B5 Yijing Garden, Luohu District Shenzhen, Guangdong, China N/A (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (86) 769 2614-9999 Europa Acquisition IV, Inc. (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. On May 20, 2011, Europa Acquisition IV, Inc., (the “Company”) filed a Certificate of Amendment to its Articles of Incorporation with the State of Nevada changing the Company’s name to Kangye International Holdings, Inc. andincreasing the number of authorized common stock shares from 100,000,000 to 1,000,000,000, Par Value $0.001. Item9.01Financial Statement and Exhibits. (d) EXHIBITS Exhibit 3.1.Certificate of Amendment filed with the State of Nevada 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Kangye International Holdings, Inc. By:/s/ Siwei Wang Name: Siwei Wang Title: President and Chief Executive Officer Dated: May 26, 2010 3

Name: Commission Regulation (EEC) No 37/91 of 8 January 1991 fixing the import levies on cereals and on wheat or rye flour, groats and meal Type: Regulation Date Published: nan 9 . 1 . 91 Official Journal of the European Communities No L 6/ 1 I (Acts whose publication is obligatory) COMMISSION REGULATION (EEC) No 37/91 of 8 January 1991 fixing the import levies on cereals and on wheat or rye flour, groats and meal THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 2727/75 of 29 October 1975 on the common organization of the market in cereals ('), as last amended by Regulation (EEC) NQ 3577/90 (2), and in particular Article 13 (5) thereof, Having regard to Council Regulation (EEC) No 1676/85 of 11 June 1985 on the value of the unit of account and the exchange rates to be applied for the purposes of the common agricultural policy (3), as last amended by Regu ­ lation (EEC) No 2205/90 (4), and in particular Article 3 thereof, Having regard to the opinion of the Monetary Committee, Whereas the import levies on cereals, wheat and rye flour, and wheat groats and meal were fixed by Commission Regulation (EEC) No 3844/90 (*) and subsequent amen ­ ding Regulations ; Whereas, if the levy system is to operate normally, levies should be calculated on the following basis : ” in the case of currencies which are maintained in rela ­ tion to each other at any given moment within a band of 2,25 %, a rate of exchange based on their central rate, multiplied by the corrective factor provided for in the last paragraph of Article 3 ( 1 ) of Regulation (EEC) No 1676/85, ” for the other currencies, an exchange rate based on an average of the ecu rates published in the Official Journal of the European Communities, C series, over a period to be determined, multiplied by the coeffi ­ cient referred to in the preceding indent ; Whereas these exchange rates being those recorded on 7 January 1991 ; Whereas the aforesaid corrective factor affects the entire calculation basis for the levies, including the equivalence coefficients ; Whereas it follows from applying the detailed rules contained in Regulation (EEC) No 3844/90 to today's offer prices and quotations known to the Commission that the levies at present in force should be altered to the amounts set out in the Annex hereto, HAS ADOPTED THIS REGULATION : .Article 1 The import levies to be charged on products listed in Article 1 (a), (b) and (c) of Regulation (EEC) No 2727/75 shall be as set out in the Annex hereto . Article 2 This Regulation shall enter into force on 9 January 1991 . This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 8 January 1991 . For the Commission Ray MAC SHARRY Member of the Commission ( ») OJ No L 281 , 1 . 11 . 1975, p . 1 . 0 OJ No L 353, 17. 12. 1990, p. 23 . (3) OJ No L 164, 24. 6. 1985, p. 1 . 0 OJ No L 201 , 31 . 7. 1990, p . 9 . 0 OJ No L 367, 29. 12 . 1990, p. 13 . No L 6/2 Official Journal of the European Communities 9 . 1 . 91 ANNEX to the Commission Regulation of 8 January 1991 fixing the import levies on cereals and on wheat or rye flour, groats and meal (ECU/tonne) CN code Levies Third country 0709 90 60 140,09 (2) (3) 0712 90 19 140,09 (2) (3) 1001 10 10 196,97 Of5) 1001 10 90 196,97 0 0 1001 90 91 190,15 1001 90 99 190,15 1002 00 00 155,72 0 1003 00 10 147,86 1003 00 90 147,86 1004 00 10 145,39 1004 00 90 145,39 1005 10 90 140,09 0 0 1005 90 00 140,09 0 0 1007 00 90 147,20 (4) 1008 10 00 59,71 1008 20 00 122,98 (4) 1008 30 00 70,59 0 1008 90 10 . 0 1008 90 90 70,59 1101 00 00 280,23 0 1102 10 00 232,03 0 1103 11 10 318,69 (8) 1103 1190 301,56 (8) (') Where durum wheat originating in Morocco is transported directly from that country to the Community, the levy is reduced by ECU 0,60/tonne . (2) In accordance with Regulation (EEC) No 715/90 the levies are not applied to products imported directly into the French overseas departments, originating in the African, Caribbean and Pacific States or in the 'overseas countries and territories'. (3) Where maize originating in the ACP or OCT is imported into the Community the levy is reduced by ECU 1,81 /tonne . (4) Where millet and sorghum originating in the ACP or OCT is imported into the Community the levy is applied in accordance with Regulation (EEC) No 715/90. (*) Where durum wheat and canary seed produced in Turkey are transported directly from that country to the Community, the levy is reduced by ECU 0,60/tonne. (6) The import levy charged on rye produced in Turkey and transported directly from that country to the Commu ­ nity is laid down in Council Regulation (EEC) No 1180/77 (OJ No L 142, 9. 6. 1977, p. 10) and Commission Regulation (EEC) No 2622/71 (OJ No L 271 , 10 . 12. 1971 , p. 22). 0 The levy applicable to rye shall be charged on imports of the product falling within CN code 1008 90 10 (triti ­ cale). (8) On importation into Portugal the levy is increased by the amount specified in Article 2 (2) of Regulation (EEC) No 3808/90.

Exhibit 10.4   SECURITIES.   Principal Amount: $36,750.00 Issue Date: May 30, 2019 Purchase Price: $35,000.00     CONVERTIBLE PROMISSORY NOTE   FOR VALUE RECEIVED, RemSleep Holdings, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Armada Investment Fund LLC, a Delaware limited liability company, or registered assigns (the “Holder”) the sum of $36,750.00 together with any interest as set forth herein, on February 29, 2020 (the “Maturity Date”), and to pay interest on the unpaid                 events) shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) for the Common Stock during the previous twenty (20) Trading Day period before the Issue Date of this Note, or (ii) the Variable Conversion Price (as defined herein). The “Variable Conversion Price” shall mean, 55% any date, the lowest traded price of the Common Stock on the OTCQB, OTCQX, Pink such security, the lowest traded price of the such security on the principal or, if no lowest traded price of such security is available in any of the foregoing manners, the average of the lowest prices of any market makers for associated with any such issuance. Holder shall be entitled to deduct $500.00 from the conversion amount in each Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion.   2     time, initially 14,000,000) (the “Reserved Amount”). The Reserved Amount shall       hereunder).     3           4     Purchase Agreement).         share exchanges.   5         6               occur:       7     from the Holder.     appointed.               8       Holder.     9       ARTICLE IV. MISCELLANEOUS     communications shall be:     RemSleep Holdings, Inc. 637 N. Orange Ave., Suite 609 Orlando, Florida 32789 Attn: Tom J. Wood, Chief Executive Officer     7703 Springfield Lake Drive   supplemented.   10     investing in securities.   Borrower.   attorneys’ fees.   permitted by law.   11         its duly authorized officer this on May 30, 2019   REMSLEEP HOLDINGS INC.         By: /s/ Tom J. Wood     Tom J. Wood     Chief Executive Officer     12       REMSLEEP HOLDINGS INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of May 30, 2019 (the     Transfer”).   Account Number:   attachment hereto:   [Insert Name and Address of Holder Here]   Notes: _____________   Amount of Principal Balance due remaining under the Note     ARMADA INVESTMENT FUND LLC             By:     Name: Gabriel Berkowitz     Title: Managing Member     Date:       13    

Name: COMMISSION REGULATION (EC) No 900/97 of 21 May 1997 fixing the representative prices and the additional import duties for molasses in the sugar sector Type: Regulation Date Published: nan

8. Agreement between the EC and Paraguay on certain aspects of air services (vote)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT This amended and restated employment agreement (the “Agreement”), dated as of September 1, 2011, by and between Bergio International, Inc., a corporation incorporated under the laws of the State of Delaware, having an address at 12 Daniel Road E., Fairfield, New Jersey 07004 (“the Company”), and Berge Abajian (“Abajian” and together with the Company, collectively, the “Parties” and each a “Party”), amends and restates that certain employment agreement, dated February 28, 2010 (the “Original Employment Agreement”), entered into by and between the Company and Abajian. RECITALS: WHEREAS, Abajian is the founder of the Company and has extensive knowledge and skills relating to the design, manufacture and merchandising of diamond jewelry; WHEREAS, the Parties have previously entered into the Original Employment Agreement and Abajian is currently the Chief Executive Officer (“CEO”) of the Company pursuant to the terms and conditions thereof; best interest of Company to continue to avail itself of the services of Abajian WHEREAS, Abajian desires to provide his services in accordance with the mutual covenants and agreements contained herein regarding Abajian’s continued involvement and employment with the Company as CEO and as a member of the contained, and other good and valuable consideration the receipt and adequacy of 1.           Retention of Services.  The Company hereby retains the services of Abajian and Abajian hereby accepts such employment upon the terms and conditions of this Agreement.  This Agreement shall amend, restate and replace, in its entirety, the Original Employment Agreement.  It is expressly understood that all services performed pursuant hereto shall be rendered personally by Abajian. 2.           Term.  The term of this Agreement shall commence retroactively on February 28, 2010 and shall continue for a five (5) year period until February 28, 2015 (the “Term”).  Thereafter, this Agreement shall be extended automatically for successive periods of one (1) year each upon the same terms and conditions herein unless this contract is otherwise terminated by notice of the Board or Abajian.  However, Abajian can terminate this Agreement at any time by giving a minimum of six (6) months written notice to the Board of Directors.   1   3.           Duties: Efforts.   Abajian shall at all times serve as the CEO of the Company and Chairman of the Board.  As such Abajian shall be involved in all aspects of the day to day business operations of the Company, including, but not limited to all marketing, sales, manufacturing, distribution and creative design of diamond jewelry and other jewelry products manufactured and distributed by the Company.  Abajian shall also be responsible for determining necessary strategic partnerships and investment opportunities relating to the acquisition of other jewelry design manufactures, both nationally and internationally and shall have wide discretion in implementing the vision, strategic goals and operational mission of the Company.  Abajian shall, on a full time and exclusive basis, devote all of his business time, attention and energies to the operations of the Company and other duties as required by this Agreement, and shall use his best efforts to advance the best interests of the Company. 4.           Compensation. (a)           Base Salary.  Abajian shall be entitled to a base salary (the “Base Salary”) in the amount of $175,000 per annum for year one (1) beginning on February 28, 2010.  The Base Salary shall be paid in 26 equal installments and paid bi-weekly.  Abajian’s Base Salary shall increase at a rate of three percent (3%) per annum for each consecutive year after 2010 or as at such rates a may be approved from time to time by the Board.  Upon written request of Abajian (each a “Request”), the Company shall pay all or a portion of the Base Salary owed to Abajian at the time of the Request in the form of the Company’s restricted common stock or, if available, S-8 common stock (each a “Common Stock Payment”).  The number of shares to be issued to Abajian as the Common Stock Payment shall equal the dollar amount of the Base Salary owed to Abajian at the time of the Request. (b)           Annual Bonus.  In addition to the Base Salary, Abajian shall be paid an annual bonus (the “Annual Bonus”) of one half (1/2%) percent based upon the net profit before taxes (“net profits”) of the Company.  For purposes of this Agreement, net profits will be Company profits before any deduction or reduction of federal income taxes, or taxes on income of the Company due to the States of New Jersey and Delaware. (c)           Employee Benefit Plans.  If and to the extent Abajian is eligible, Abajian shall be eligible to participate, in accordance with the respective the general benefit of its senior executives, subject to the respective terms and conditions of any such plans.  The foregoing shall not, however, be construed to require the Company to establish or maintain any such plan(s), or to prevent the Company from modifying or terminating any such plan(s) once established. (d)           Vacation.  Abajian may be awarded an aggregate of up to four (4) weeks (i.e., twenty (20) business days) of vacation time each calendar year (or a pro rata number of vacation days with respect to any partial calendar year during the term hereof) as business conditions permit, which shall be scheduled so as to minimize interference with the business of the Company, it being understood that vacation time may not accumulate from year to year, except, however, for the carryover of two (2) weeks vacation (i.e., ten (10) business days) to be used within the first six (6) months of the successive year.       2   (e)           Expenses.  The Company shall reimburse Abajian for all reasonable business expenses incurred by Abajian for or on behalf of the Company in furtherance of the performance by Abajian of his duties hereunder, subject to and in accordance with any then applicable expense reimbursement policy of the Company, and with any such reimbursement to be subject to timely receipt by the Company of such receipts, vouchers and other verification as the Company shall reasonably require to evidence such expenses. (f)           Preferred Stock.   As of the date hereof, the Company shall issue to Abajian fifty-one (51) shares of its Series A Preferred Stock, par value $0.001 (the “Stock”).  If there is any change in the number or kind of Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization, stock split, or combination or exchange of shares; (ii) by reason of a merger, reorganization, or consolidation; (iii) by reason of a reclassification or change in par value; or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Stock, or if the value of outstanding Stock is extraordinary dividend or distribution, the number of Stock issued, or to be issued, to Abajian pursuant to this Agreement and/or the kind of Stock issued, or to be issued, to Abajian pursuant to this Agreement shall be appropriately adjusted by the Company to reflect any increase or decrease in the number of, or change in the kind or value of, issued Stock to preclude any dilution to the number or kind of Stock issued, or to be issued, to Abajian hereunder. 5.           Termination.  This Agreement shall automatically terminate upon the death of Abajian or upon the Company’s decision to termination Abajian for cause (“Termination for Cause”).  The Company shall have the right to invoke the Termination for Cause provision of this section, where it determines that Abajian has: (a)           Breached, failed or refused to comply with any of the material (b)           Refused or neglected to perform material duties under this Agreement; or (c)           Been indicted for any act of fraud, larceny, misappropriation of funds or embezzlement or for a crime other than traffic or other misdemeanors. In the case of a first or second act or omission constituting a breach of clauses (i) or (ii) above, Abajian shall receive thirty (30) days written notice of the Company’s intention to terminate this Agreement for cause pursuant to this Section 5, and indicate the conduct constituting such cause.  If Abajian cures said conduct during such thirty (30) days, the notice of termination shall be revoked and Abajian’s employment under this Agreement shall continue.  Further breaches shall not be entitled to notice nor to an opportunity to cure, and Abajian shall be subject to immediate Termination for Cause.  In the case of any breach of clause (iii), Abajian shall be subject to immediate Termination for Cause.  Any notice of Termination for Cause shall specify the effective date of said termination.       3     6. Payment Upon Termination. In the event that a termination of this Agreement occurs, (1) voluntarily by Abajian, (2) as a result of Abajian’s death, or (3) as a result of Termination for Cause, the Company shall pay to Abajian: (a)           Six (6) months Base Salary. (b)           Any bonus which may be due in respect of the year during which (c)           Reimburse Abajian for any expenses reimbursable pursuant to Section 4 of this Agreement.  Abajian shall thereafter have no further entitlement to any other compensation or benefits from the Company. If a termination occurs as a result of Abajian’s death, all payments made pursuant to this Section 6 should be made to Abajian’s estate. In the event that Abajian’s employment is terminated by the Company without cause, including, but not limited to, an involuntary change in position or termination of Abajian as a result of a material breach of this Agreement by the Company, Abajian shall receive from the Company, through the end of the Term:  (1) his Base Salary; and (2) the benefits provided in Section 4 hereof. 7.           Disability.  Disability shall be deemed to occur if Abajian shall become physically or mentally ill or disabled so as not to be able to attend to his regular full-time duties hereunder, and such illness or disability shall continue for more than two (2) consecutive months or for a total of three (3) months (whether or not consecutive) in any twelve-month period during the Term.  Should Abajian become disabled, this Agreement shall terminate.  Upon termination due to disability hereunder, the Company shall continue to pay Abajian his Base Salary on a monthly basis up to a maximum of twenty-four (24) months.  Upon termination due to disability hereunder, the Company shall also pay Abajian all additional compensation pursuant to and in accordance with Section 4 of this Agreement up to a maximum of eighteen (18) months. 8.           Protection of Confidential Information.  Abajian acknowledges that he will be provided with information about, and Abajian’s engagement by the Company will bring Abajian into close contact with the confidential affairs of the Company, including proprietary information about the business of the Company including, without limitation, costs, finances, internal financial statements, projections, markets, sales, customers, vendors, products, key personnel, operational methods, formulas, methods of production, technical processes and methods, plans for future developments, software, data bases, computer programs, specifications, documentations, designs, trade secrets, technology, know-how, reissues, extensions, divisions, continuations and continuations in part thereof and registrations, applications, patents of addition and investor certificates) and other information not available to the public (collectively “Confidential Information”), all of which are highly confidential and proprietary and all of which were or will be developed by the Company at great effort and expense. The Company and Abajian further acknowledge that the services to be performed by Abajian under this Agreement are of a special unique, unusual, extraordinary and intellectual character and that the nature of the relationship of Abajian with the Company is such that Abajian is capable of competing with the Company.  In recognition of the foregoing, and as a specific inducement for Company to enter into this Agreement, Abajian covenants and agrees that during the duration of this Agreement and thereafter he will:       4   (a)              Keep secret all Confidential Information of the Company and not disclose the same to anyone outside of the Company, either during or after the Term, except with the Company’s prior written consent; (b)             Not make use of any of such Confidential Information for his own purposes or the benefit of anyone other than the Company; (c)             Deliver promptly to the Company on termination of this Agreement, or at any time the Company may so request, all Confidential Information including but not limited to memoranda, notes, records, computer software discs, reports and other confidential documents (and all copies thereof) relating to the Company and its business, that Abajian may than possess or have under his or its control. Notwithstanding the foregoing, information shall not be considered to be Confidential Information if it is required to be disclosed by law or by any government, regulatory or self­regulatory agency or body (unless Abajian is advised in writing by Company’s counsel that the information is not required to be disclosed) or if it becomes generally available to the public other than as a result of Abajian’s acts or omissions. In the event Abajian is served with a Court Order, notice, subpoena, or like request compelling the disclosure of information, he shall give prompt notice to the Company so that the Company may contest any such production. 9.           Restriction on Interference; Non-Solicitation.  As an inducement to the Company to enter into and perform its obligations under this Agreement, Abajian covenants and agrees that, during the term of this Agreement and for a period of two (2) years after the termination of this Agreement, whether for or without cause, Abajian will not, directly or indirectly, or on behalf of any other Person (defined below): (a)           Solicit, employ or retain or otherwise induce employees, consultants or independent contractors of the Company or its affiliates to terminate their employment or relationship with the Company; or (b)           Induce customers, clients, subscribers, accounts, contracting parties, suppliers or vendors of the Company to alter or terminate their The foregoing is not intended to prohibit Abajian from soliciting any consultant, independent contractor, customer, client, subscriber, account, contracting party, supplier or vendor of the Company on behalf of himself or a new employer, provided that in connection with such solicitation does not request or require such party to alter or terminate its relationship with the Company.  For the purpose of this Agreement, “Person” shall mean any individual, entity or group within meaning of Section 13(d)(3) or 14 (d)(2) of the       5   10.           Specific Remedies.  It is understood by Abajian that the covenants contained in Sections 8 and 9 are essential elements of this Agreement and that, but for the agreement of Abajian to comply with such covenants, the Company would not have entered into this Agreement.  If Abajian commits a material breach of any of the provisions of Section 8 or 9 hereof, such breach shall be grounds for termination for Cause, subject to immediate termination and not entitled to further notice or opportunity to cure.  In addition, Abajian acknowledges that the Company may have no adequate remedy at law if he violates any of the terms hereof.  Abajian therefore understands and agrees that Company shall have, without prejudice as to any other remedies, the right, without posting any bond or other security whatsoever, to seek a temporary restraining order, preliminary injunction, injunction, specific performance or other   11. Representations (a)           The Company represents that:   (i) It has all requisite corporate power and authority to enter into and perform its   (ii) The execution and delivery of this Agreement by the Company and the performance by the Company of the transactions contemplated herein have been duly and validly authorized by all necessary corporate action;   (iii) This Agreement is a legal, valid and binding obligation of the Company; and   (iv) of its obligations hereunder are not in violation of, and do not conflict with or constitute a default under any agreement by which the Company is bound or any order, decree or judgment to which the Company is subject. (b)           Abajian represents that:   (i) He has all requisite power and authority to enter into and perform the obligations required by this Agreement;   (ii) This Agreement is a legal, valid and binding obligation of Abajian; and   (iv) The execution and delivery of this Agreement by Abajian and the performance of constitute a default under any agreement by which Abajian is bound or any order, decree or judgment to which Abajian is subject.       6   12.           Notices.  Any notice or other communications required or permitted delivery, if delivered by hand, (b) upon receipt of electronic confirmation, if sent by facsimile or e-mail transmission, (c) three (3) days after the date of service to the parties at their addresses set forth above, the address set forth in the Company’s books and records, or to such other additional address or facsimile number as either party may from time to time specify to the other.   13. Miscellaneous binding upon the successors and assigns of the Company.  This Agreement contemplates the rendition of employment services by Abajian and is assignable by the Company.  This Agreement may be assigned by the Company to an affiliate of the Company or in connection with a sale of all or substantially all of the assets of the Company.  As a condition to the assignment of this Agreement the Company shall cause the assignee or its affiliates to agree to pay to Abajian under the same terms and conditions as set forth in this Employment Agreement. fullest extent permitted by law.  The Company’s right and remedies provided for cumulative. (c)           Governing Law and Jurisdiction.  Any and all differences and disputes of whatever nature arising out of or relating to this Agreement termination of this Agreement) shall be governed by the laws of the State of New Jersey applicable to contacts made, negotiated and to be performed entirely in be subject to the exclusive jurisdiction of the state and/or federal courts located in the State of New Jersey. (d)           Entire Agreement; Modifications.  This Agreement constitutes the entire agreement between the Company and Abajian relating to the subject matter hereof, and all prior negotiations and understandings of the parties have been merged into this Agreement.  No modification of this Agreement shall be valid unless in writing and executed by the parties hereto. (e)           Waiver of Breach.  The waiver of a breach or default of or under       7     IN WITNESS WHEREOF, the parties have signed this Agreement as of the date above written. By: /s/ Arpi Abajian Name: Arpi Abajian Title: Secretary /s/ Berge Abajian Berge Abajian [ signature page to Amended and Restated Employment Agreement ]   8  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (date of earliest event reported): May 8, 2012 TETRA Technologies, Inc. (Exact name of registrant as specified in its charter) Delaware 1-13455 74-2148293 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 24955 Interstate 45 North The Woodlands, Texas 77380 (Address of Principal Executive Offices and Zip Code) Registrant’s telephone number, including area code: (281) 367-1983 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.07. Submission of Matters to a Vote of Security Holders. (a)The annual meeting of stockholders of TETRA Technologies, Inc. (the “Company”) was held on May 8, 2012. (b)The following matters were voted upon by the stockholders of the Company at its 2012 Annual Meeting of Stockholders: (i) Item 1 – the election of nine members to the Company’s Board of Directors; (ii) Item 2 – the ratification and approval of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012; and (iii) Item 3 – to conduct an advisory vote to approve the compensation of the Company’s named executive officers as disclosed in the Company’s 2012 proxy statement, filed with the SEC on March 27, 2012. The proposals are described in detail in the Company’s definitive proxy statement. The voting results are as follows: Item 1 – Election of Directors Votes For Votes Withheld Broker Non-Votes Thomas R. Bates, Jr. Stuart M. Brightman Paul D. Coombs Ralph S. Cunningham Tom H. Delimitros Geoffrey M. Hertel Kenneth P. Mitchell William D. Sullivan Kenneth E. White, Jr. Item 2 – Ratification of Auditors Votes For Votes Against Votes Abstained Item 3 – Advisory Vote to Approve the Compensation of Named Executive Officers Votes For Votes Against Votes Abstained Broker Non-Votes 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TETRA Technologies, Inc. By: /s/Bass C. Wallace, Jr. Bass C. Wallace, Jr. Sr. Vice President & General Counsel Date: May 11, 2012 2

Exhibit 10.1   SUBSCRIPTION AGREEMENT   Conyers Park Acquisition Corp. c/o Centerview Capital 31 West 52nd Street, 22nd Floor   Ladies and Gentlemen:   Conyers Park Acquisition Corp., a Delaware corporation (the “Company”), and NCP-ATK Holdings, Inc., a Delaware corporation (“Atkins”), pursuant to contemplated Agreement and Plan of Merger among the Company, Atkins and the other parties thereto (as may be amended and/or restated, the “Transaction Agreement”), the Company is seeking commitments from certain of its existing stockholders and other interested investors to purchase shares of the Company’s Class A common stock, par value $0.0001 per share (the “Shares”), for a purchase price of $10.00 per share, in a private placement in which the Company expects to raise an aggregate of up to $100 million (subject to increase or decrease in the discretion of the Company). In connection therewith, the undersigned and the   1.       Subscription. The undersigned hereby irrevocably subscribes for and agrees to purchase from the Company such number of Shares as is set forth on the signature page of this Subscription Agreement on the terms provided for herein. The undersigned understands and agrees that the Company reserves the right to accept or reject the undersigned’s subscription for the Shares for any reason or for no reason, in whole or in part, at any time prior to its acceptance by the Company, and the same shall be deemed to be accepted by the Company only when this Subscription Agreement is signed by a duly authorized person by or on behalf of the Company; the Company may do so in counterpart form. Notwithstanding the foregoing, in the event that the Company does not (i) accept the subscription, and (ii) consummate the closing of the Transaction, on or before August 21, 2017, this Subscription Agreement shall be void and of no further effect and any monies paid by the undersigned to the Company in connection herewith shall immediately be returned to the undersigned. In the event of rejection of the entire subscription by the Company or the termination of this subscription in accordance with the terms hereof, the undersigned’s payment hereunder will be returned promptly to the undersigned along with this Subscription Agreement, and this Subscription Agreement shall have no force or effect. In the event that the Company rejects the subscription in part, the undersigned may terminate this Subscription Agreement by providing notice to the Company within one business day of receiving notification that its subscription was rejected in part. The undersigned understands that pursuant to the Transaction Agreement the Shares will become share of common stock in The Simply Good Goods Company.   2.       Closing. The closing of the sale of Shares contemplated hereby (the Transaction. The Closing shall occur on the date of, and immediately prior to, the consummation of the Transaction. Upon (i) satisfaction of the conditions set notice from (or on behalf of) the Company to the undersigned (the “Closing Notice”), that the Company reasonably expects all conditions to the closing of the Transaction to be satisfied on a date that is not less than five (5) business days from the date of the Closing Notice, the undersigned shall deliver Date”) the subscription amount for the Shares subscribed by wire transfer of the Company in the Closing Notice against delivery to the undersigned of the Shares in book entry form as set forth in the following sentence. The Company shall deliver (or cause the delivery of) the Shares in book entry form to the undersigned or to a custodian designated by undersigned, as applicable, as indicated below. This Subscription Agreement shall terminate and be of no move forward with the Transaction and/or terminates the undersigned’s    1        or trading in any jurisdiction, or initiation or threatening of any proceedings for any of such purposes, shall have occurred other than in connection with the   Agreement as of the Closing Date, but in each case without giving effect to   c.       no applicable governmental authority shall have enacted, issued, prohibition;   d.       all conditions precedent to the closing of the Transaction, including the approval of the Company’s shareholders, shall have been satisfied or waived      2        presently conducted.   the undersigned against full payment therefor in accordance with the terms of this Subscription Agreement, the Shares will be validly issued, fully paid and Delaware.   c.       This Subscription Agreement has been duly authorized, executed and delivered by the Company and is enforceable in accordance with its terms, except   with all of the provisions of this Subscription Agreement and the consummation of the transactions herein will be done in accordance with the NASDAQ marketplace rules and will not conflict with or result in a breach or violation license or other agreement or instrument to which the Company or any of its transactions therein contemplated.   any agent, broker, investment banker, financial advisor or other person to any undersigned could become liable.    3      g.       The Company understands that the foregoing representations and undersigned.   6.       Subscriber Representations and Warranties. The undersigned represents   a.       The undersigned is (i) a “qualified institutional buyer” (as defined in case, satisfying the requirements set forth on Schedule A, and is acquiring the Shares only for his, her or its own account and not for the account of others, and not on behalf of any other account or person or with a view to, or for offer following the signature page hereto). The undersigned is not an entity formed   Act. The undersigned understands that the Shares may not be resold, transferred, pledged or otherwise disposed of by the undersigned absent an effective registration statement under the Securities Act except (i) to the Company or a (iii) in accordance with any applicable securities laws of the states and other Shares shall contain a legend to such effect. The undersigned acknowledges that the Shares will not be eligible for resale pursuant to Rule 144A promulgated under the Securities Act. The undersigned understands and agrees that the Shares restrictions, the undersigned may not be able to readily resell the Shares and may be required to bear the financial risk of an investment in the Shares for an indefinite period of time. The undersigned understands that it has been advised   c.       The undersigned understands and agrees that the undersigned is purchasing Shares directly from the Company. The undersigned further acknowledges that there have been no representations, warranties, covenants and agreements made to the undersigned by the Company, or its officers or directors, covenants and agreements included in this Subscription Agreement.   d.       The undersigned’s acquisition and holding of the Shares will not the Employee Retirement Income Security Act of 1974, as amended, Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.    4      e.       The undersigned acknowledges and agrees that the undersigned has Company’s filings with the SEC and (ii) the disclosure package provided to the undersigned, dated April 3, 2017 (the “Disclosure Package”). The undersigned such answers and obtain such information as the undersigned and such investment decision with respect to the Shares. The undersigned further acknowledges that the information contained in the Disclosure Package is preliminary and subject to change, and that any changes to the information contained in the Disclosure Package, including, without limitation, any changes based on updated information or changes in terms of the Transaction, shall in no way affect the undersigned’s obligation to purchase the Shares hereunder.   means of direct contact between the undersigned and the Company or a representative of the Company, and the Shares were offered to the undersigned solely by direct contact between the undersigned and the Company or a representative of the Company. The undersigned did not become aware of this offering of the Shares, nor were the Shares offered to the undersigned, by any other means. The undersigned acknowledges that the Company represents and   g.       The undersigned acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Shares, including those set forth in the Disclosure Package and in the Company’s filings with the SEC. The undersigned has such knowledge and experience in financial and investment in the Shares, and the undersigned has sought such accounting, legal and tax advice as the undersigned has considered necessary to make an informed investment decision.   has adequately analyzed and fully considered the risks of an investment in the total loss exists.   relied solely upon independent investigation made by the undersigned. Without limiting the generality of the foregoing, the undersigned has not relied on any statements or other information provided by the Placement Agent concerning the    5        formation.   with its terms.        6      o.       No disclosure or offering document has been prepared by Goldman, Sachs & Co. or any of its respective affiliates (the “Placement Agent”) in connection   p.       The Placement Agent and each of its directors, officers, employees, with respect to the Company or the Shares or the accuracy, completeness or adequacy of any information supplied to the undersigned by the Company.   Agent has not acted as the undersigned’s financial advisor or fiduciary.   r.       If the undersigned is a resident or subject to the laws of Canada, the undersigned hereby declares, represents, warrants and agrees as set forth in the attached Schedule B.   7.       Registration Rights. In the event that the Shares are not registered in connection with the consummation of the Transaction, the Company agrees that, within forty-five (45) calendar days after the consummation of the Transaction, the Company (or its successor including The Simply Good Foods Company) will file registering such resale (the “Registration Statement”), and the Company shall agrees that The Simply Good Foods Company will cause such registration statement or another shelf registration statement to remain effective until the earlier of (i) two years from the issuance of the Shares, or (ii) on the first date on which the undersigned can sell all of its Shares (or shares received in exchange therefor) under Rule 144 of the Securities Act of 1933 within 90 days without limitation as to the amount of such securities that may be sold. The Simply Good Foods Company may suspend the use of any such registration statement if it determines that in order for the registration statement to not contain a material misstatement or omission, an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act of 1934, as amended. The undersigned agrees to disclose its ownership to the Company and the The Simply Good Foods Company upon request to assist them in making the (or shares issued in exchange therefor) in the Registration Statement are contingent upon the undersigned furnishing in writing to the Company such information regarding the undersigned, the securities of the Company held by the undersigned and the intended method of disposition of the Shares as shall be reasonably requested by the Company to effect the registration of the Shares, Company may reasonably request that are customary of a selling stockholder in similar situations. After giving effect to the transactions contemplated therein, the Company agrees to cause The Simply Good Foods Company to assume the rights and obligations herein in place of the Company and the undersigned agrees to the same.    7      8.       Termination. This Subscription Agreement shall terminate and be void this Subscription Agreement or (c) if any of the conditions to Closing set forth in Section 3 of this Subscription Agreement are not satisfied or waived on or this Subscription Agreement are not consummated at the Closing; provided that from such breach. The Company shall promptly notify the undersigned of the termination of the Transaction Agreement promptly after the termination of such agreement.   9.       Trust Account Waiver. The undersigned acknowledges that the Company is a blank check company with the powers and privileges to effect a merger, asset Company and one or more businesses or assets. The undersigned further initial public offering dated July 14, 2016 (the “Prospectus”) available at shareholders and the underwriters of the Company’s initial public offering. that may be released to the Company to pay its tax obligations, if any, and for working capital, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of the Company entering into this Subscription Agreement, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the Subscription Agreement.   10.       Miscellaneous.   the undersigned hereunder (other than the Shares acquired hereunder, if any) may   b.       The Company may request from the undersigned such additional information as the Company may deem necessary to evaluate the eligibility of the undersigned to acquire the Shares, and the undersigned shall provide such information as may reasonably be requested, to the extent readily available and   c.       The undersigned acknowledges that the Company, the Placement Agent and acknowledges and agrees that the Placement Agent is a third-party beneficiary of the representations and warranties of the undersigned contained in Section 6 of this Subscription Agreement.    8          of such modification, waiver, or termination is sought.   h.      This Subscription Agreement constitutes the entire agreement, and or remedies upon any person other than the parties hereto, and their respective successor and assigns.   i.       Except as otherwise provided herein, this Subscription Agreement shall and permitted assigns.        9        PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER STATE. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS SUBSCRIPTION AGREEMENT   made by any person, firm or corporation (including, without limitation, Goldman, Sachs & Co., any of its affiliates or any of its or their control persons, officers, directors and employees), other than the statements, representations and warranties contained in this Subscription Agreement, in making its investment or decision to invest in the Company. The undersigned agrees that neither (i) any other purchaser pursuant to this Subscription Agreement or any other Subscription Agreement related to the private placement of the Shares (including the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser) nor (ii) Goldman, Sachs & Co., its       10      set forth below.   Name of Investor: State/Country of Formation or Domicile:     By:   Name in which shares are to be registered (if different): Date: April [    ], 2017     Investor’s EIN:       Business Address-Street: Mailing Address-Street Attn:__________________ Attn:__________________     Telephone No.: Telephone No.: Facsimile No.: Facsimile No.:     Number of Shares subscribed for:       Aggregate Subscription Amount: $ Price Per Share: $10   in immediately available funds to the account specified by the Company in the Closing Notice). To the extent the offering is oversubscribed, the number of Shares received may be less than the number of Shares subscribed for.    11      IN WITNESS WHEREOF, Conyers Park Acquisition Corp. has accepted this Subscription Agreement as of the date set forth below.      CONYERS PARK ACQUISITION CORP.         By:            Name:     Title:         Date:                   , 2017         12                                                                                        Schedule B      

EXHIBIT 10.33   issued to Tampa, Florida and TYPTAP INSURANCE COMPANY Ocala, Florida   U8GR0007      1 of 40   TABLE OF CONTENTS   Article 9   8           Special Acceptance      10   9           Premium      10   10           Definitions      11   11           Extra Contractual Obligations/Excess of Policy Limits      14   12           Net Retained Liability      15   13           Other Reinsurance      15   14           Original Conditions      15   15           No Third Party Rights      16   16           Notice of Loss and Loss Settlements      16   17           Late Payments      16   18           Offset      17     U8GR0007      2 of 40   Article        Page 19           Currency    18 20           Unauthorized Reinsurance    18 21           Taxes    20 22           Access to Records    21 23           Confidentiality    22 24           Indemnification and Errors and Omissions    23 25           Insolvency    23 26           Run-Off Reinsurer    24 27           Arbitration    26 28           Expedited Arbitration    27 29           Service of Suit    27 30           Governing Law    28 31           Entire Agreement    28 32           Non-Waiver    29 33           Agency    29 34           Intermediary    29 35           Mode of Execution    29   Company Signing Block    31   U8GR0007      3 of 40   TABLE OF CONTENTS   Attachments        Page     Pools, Associations & Syndicates Exclusions Clause      33     36     Terrorism Exclusion      38     Trust Agreement Requirements Clause      39     U8GR0007      4 of 40   issued to Tampa, Florida and TYPTAP INSURANCE COMPANY Ocala, Florida by ARTICLE 1 BUSINESS COVERED ARTICLE 2 RETENTION AND LIMIT   A. Ultimate Net Loss over and above the initial Ultimate Net Loss of $**** each Loss Occurrence, subject to a limit of liability to the Reinsurer of $**** each Loss Occurrence, and subject further to a limit of liability of $**** for all Loss Occurrences commencing during the term of this Contract.   U8GR0007      5 of 40   B. ARTICLE 3 FLORIDA HURRICANE CATASTROPHE FUND   A. to the following:     1. inability to pay.     2.     3.     4.   B. reinsurance.   C.   U8GR0007      6 of 40   ARTICLE 4 TERM ARTICLE 5 SPECIAL TERMINATION   A.     1.     2. under regulatory supervision.     3. operations.     4.     5.     6.     7.   U8GR0007      7 of 40     8.     9.     10.   B. Reinsurer’s participation hereon.   C. under this Contract.   D.   U8GR0007      8 of 40   ARTICLE 6 TERRITORY Company’s Policies. ARTICLE 7 EXCLUSIONS   A.     1.     2.     3.     4.     5.     6. part.     7.     8.     9.   U8GR0007      9 of 40     10.     11. Policy.     12.     13.   B. ARTICLE 8 SPECIAL ACCEPTANCE ARTICLE 9 PREMIUM   A. The Company shall pay the Reinsurer a premium of $**** for the term of this Contract.   U8GR0007      10 of 40   B. Company in four equal installments of $**** on June 1, 2019, September 1, 2019, January 1, 2020 and April 1, 2020.   C. Reinsurer’s financial statements. ARTICLE 10 DEFINITIONS   A.      1.     2. hereunder.     3. hereto.     4.     5. ascertained.   B.     1. court costs;     2.     3. monitoring counsel expenses;   U8GR0007      11 of 40     4. judgment actions;     5.     6.     7. Contract; and     8.   C.      1.     a.   U8GR0007      12 of 40     b.     c.     d. Occurrence”.     e.     f.     2.     a.     b.   U8GR0007      13 of 40     3.   D. the Company. ARTICLE 11   A.   B.   C.   D. Policy.   U8GR0007      14 of 40   E.   F. hereunder.   G. ARTICLE 12 NET RETAINED LIABILITY   A.   B. ARTICLE 13 OTHER REINSURANCE ARTICLE 14 ORIGINAL CONDITIONS   U8GR0007      15 of 40   ARTICLE 15 NO THIRD PARTY RIGHTS ARTICLE 16   A. Reinsurer.   B.   C. ARTICLE 17 LATE PAYMENTS   A.     1.   U8GR0007      16 of 40     2.     3.   B.     1.     2.   C.   D. outlined herein.   E. ARTICLE 18 OFFSET   U8GR0007      17 of 40   ARTICLE 19 CURRENCY   A. Dollars.   B. ARTICLE 20 UNAUTHORIZED REINSURANCE   A. Company’s reserves.   B.     1.     2.     3. the Reinsurer;     4.     5.   C.   U8GR0007      18 of 40   D.   E. Trust Agreement:     1.     2.     3.     4. under this Contract.   F.   G.   U8GR0007      19 of 40   H.     1.     2. ARTICLE 21 TAXES   A. District of Columbia.   B.      1.     2.   U8GR0007      20 of 40   ARTICLE 22 ACCESS TO RECORDS   A.   B.   C.     1.     2.     3.   U8GR0007      21 of 40   ARTICLE 23 CONFIDENTIALITY   A. can show:     1. the Reinsurer;     2. confidentiality; or     3. obligation of confidentiality.   B.     1.     2.     3.   C.   D. successors and assigns.   U8GR0007      22 of 40   ARTICLE 24   A.     1.     2.     3.   B.   C. immediately upon discovery.   D. ARTICLE 25 INSOLVENCY   A.   B.   U8GR0007      23 of 40     C.   D. ARTICLE 26 RUN-OFF REINSURER   A.     1. rehabilitation; or     2.     3.     4.   U8GR0007      24 of 40     5.   B. participation hereunder:     1.     2.     3. deemed waived.     4.   C.   U8GR0007      25 of 40   ARTICLE 27 ARBITRATION   A.   B.   C. arbitration shall continue.   D. hearings.   E.   F. having jurisdiction thereof.   G. permitted by law.   U8GR0007      26 of 40   ARTICLE 28 EXPEDITED ARBITRATION   A.   B.   C. ARTICLE 29 SERVICE OF SUIT   A. insurance regulatory authorities.   B.   C. the laws of the   U8GR0007      27 of 40     D.   E. ARTICLE 30 GOVERNING LAW ARTICLE 31 ENTIRE AGREEMENT   U8GR0007      28 of 40   ARTICLE 32 NON-WAIVER ARTICLE 33 AGENCY ARTICLE 34 INTERMEDIARY ARTICLE 35 MODE OF EXECUTION   A.     1.     2. paper documents;     3.   U8GR0007      29 of 40   signature is invalidated.   B.   U8GR0007      30 of 40         U8GR0007      31 of 40   TYPTAP INSURANCE COMPANY       U8GR0007      32 of 40   Section A: This Contract excludes:     a.     b. Automobile Physical Damage. Section B:   1. Aviation Risks   2.     a. than $250,000,000.     b.     c. Section C:   1. be excluded herefrom:     a.   U8GR0007      33 of 40     b.     c.     d. excluded hereunder.   2. resulting from:     a. meet its liability;     b.     c.     d.     e.     f.   3.   4.   U8GR0007      34 of 40   applicable.       NOTES:     “Company”     “Contract”     “Reinsurer”   U8GR0007      35 of 40     1. Energy risks.   2.     I.     II.     III.     IV. fission.   3. operate     (a) nuclear installation, or     (b)   4. specifically insured against.   U8GR0007      36 of 40   5.   6.   7.     (a) substantial quantities, and     (b)     (a)     (b) NMA 1119       NOTES:     “Reassured”     “Agreement”     “Reinsurers” reinsurers.   U8GR0007      37 of 40   TERRORISM EXCLUSION   A.   B.     a.     b.     c.     d.     e.   C.   D.   U8GR0007      38 of 40   TRUST AGREEMENT REQUIREMENTS CLAUSE   A.     1.     2.     3.     4.     5. the Reinsurer.   B.     1.     2.   U8GR0007      39 of 40     3.     4.   C.   U8GR0007      40 of 40

Title: [Manitoba, Canada] Is it legal for my neighbour to come on to my property without my permission to move garbage bins? Answer #1: Legal Answer: As others have said, it's technically trespassing but you're not likely to get a police response about your nosy neighbor moving your trash bins in off the street after they've been emptied. Nonlegal Answer: Your trash is picked up on Wednesday morning and the bins are still there on Thursday evening? Presumably after you've driven past them both returning from work Wednesday evening and leaving for work Thursday morning? You're the reason that HOAs are formed, bring your bins in on Wednesday evening after they've been emptied.

ITEMID: 001-4751 LANGUAGEISOCODE: ENG RESPONDENT: GBR BRANCH: ADMISSIBILITY DATE: 1999 IMPORTANCE: 4 CONCLUSION: Inadmissible JUDGES: Nicolas Bratza TEXT: The applicant is a British citizen, born in 1953. He is currently detained in H.M. Prison in Derbyshire. He is represented before the Court by Mr Andrew Kenyon, a solicitor practising in Manchester. On an unspecified date the applicant was charged by the Serious Fraud Office with various offences of dishonesty. He applied and was granted legal aid. At the end of 1992 the applicant's case was transferred to the Central Criminal Court. It was first listed before a judge in March 1993. At that stage the applicant was represented by solicitors and senior and junior counsel. On 24 May 1994 the applicant was arraigned. The hearing was fixed for September 1994. However, that date was vacated because the applicant's representatives had sent to the Serious Fraud Office detailed submissions as to why the prosecution should have been discontinued. Following the rejection of these submissions, the applicant decided that he wished to represent himself. On 13 October 1994 the applicant's counsel appeared before the judge and asked to be allowed, together with their solicitors, to withdraw from the case. The judge heard the applicant's senior counsel, his solicitor and the applicant himself. He also heard counsel for the Crown. The applicant's position was that he wished to present himself the factual side of the case, examine and cross-examine witnesses and address the jury. At the same time he wanted to be allowed to have his solicitors and counsel to advise him upon and argue on his behalf such matters of law as might arise in the course of the case. The applicant's solicitor told the judge that he had advised the applicant that he should be represented by counsel if his case was to be conducted properly. However, according to the solicitor, there had been a serious breakdown of confidence between himself and the applicant and in those circumstances, unless directed to the contrary, he wished to withdraw. The applicant's counsel said that he knew of cases where a defendant had retained solicitors and counsel to argue the law and the Crown's counsel accepted that, provided that proper ground rules were established, such a course of action could be followed. The judge, having satisfied himself that the applicant had formed a firm and considered opinion and that his views had been properly presented to the court, decided that it would be improper to allow the applicant to proceed with the case in the manner he envisaged. The judge considered that, if counsel were to continue to participate in the proceedings, they should have control over the case. Counsel for the applicant and the Crown agreed. Then the applicant was asked whether, in the light of this development, he wished to reconsider his decision to represent himself. He refused. The court reconvened on 21 October 1994. The matter of the applicant's representation was again discussed. The judge formally allowed the applicant's counsel and solicitors to withdraw. The applicant was allowed to represent himself. However, new solicitors were retained to advise the applicant who could seek advice from counsel on particular matters. These solicitors assisted the applicant throughout the proceedings and occasionally consulted counsel. On 28 October 1994 the applicant requested that the court should sit only three days a week. However, the judge refused this request. On a number of subsequent occasions, before the actual beginning of the trial, the applicant repeated his wish to have the kind of representation he had favoured from the beginning. However, the judge reaffirmed his earlier ruling. On at least one occasion, on 4 November 1994, the judge again sought and received confirmation that the applicant had decided to represent himself. The judge's last pre-trial re-iteration of his ruling was on 3 January 1995 when he stated the following: “It is an absolute right for someone to represent themselves; and Mr Naviede has decided to represent himself in this trial. I have considered the question of whether I should extend his legal aid for leading and junior counsel to represent him; and I have come plainly to the conclusion that it would be wholly inappropriate in this case for Mr Naviede to represent himself, have control of cross-examination and the calling of witnesses [on] issues of fact, then instruct counsel to represent him on points of law throughout the course of the case. It seems to me that that would be wrong. It would involve, were I to grant this application, an adjournment of this case for ... a considerable period ... and, in all the circumstances, I have no alternative but to reject the application that is made. The defendant has had ample time to prepare himself for this trial ... [A] great deal of work has been done on his behalf. The documents have all been got in order and, in my view, the representation that he has - which in the representation of experienced solicitors, who no doubt are knowledgeable in the law - is a proper basis on which we ought to proceed.” The trial began on 9 January 1995. The applicant requested that the hearing be adjourned for a period of four to six weeks because he was suffering from mental exhaustion and stress. The judge, having heard expert evidence from two doctors for the defence and two for the prosecution, refused the applicant's request on the ground that the applicant was fit to continue with the hearing. Then the applicant cross-examined the most important prosecution witness. On 11 February 1995 the applicant informed the judge that he was to undergo an operation as he was suffering from the disease of pneumothorax. He applied for an adjournment that would also give him sufficient time to recover from the post-operative effects. The court adjourned the case for five weeks. On returning, however, on 15 March 1995, the applicant was still suffering from post-operative discomfort and requested another week's adjournment. In support of his request the applicant invoked his doctor's opinion that he was at risk of a nervous breakdown. However, the judge relied on the evidence of another doctor that the applicant was in a fit state and refused his request. On 14 May 1995 the judge, in the absence of the jury, threatened the applicant that he could be found in contempt of court because one of his witnesses was not present. On Thursday 25 May 1995 the applicant, having completed eleven days in the witness box, asked for an adjournment until next Tuesday in order to prepare for the examination of the defence witnesses. The judge decided that the rest of the day would be sufficient for the applicant to prepare himself. On 7 July 1995 the applicant was convicted of a number of dishonesty offences. He was sentenced to nine years' imprisonment. The applicant obtained leave to appeal to the Court of Appeal against conviction and sentence. He relied on a number of grounds including the failure of the judge to grant his above-mentioned requests concerning the presentation of his case, the number of sittings per week and the adjournments. In the proceedings before the Court of Appeal the applicant was represented by legal aid counsel. On 21 March 1997 the Court of Appeal, for technical reasons, quashed the applicant's convictions on some counts, substituted convictions for different offences and reduced his sentence to six years. However, the court did not allow any of the grounds of appeal concerning the above-mentioned requests. Furthermore, it refused to certify any question of law involved in the determination of the appeal as being of general public importance.

EXHIBIT 99.1 Apollo Global Management Announces Strategic Transactions Creation of AR Global More Than Doubles Apollo’s Real Estate AUM, Increases Permanent Capital, Expands Investor Base, Provides Significant Growth Opportunities and Diversifies Investment Offerings Acquisition of RCS Capital’s Wholesale Distribution Business and Strategic Relationship with Cetera Enhances Apollo’s Retail Distribution Capabilities New York, NY. August 6, 2015 – Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) today announced that it has agreed to acquire a majority interest in a new company, AR Global Investments, LLC (“AR Global”), that will own a majority of the ongoing asset management business of AR Capital, a leading asset management firm focused on providing income solutions for retail investors. Apollo also announced today that it is acquiring RCS Capital’s (“RCS”) (NYSE: RCAP) wholesale distribution business, which will become part of AR Global, and that it has entered into a strategic relationship with RCS Capital’s retail advice business, Cetera Financial Group (“Cetera”). AR Global will more than double Apollo’s real estate assets under management (“AUM”) to approximately $27 billion. After giving effect to the transaction, the capital managed by Apollo in permanent capital vehicles will increase to approximately $95 billion, representing a majority of Apollo’s $182 billion in total AUM1. In addition, the transaction is expected to diversify Apollo’s investor base, augment the firm’s strategically important retail distribution activities, and provide significant growth opportunities through the expansion of AR Capital’s existing businesses. AR Capital has built a sector-leading asset management platform that provides yield-oriented funds to the retail clients of its wealth management partners, primarily in the independent broker-dealer channel. AR Capital has broadened its focus in real estate strategies spanning net lease, healthcare, retail, office, and hospitality properties. More recently, AR Capital has successfully expanded into yield-focused credit strategies such as commercial real estate debt, corporate credit and structured credit all of which will be complementary to Apollo’s existing investment strategies in those areas. In addition to the market opportunity for expansion of AR Capital’s existing investment strategies, AR Global has the potential to become a growth platform for launching innovative new investment strategies that will meet the growing secular demand by 1 AUM as of June 30, 2015 after giving effect to the transaction. individual investors for both current income needs as well as increased allocation of their portfolios to alternative strategies. “We believe AR Global will be well-positioned to benefit from the growing trend among retail investors to seek yield-oriented investment solutions and at the same time drive meaningful growth for Apollo. We are very excited about the transaction we have structured, and believe it has the potential to create significant value for Apollo’s shareholders over time with a substantial portion of the transaction consideration tied to future growth and product diversification,” said Marc Rowan, Co-Founder and Senior Managing Director of Apollo. “AR Capital participates in a sector that is in a state of transition due to both changing regulations and the evolving needs of investors. Apollo’s contrarian approach embraces businesses and industries that are in the midst of change, which we believe creates attractive opportunities. We believe Apollo is well positioned to continue to play a positive role in helping the industry evolve to offer more institutional-quality products and services to individual investors and their financial advisors. Apollo has proven experience in managing assets for the world’s leading institutional investors and wealth management platforms, which we believe positions the firm well to provide enhanced efficiency and transparency to the retail investment community.” The transaction is expected to be modestly accretive to Apollo’s fiscal year 2016 Economic Net Income and Distributable Earnings, and Apollo believes it will add meaningfully to the firm’s long-term growth, while continuing to diversify the firm’s AUM and distribution channels. The transaction is structured to include $378 million of consideration upfront, split between $200 million of cash and $178 million of Apollo equity, plus future performance-related contingent consideration. This structure is intended to facilitate a smooth transition of the business and its personnel in the near-term while also creating mutual long-term alignment of interests. The transaction is expected to close in the next 60 days, subject to regulatory and other customary closing conditions. AR Global will be governed by a newly created board of directors consisting of six Apollo representatives, one of whom will be appointed Chairman, including co-founders Josh Harris and Marc Rowan, Anthony Civale (Lead Partner and Chief Operating Officer of Apollo’s Credit business), Stephanie Drescher (Global Head of Business Development & Investor Relationship Management), Martin Kelly (Chief Financial Officer) and John Suydam (Chief Legal Officer). The four partners of AR Capital (Peter Budko, William Kahane, Nicholas Schorsch and Michael Weil) will also serve on the board. William Kahane, AR Capital’s Co-Founder and head of real estate investments, will serve as Chief Executive Officer of AR Global until a search is concluded to hire a new Chief Executive Officer after which he will serve as Chief Investment Officer of AR Global’s real estate activities. Nicholas Schorsch will serve as Senior Managing Director of AR Global. AR Global will benefit from the bench of talented investment professionals and managers within each of its existing investment strategies. This team has generated strong performance in the aggregate in vehicles that began as non-traded public REITs and were subsequently listed or exited, generating attractive returns of approximately 17% net of fees.2 2 Return figure is a net internal rate of return calculated using total market capitalization of last available trading day for historical funds or July 31, 2015 for actively traded funds. REITs include: American Realty Capital Trust, Inc., 2 AR Capital, founded in 2006, currently manages approximately $19 billion of alternative assets across a variety of real estate investment trusts, business development companies, mutual funds and other partnerships. Since its founding, AR Capital has had a history of growth and innovation and has been a pioneer in the retail alternative investment space. Apollo also announced today that it has agreed to acquire RCS Capital’s wholesale distribution business for $25 million in cash3. Apollo has also entered into a strategic partnership with RCS’s retail advice business, Cetera Financial Group. In addition, Apollo will be purchasing $25 million in newly issued preferred stock in RCS. The wholesale business and partnership with Cetera are complementary to Apollo’s existing relationships and long-term commitment to the retail channel. The transaction will substantially expand Apollo’s wholesale distribution network, adding scale and an increased ability to service the needs of its strategic distribution partners as appropriate. The acquisition is expected to close concurrently with Apollo’s acquisition of AR Global, subject to regulatory approval and other customary closing conditions. Bill Dwyer, the Chief Executive Officer of RCS’s wholesale business, will continue to lead the business following the acquisition. “RCS’s wholesale distribution business is one of the industry’s largest networks for distributing alternative investment products, and we believe it will play a strategically important role in expanding and diversifying Apollo’s and AR Global’s real estate and credit businesses,” commented Apollo’s Marc Rowan. “In addition, we believe our strategic partnership with Cetera, a leading network of independent financial advisors, will be beneficial to Apollo by adding scale and greater diversification, particularly from the independent broker dealer community.” Lazard acted as financial advisor to Apollo and Debevoise & Plimpton LLP acted as legal counsel. Supplemental Materials An investor presentation which includes additional information regarding these transactions has been posted to the Investor Relations section of Apollo’s website at www.agm.com. Forward-Looking Statements In this press release, references to “Apollo,” “we,” “us,” “our” and the “Company” refer collectively to Apollo Global Management, LLC, together with its consolidated subsidiaries. This press release may contain forward looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act American Realty Capital Trust III, Inc., American Realty Capital Trust IV, Inc., New York REIT, Inc., American Realty Capital Healthcare Trust, Inc., and Global Net Lease, Inc. 3 Immediately following the closing of the transactions, Apollo will contribute the wholesale distribution business to AR Global, effectively reducing its cash outlay for the business to $15 million, and the incremental $10 million of cash will be funded by AR Capital. 3 of 1934, as amended. These statements include, but are not limited to, discussions related to Apollo's expectations regarding the performance of its business, its liquidity and capital resources and the other non-historical statements in the discussion and analysis. These forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. When used in this press release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions, including risks relating to our dependence on certain key personnel, our ability to raise new private equity, credit or real estate funds, market conditions, generally, our ability to manage our growth, fund performance, changes in our regulatory environment and tax status, the variability of our revenues, net income and cash flow, our use of leverage to finance our businesses and investments by our funds and litigation risks, among others. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in Apollo's annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2015, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in other filings. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law. This press release does not constitute an offer of any Apollo fund. About Apollo Global Management, LLC Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, Chicago, Bethesda, Toronto, London, Frankfurt, Luxembourg, Madrid, Mumbai, Delhi, Singapore, Shanghai and Hong Kong. Apollo had assets under management of approximately $162 billion as of June 30, 2015 in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. Apollo shares are listed on the New York Stock Exchange. For more information about Apollo, please visit www.agm.com. About AR Capital Founded in 2006, AR Capital is a full service investment management firm providing advisory services to retail and institutional investors. AR Capital is an active sponsor and manager of numerous alternative investment programs, including multiple real estate investment trusts (“REITs”), open-end mutual funds, two business development companies and a closed–end fund. Additional information can be found at www.americanrealtycap.com. 4 About RCS Capital RCS Capital Corporation (NYSE: RCAP) is a full-service investment firm expressly focused on the individual retail investor. With operating subsidiaries including retail advice services, wholesale distribution, investment banking, capital markets, investment research, investment management and crowdfunding, RCS Capital's business is designed to capitalize, support, grow and maximize value for the investment programs it distributes and the independent advisors and clients it serves. Additional information about RCS Capital can be found on its website at www.rcscapital.com. RCS Capital may disseminate information about itself, including the results of its operations and financial information, via social media platforms such as Facebook, LinkedIn and Twitter. Contacts For investor inquiries regarding Apollo, please contact: Apollo Global Management, LLC

Exhibit 10.1   SUPPLIER AGREEMENT made on May 20, 2019 [*DATE*]   Between   (1) POLAR POWER INC [*Supplier’s full registered legal name*] (“Supplier”) of 249 E. GARDENA BLVD [*Supplier’s full registered address*], a Delaware UNITED STATES [*Supplier’s U.S. state or if not in U.S., country of incorporation*];    and   (2) Each and any of Citibank, N.A., its branches and subsidiaries and affiliates (“Citibank”).   BACKGROUND   WHEREAS, from time to time the Supplier enters into commercial trade transactions with Buyers for the sale of goods and/or services resulting in Receivables owed by each relevant Buyer to the Supplier. To facilitate the processing of such Receivables, Citibank, the Supplier and each relevant Buyer intend to utilize one or more computerized/online settlement systems provided by Citibank or its affiliates or licensors.   WHEREAS, from time to time the Supplier may wish to sell to Citibank and Citibank may wish to purchase from the Supplier and have assigned to Citibank, such Receivables that are processed through the System, subject to the terms and   NOW, THEREFORE, in consideration of the mutual covenants, terms, conditions, Supplier and Citibank agree as follows:   ARTICLE I: DEFINITIONS   For the purposes of this Agreement the following terms shall, unless the context   “Agreement” means this Supplier Agreement including Annex 1 (Pricing Schedule(s)), Annex 2 (License Schedule), Annex 3 and, if applicable, Annex 4 and Annex 5, and any other Annexes added hereto from time to time upon the agreement of the Parties. each as amended from time to time.   “Anti Corruption Laws” means all laws, rules, and regulations from time to time, as amended, concerning or relating to bribery or corruption, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and all other applicable anti-bribery and corruption laws.   “Asset Representations” means the representations and warranties of the Supplier set forth in Sections 4.2(a) - (d).   “Authorized Users” means employees, agents or contractors of the Supplier whom it has designated as being authorized to access the System on its behalf and who have been provided Logins to access the System by Citibank.   “Auto Discounting” has the meaning set forth in Section 2.1.   and foreign currency deposits) in the jurisdiction where the applicable Citibank entity is located and in the principal financial center of each relevant currency. “Buyer” means the Supplier’s customer set forth on the Pricing Schedule(s) attached hereto, including all such customer’s subsidiaries and affiliates that are obligors on the Receivables purchased by Citibank hereunder and any other customer of Supplier that Citibank and Supplier agree to add to this Agreement as a “Buyer” by adding one or more Pricing Schedules hereto.   “Claim” means any abatement, charge, claim, claw-back, counterclaim, defense, deferral, lien, netting, offset, reduction, recovery. set off right or withholding or any other right, dispute or claim relating to carriage, damage, defects, delivery (including nondelivery, under or late delivery), failure to meet the specifications, warranties or representations (whether express or implied), or any other failure of the Supplier to comply with the terms of the contract under which the relevant goods or services were supplied to the relevant Buyer.   “Credit Note” means information uploaded by the relevant Buyer in accordance with the System describing any Claim.   “Credit Note Amount” means the amount specified in a Credit Note.   “Designated Account” means the Supplier’s bank account identified in the set up form completed by the Supplier in order for Citibank to implement the services   “Discount Offer” and “Discount Proceeds” have the meanings set forth in Section 2.1, and “Discount Charge” has the meaning set forth in the relevant Pricing Schedule.   “License Schedule” means the license schedule set out in Annex 2 hereto agreed to by the Supplier, which sets out the terms and conditions on which the Supplier is entitled to use the System.   “Logins” means usernames and passwords for Authorized Users to access the System;   “Losses” means any claims, liabilities, losses, damages, costs or expenses, including reasonable attorneys’ fees and disbursements, other dispute resolution expenses and costs of collection; provided that, and for the avoidance of doubt, the term “Losses” does not include any credit related losses that may apply to a Receivable from time to time after it is sold under this Agreement.   Page 1 of 14     “Message” means any message, information or instruction that is transmitted through the System, including any communication relating to a Transaction.   “Party” or “Parties” means each or both of the Supplier or Citibank, as the context requires.   “Paying Agent” means that particular Citibank entity acting as paying agent for Buyer from time to time under the Paying Services Agreement as set out in the Pricing Schedule hereto.   “Paying Services Agreement” means that certain Paying Services Agreement between Buyer and Paying Agent.   “Payment Amount” is the face amount of Receivables due from a Buyer on the Payment Due Date, as set forth in the Payment Notification, less the sum of any Credit Notes that have been uploaded into the System and have been applied against the Receivables prior to the date of the relevant Discount Offer.   “Payment Due Date” means the date payment by a Buyer of the Payment Amount is due as specified in the Payment Notification.   “Payment Notification” means the notification sent by Citibank, in its capacity as Paying Agent, to the Supplier expressly or through the System, notifying the Supplier that Buyer has instructed the Paying Agent to make payment from Buyer’s account of the Payment Amount on a specified date.   corporation, trust. association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, governmental body or any other entity.   “Pricing Schedule” means the pricing schedule as Citibank will provide to the Supplier from time to time that sets out the method used to calculate the Discount Charge and other fees and charges in respect of Receivables offered for sale hereunder. The initial Pricing Schedule is set out in Annex 1 hereto and there may be different Pricing Schedules for different currencies, Buyer jurisdictions and/or Citibank entities substantially in the form set out in Annex 1. The Pricing Schedule shall set out the particular Citibank entity acting as purchaser of Receivables and the particular Citibank entity acting as Paying Agent under the relevant Paying Services Agreement with Buyer.   “Receivables” means the Supplier’s rights to receive payment from Buyers (or any parent or other affiliate thereof that has undertaken to make payment) in respect of bona fide obligations of Buyers arising out of the Supplier’s sale and delivery of goods and services, in each case as evidenced by an invoice (or similar document) and referenced in a Payment Notification.   “Sanctions” means economic, trade, or financial sanctions, requirements, or embargoes imposed, administered, or enforced from time to time by any Sanctions Authority.   the U.S. Department of State), the United Kingdom (including, without limitation, Her Majesty’ s Treasury), the European Union and any EU member state, the United Nations Security Council and any other relevant sanctions authority. “Sanctioned Jurisdiction” means, at any time. a country or territory that is, or   related list maintained by any Sanctions Authority, (b) any Person located, organized, or resident in a Sanctioned Jurisdiction, or (c) any other subject of Sanctions, including, without limitation, any Person controlled or 50 percent or more owned in the aggregate, directly or indirectly, by, or acting for or on behalf of, or at the direction of, any such Person or Persons described in the   “Software” means all software, programming or object code provided by or on behalf of Citibank to Supplier for utilizing a computer or like device to use the System.   “System” means the computerized/online settlement system(s), including related services, equipment and software, to facilitate the processing of Receivables, and payments made with respect thereto.   “Transaction” means a trade/supplier finance transaction permitted by this Agreement, transacted over or using the System.   “U.S. Person” means a Person incorporated or organized under the laws of the United States of America, any State thereof, the District of Columbia or Puerto Rico.   ARTICLE II: RECEIVABLES SALE AND PURCHASE   2.1 Discount Offer. Upon receipt of a Payment Notification, the Supplier is deemed to     ☐ automatically, or   ☒ at its option (and in accordance with the System)   offer to sell to Citibank the Receivables (a “Discount Offer”) evidenced by such Payment Notification as notified whether expressly or shown on the System, at a price (the “Discount Proceeds”) equal to the face amount of the Receivables less the sum of any Credit Notes that have been uploaded prior to the date of the Discount Offer to and shown in the System and have been applied against the Receivables as specified in the Payment Notification, less the applicable Discount Charge and other fees and charges (as further described in Article III and the relevant Pricing Schedule).   Where the Supplier has agreed to offer to sell the Receivables to Citibank automatically under Section 2.1 (an “Auto Discounting”), the Supplier must submit an Auto Discounting Request to Citibank substantially in the form set out in Annex 3. The Supplier may cancel such Auto Discounting at any time on the giving of notice to Citibank and such Auto Discounting shall cease 5 Business Days after the receipt of such notice by Citibank. Citibank may cancel any Auto Discounting at any time upon written notice to the Supplier.   2.2 Discount Acceptance. Citibank, at its option, may accept the Discount Offer by purchasing the offered Receivable on or before the relevant Payment Due Date, by depositing the Discount Proceeds therefor in the Designated Account.   2.3 Discount Rejection. If Citibank has not deposited the Discount Proceeds with respect to an offered Receivable on or prior to the Payment Due Date, the Discount Offer shall be deemed not accepted by Citibank and rescinded by the Supplier, in which case the Paying Agent will make payment on the Buyer’s behalf to the Designated Account on the Payment Due Date (to the extent sufficient funds are provided for by the relevant Buyer, as set out in Section 2.5).   Page 2 of 14     2.4 Receivables Purchase.   (a) The Supplier hereby agrees that, simultaneously with Citibank’s deposit in the Designated Account of the Discount Proceeds set forth in the Discount Offer prior to the Payment Due Date, the Supplier (i) shall have sold or transferred to Citibank all of the Supplier’s present and future right, title and interest in, to and under the Receivables to which such Discount Offer relates, and (ii) be deemed to have provided notice to the Paying Agent of the Supplier’s designation of Citibank as the entity to receive payment of the amount specified in the Payment Notification with respect to such Receivables. No further writing shall be necessary to evidence such transfer of ownership. Notwithstanding the foregoing, the Supplier (i) agrees to sign all such other documents, and take all such further actions, as Citibank may reasonably request from time to time to evidence this transfer of ownership; and (ii) irrevocably and unconditionally authorizes Citibank, in Citibank’s name or on behalf of the Supplier, to notify the Buyer of the transfer of the Receivables by email or otherwise at any time   (b) The Supplier hereby agrees that its obligations under this Agreement and any Discount Offers issued by it shall not be affected by the invalidity, unenforceability, existence, performance or non-performance by the Supplier or Buyer (including partial payment, non-payment or late payment) of the relevant underlying transaction, which (and any liability for which) shall be between the Supplier and the relevant Buyer only.   (c) It is the intention of the Supplier and Citibank that each purchase and sale of Receivables pursuant to this Article II shall constitute a true sale which shall have the effect of the Supplier as legal and beneficial owner assigning absolutely with full title guarantee the Receivables to Citibank. Such sale will be absolute and irrevocable and provide Citibank with the full benefits and burdens of ownership of such Receivables. The sale of Receivables hereunder is made without recourse to the Supplier, except in the case of a breach by the Supplier of any Asset Representation with respect to any Receivable; provided, however, that such sale does not constitute and is not intended to result in an assumption by Citibank of any obligation of the Supplier or any other Person arising in connection with the Receivables or any other obligations of the Supplier.   (d) In the event that, contrary to the mutual intent of the parties, a court of competent jurisdiction determines that the transactions contemplated hereby constitute a loan rather than a purchase and sale, (i) the Supplier shall, effective as of the date hereof, be deemed to have granted to Citibank (and the Supplier hereby does grant to Citibank) a first priority security interest in and to any and all present and future Receivables and the proceeds thereof, collectively, to secure the repayment on demand of all amounts paid by Citibank hereunder and all other amounts due or to become due hereunder from the Supplier and all amounts payable hereunder by a Buyer, and (ii) this Agreement shall be deemed to be a security agreement. With respect to such grant of security interests, Citibank may, at its sole and absolute option, exercise from time to time any and all rights and remedies available to it hereunder, under the UCC or otherwise. 2.5 Collection Option. In the case of any Payment Notification as to which (i) Citibank is deemed not to have accepted a Discount Offer for the purchase of the related Receivables or (ii) the Supplier has chosen not to sell the related Receivables to Citibank, Supplier acknowledges and agrees that the Paying Agent shall have no obligation to make the payment specified in the Payment Notification unless the Paying Agent has received sufficient funds from the Buyer. If the Paying Agent makes such payment before such receipt, the Paying Agent may reverse all or part of such payment, make an appropriate entry to the Designated Account (if applicable) and require repayment of an amount corresponding to each payment.   2.6 Discharge. The Supplier confirms to Citibank in Citibank’s capacity as purchaser of a Receivable (and for the benefit of the applicable Buyer) that Citibank’s deposit of the Discount Proceeds in the Designated Account in accordance with Section 2.4(a) shall be deemed to satisfy Buyer’s obligation to pay Supplier the face amount of such Receivable less the sum of any associated Credit Notes uploaded prior to the date of the Discount Offer. The Supplier also confirms to Citibank in Citibank’s capacity as Paying Agent on a Receivable (and for the benefit of the applicable Buyer) that Citibank’s deposit of the Payment Amount in the Designated Account in accordance with Sections 2.3 and 2.5 shall be deemed to satisfy Buyer’s obligation to pay Supplier the face amount of such Receivable less the sum of any associated Credit Notes. Supplier acknowledges and agrees that (i) resolution of any Claims set forth in any Credit Notes and (ii) any payment obligations of either party under the commercial contract between Buyer and Supplier (other than the Buyer’s obligation to pay the face amount of a Receivable less the sum of any associated Credit Notes), are beyond the scope of this Agreement and are unaffected hereby.   2.7 Change of System. Citibank may from time to time elect (in its sole discretion) to replace the current System with an alternative System. Citibank shall give the Supplier reasonable notice of the proposed replacement. The Supplier’s ability to use the replacement System may be conditioned on the execution of License Agreement in respect of the replacement System by the Supplier and each relevant Buyer.   ARTICLE III: FEES, CHARGES AND TAXES   3.1 Fees and Charges. From time to time, Citibank will provide to the Supplier the Pricing Schedule that (i) discloses all processing, licensing or other fees or charges (including any document examination or other processing charges applicable to an associated open account servicing relationship established for Buyer, if applicable) (ii) describes the method used to calculate the applicable Discount Charge and (iii) sets the effective period (and any renewal periods) with respect thereto. Citibank’s determination whether to purchase Receivables owed by a particular Buyer shall be subject to the terms of the relevant Pricing Schedule. Each Pricing Schedule shall be valid from the effective date specified therein unless changed by Citibank in its sole discretion at any time upon reasonable notice to the Supplier. Any changes to the Pricing Schedule (as permitted therein) shall not affect the Discount Charge applicable to any Receivables previously purchased by Citi or any Discount Offer then outstanding.   Page 3 of 14     3.2 Taxes. The Supplier shall pay, and indemnify and hold Citibank harmless from and against, any taxes that may at any time be asserted in respect of the purchase transactions hereunder (including any sales, occupational, excise, gross receipts, personal property, privilege or license taxes, stamp duties or any withholdings (“Taxes”), but not including taxes imposed upon Citibank with respect to its overall net income) and costs, expenses and reasonable counsel fees in defending against the same, whether arising by reason of the acts to be performed by the Supplier hereunder or otherwise. If the Supplier shall be hereunder (i) the sum payable shall be increased as may be necessary so that, additional sums payable under this paragraph), Citibank receives an amount equal Supplier shall make such deductions and (iii) the Supplier shall pay the full   ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS   4.1 Mutual Representations and Warranties of the Parties. Each of the Supplier and Citibank represents and warrants as follows: (i) it is validly existing and in good standing and has the power to enter into and perform, and has all necessary authorizations for the entry into, performance and delivery of, this Agreement and the transactions contemplated by this Agreement; (ii) this accordance with the Agreement’s terms; and (iii) its execution, delivery and performance of this Agreement does not contravene its constitutive documents or any contract binding on or affecting it or any of its properties, does not violate any applicable law, regulation or order, and does not require any notice, filing or other action to or by any governmental authority.   4.2 Supplier Representations and Warranties. The Supplier hereby agrees that, by entering into this Agreement, the Supplier will be deemed to have made the representations and warranties under Section 4.1, and each of the following representations and warranties, both as of the date of each Discount Offer and as of the date any such Discount Offer is accepted by Citibank pursuant to Section 2.2:   (a) Each such Receivable (i) is the exclusive property of the Supplier, free and clear of all security interests, liens or claims of any kind; (ii) relates exclusively to a commercial trade transaction and represents consideration for a sale of goods or services that (A) have been delivered to and accepted by the relevant Buyer in the ordinary course of business, (B) in relation to which all of the Supplier’s obligations have been performed by it in full, and (C) which complies with all applicable legal requirements; (iii) constitutes a valid, binding and unconditional obligation of the relevant Buyer to pay the full amount of such Receivable, free of any defense, set-off or counterclaim (other than any Claim); (iv) is not disputed by Buyer or any other Person, and is not the subject of any legal or arbitral proceeding; (v) does not have a Payment Due Date falling more than 180 days after the date it is purchased by Citibank pursuant to Section 2.2; and (vi) is freely assignable or transferable (as applicable) and the provisions of this Agreement are effective to assign or transfer (as applicable) the relevant Receivable to Citibank. (b) On the date hereof and at the time of each sale of Receivables hereunder, the Supplier (i) is not and will not be insolvent or unable to pay its debts (including subordinated and contingent debts), nor could it be deemed by a court to be unable to pay its debts, all within the meaning of the law in the jurisdiction of its organization, nor will it become so in consequence of its entering into this Agreement and/or its sale of Receivables to Citibank hereunder and (ii) is not and will not be an affiliate of any Buyer.   (c) The Supplier and any subsidiaries are conducting and will continue to conduct their business in compliance with Anti-Corruption Laws. The Supplier and any subsidiaries have implemented, maintain, and will continue to maintain in effect policies and procedures to ensure compliance by the Supplier, any subsidiaries, and their respective directors, officers, employees, and agents, with Anti-Corruption Laws. None of the Supplier or any of its parents or subsidiaries, or any of their respective directors, officers, or employees, or to the knowledge of the Supplier, the affiliates or agents of the Supplier or any of their subsidiaries, is a Sanctioned Person, or located, organized, or resident in a Sanctioned Jurisdiction.   (d) The operations of the Supplier and any subsidiaries are and have been reporting requirements, as amended, the applicable money laundering statutes of all jurisdictions where the Supplier or any subsidiaries conduct business, the or guidelines, issued, administered or enforced by any governmental or authority or body or any arbitrator involving the Supplier or any subsidiaries of the Supplier, threatened.   (e) If the Supplier provides Citibank with personal data about itself or its Authorized Users, (including without limitation through the use of cookies,) the Supplier warrants that such data has been given with the consent of each individual and in compliance with any applicable personal data protection and privacy legislation, such that the data may be processed or transmitted by and to Citibank and its contractors in any country of the world in connection with this Agreement. The Supplier consents to the disclosure by Citibank of such data to Buyers to the extent such data is needed in connection with the delivery of any Payment Notification.   4.3 Supplier Covenants. The Supplier hereby covenants and agrees with Citibank as follows:   (a) The Supplier shall use the System solely to settle genuine and lawful the sale and purchase of goods or services between the Supplier and Buyers.   (b) Supplier shall comply with all relevant laws and regulations applicable to this Agreement, the Receivables and transactions conducted using the System including, without limitation, all applicable export control laws, and shall keep its state or other place of incorporation or organization and the office where it keeps its records concerning the Receivables at the address referred to in Section 5.9. The Supplier shall timely and fully perform and comply with all material provisions required to be observed by it under the contracts related to the Receivables and promptly inform Citibank of any breach or default by the Supplier or any Buyer of any of the terms thereof.   Page 4 of 14     (c) The Supplier shall (a) at the request of Citibank, execute any such documents and do all acts and things as may be, in the opinion of Citibank, reasonably necessary to protect Citibank’s rights and benefits in respect of this Agreement and/or to confer to Citibank all rights, title and interest of the Supplier in respect of any Receivable purchased by Citibank and (b) maintain and implement administrative and operating procedures and keep and maintain all documents, books, records and other information (including without limitation the relevant supply contract and shipping documents) reasonably necessary or advisable for the collection of all Receivables purchased by Citibank or in order to comply with applicable laws and regulations and provide copies of such records and documentation to Citibank promptly on request. The Supplier shall retain each record required to be maintained under this Section 4.3(c) for at least the longer of (i) the term of this Agreement or (ii) as may be required by   (d) The Supplier shall not, at any time after making a Discount Offer to Citibank, sell or otherwise dispose of or permit any encumbrance on the Receivables offered to or purchased by Citibank other than Citibank’s interest therein.   (e) The Supplier hereby irrevocably authorizes Citibank, in its sole discretion, to file one or more financing statements (and other similar instruments) and amendments thereto and, if the Supplier is not a U.S. Person, any other notice, registration, document or instrument required under the laws of the Supplier’s jurisdiction of organization, and to take any other action, relative to all or any part of the Receivables purchased by Citibank, without the signature of the Supplier, to the extent permitted by applicable law, in each case as may be necessary or appropriate in order to perfect and maintain the perfection of Citibank’s ownership of and security interest in such Receivables. If not so permitted by applicable law, or in such other circumstances as Citibank may reasonably request, the Supplier will execute and file any such financing statements and amendments thereto, and such other notices, registrations, documents and instruments, and will take any other required action, as may be necessary or appropriate to perfect and maintain the perfection of Citibank’s ownership and security interest in such Receivables. If the Supplier is a U.S. Person, the Supplier shall not (i) change its location (as defined in Section 9-307 of the New York UCC) or (ii) change its name from its current legal name without providing Citibank at least 30 Business Days prior written notice.   (f) The Supplier will mark its computer records relating to any Receivables purchased by Citibank with a legend evidencing that Citibank has purchased such receivables.   (g) The Supplier shall immediately notify Citibank if it ever becomes or believes it is likely to become a subsidiary or affiliate of any Buyer. (h) None of the Supplier or any of its parents or subsidiaries, or any of their respective directors, officers, or employees, or to the knowledge of the Supplier, the affiliates or agents of the Suppliers or any of their subsidiaries, will, directly or indirectly, use any part of the Discount Proceeds, or lend, contribute, or otherwise make available such proceeds (i) to fund or facilitate any activities or business of or with any Person that, at the time of such funding or facilitation, is a Sanctioned Person, (ii) to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction, (iii) in any manner that would result in a violation by any Person of Sanctions, or (iv) in violation of applicable law, including, without limitation, Anti-Corruption Laws. None of the execution, delivery, or performance of this Agreement, or any activities, transactions, services, or security interest contemplated by this Agreement, would result in a violation of Sanctions by Citibank.   ARTICLE V: MISCELLANEOUS   5.1 Waivers; Severability. No delay or failure of any Party hereto in exercising any right, privilege or option under this Agreement shall operate as a waiver of such or of any other right, privilege, or option. If any provision of this Agreement is or becomes illegal or invalid under any applicable law, the validity of the remaining provisions shall not be affected thereby.   5.2 Limitation on Liability.   (a) Citibank shall be entitled to rely on any communication sent or purported to be sent by the Supplier, irrespective of any error or fraud contained in the communication or the identity of the individual who sent the communication, and shall not be liable for any action taken or omitted in reliance on any notice, direction, consent, certificate, affidavit, statement, designation or other paper or document reasonably believed by it to be genuine and to have been duly and properly signed or presented to it by the Supplier.   (b) Except for liabilities to third parties relating to defense and indemnification obligations hereunder, neither Party shall be liable to the other Party or responsible for any loss of business or profits, revenue or goodwill, or any indirect or consequential, special, exemplary or punitive losses or damages, whether arising from negligence, breach of contract or otherwise, even if informed of the possibility of those losses or damages.   (c) Citibank shall not be liable for any Losses arising out of or relating to any of its actions or omissions to act hereunder, except to the extent that any such Losses are caused by Citibank’s gross negligence or willful misconduct.   (d) Notwithstanding anything contained in this Agreement, Citibank shall not be obligated to accept or take any action in respect of any Receivable which Citibank believes could breach any applicable law, rule, regulation, sanction or internal policy applicable to it.   5.3 No Implied Duties or Warranties. Citibank shall be obliged to perform such duties and only such duties as are specifically set forth herein, and no implied duties or responsibilities shall be read or implied into this Agreement against Citibank. Notwithstanding any other provision elsewhere contained in this Agreement, Citibank shall have no duties or obligations hereunder to any Person or entity other than the Supplier and, without limiting the foregoing, does not hereby assume any obligation or relationship of agency or trust hereunder for, or with, the Supplier, Buyers, or any other Persons.   Page 5 of 14     5.4 Confidentiality.   (a) Each Party agrees to maintain the confidentiality of any Confidential Information (as defined below) of the other Party to which it has access under the System or otherwise under this Agreement, and to use such Confidential Information only for the purposes of exercising its rights and performing its obligations under this Agreement, and not for its own personal gain or benefit. “Confidential Information” shall mean information of a Party that the other Party knows or reasonably should know to be confidential to such first Party.   (b) Notwithstanding the foregoing, either Party may disclose Confidential Information obtained from the other Party (i) to any authority of competent jurisdiction pursuant to legal process or pursuant to any other foreign or domestic legal and/or regulatory obligation or request, including disclosure to courts, tribunals, and/or legal, regulatory, tax and governmental authorities; (ii) to its subsidiaries and affiliates; (iii) to its professional advisors, auditors and service providers; and (iv) subject to Section 5.6 hereof, to any Person to (or through) whom Citibank sells, assigns or transfers (or may this Agreement or any Receivables, or to a counterparty in (x) a securitization or similar transaction in relation to which any Receivables or this Agreement forms a part of the asset pool or collateral pool, (y) a sub-participation in relation to any Receivables or this Agreement, or (z) any other transaction (including credit derivative transactions) under which payments are to be made by reference to any Receivables or this Agreement. In addition, Citibank may, from time to time at Buyer’s request, provide Buyer with information as to discounting volumes without violating this Section 5.4(b) or any other confidentiality provisions herein.   5.5 Indemnity. The Supplier shall defend, indemnify and hold harmless Citibank and its affiliates, employees, directors, officers, and agents (each, an “indemnified party”), from and against all Losses, including, without limitation, Losses arising out of or in any way relating to (i) any breach of the Supplier’s obligations under this Agreement, including any representations under Article IV being untrue or inaccurate, (ii) Citibank’s reliance on any Message sent or purported to be sent by the Supplier using the System, (iii) any Claim or any other dispute with respect to the commercial transaction giving rise to any Receivable, or (iv) any claim that any Message or other material transmitted or uploaded onto the System by the Supplier infringes or misappropriates any third party intellectual property rights, except to the extent that such Losses are caused by the gross negligence or willful misconduct   5.6 Assignment. This Agreement shall bind and inure to the benefit of the respective successors, permitted assigns and transferees of each of the Parties; provided, however, that the Supplier may not assign or transfer any of its rights or obligations hereunder without Citibank’s prior written consent, given in its sole discretion. Citibank shall have the right without the consent of or notice to the Supplier to sell, transfer, assign, or grant participations in the Receivables purchased by Citibank and all or any part of, or any interest in, Citibank’s obligations, rights and benefits hereunder.   5.7 Termination. Either Party may terminate this Agreement for any reason upon thirty Business Days prior written notice to the other Party. Either Party may terminate this Agreement upon five Business Days prior written notice if the other Party is in breach of, or fails to perform any of its material obligations under, this Agreement; provided that with respect to any breach of 4.2(c) or (d), Citibank may terminate this Agreement with immediate effect. Upon notice of termination, the Supplier shall no longer issue Discount Offers to Citibank and Citibank will no longer accept Discount Offers from the Supplier. Upon such termination Citibank will disable any Logins relating to the Supplier and its Authorized Users. 5.8 Survival. All covenants made herein shall continue in full force and effect so long as any purchased Receivable remains outstanding. All confidentiality, security and indemnity obligations and all limitation of liability provisions   5.9 Notices. Except as otherwise expressly contemplated herein, all notices pursuant to this Agreement shall be in writing, duly signed by the Party giving such notice, and shall be delivered, emailed, faxed or mailed to the address set forth under the relevant Party’s signature line hereto. All notices or other communications shall be deemed to have been received: (a) if sent by fax with a confirmed receipt of transmission from the receiving fax machine, on the day on which it was transmitted; (b) in the case of a notice given by hand, on the day of actual delivery; (c) if sent by mail, 5 Business Days after being deposited in the mail with first class prepaid postage; or (d) if sent by e-mail, on the date of sending; provided that a notice given in accordance with the above but received on a day which is not a Business Day or after normal business hours in the place of receipt shall he deemed to have been received on the next Business Day.   5.10 Entire Agreement; No Third Party Beneficiaries; Amendments; Additional Citibank Entities (a) This Agreement embodies the entire agreement between the Supplier and Citibank relating to the subject matter hereof, and supersedes all prior agreements relating to this subject matter. (b) This Agreement shall not be construed to confer any right, benefit, remedy or claim upon any Person other than the Supplier and Citibank and their respective successors and permitted assigns. This Agreement may be amended by the Parties at any time. All amendments and waivers to this Agreement must be in writing and signed by or on behalf of each of the Parties. The Parties agree that any Citibank branch, subsidiary or affiliate may become a party to this Agreement (and assume the rights and obligations of “Citibank”) as if it were an original party hereto subject to Citibank notifying the Supplier with a confirmation signed by (or on behalf of) such entity along with the delivery of any applicable Pricing Schedules.   5.11 Business Days. Any amounts which but for this Section 5.11 would fall due for payment by Citibank on a day other than a Business Day shall be payable on the succeeding Business Day.   5.12 Calculations. All calculations and determinations made by Citibank in connection with this Agreement (including any calculations or determinations set out in any demand on the Supplier) shall be conclusive in the absence of manifest error.   5.13 Execution. This Agreement may be either physically signed (in any number of counterparts, which taken together shall constitute a single copy of this Agreement), or, in the event that this Agreement is viewed on a website, by the acceptance of such terms as shown by a click on an “I Accept” button or similar label. Any signature delivered by facsimile or by email in “pdf” or similar format shall be deemed an original signature hereto. In addition, any electronic signature or other form of acceptance other than physical signature shall be deemed to be a physical signature.   Page 6 of 14     5.14 Governing Law and Jurisdiction. This Agreement is governed by the laws of the State of New York. The Parties agree that any New York State court or Federal court sitting in New York City or an appellate court having appellate jurisdiction over such courts shall have non-exclusive jurisdiction to hear and determine or settle any suits, litigation or other proceedings or disputes in connection with this Agreement, and submit to the jurisdiction of those courts. Each Party waives: (i) any right to immunity from jurisdiction to which it may be entitled (including, to the extent applicable, immunity from pre-judgment attachment and post judgment attachment and execution) and (ii) any objection to venue or any claim of inconvenience in connection with a proceeding brought in such a court. Without prejudice to any other mode of service allowed under any relevant law, upon Citibank’s request the Supplier shall immediately (and in any event within five (5) Business Days), appoint an agent for service of process in New York (on terms acceptable to Citibank) in connection with this Agreement. If the Supplier fails to appoint an agent upon Citibank’s request, Citibank is authorized to appoint such agent as it may choose in its sole discretion for this purpose. Citibank shall notify the Supplier of any appointment it makes pursuant to this clause 5.14. In the event that Citibank makes such appointment, the Supplier may replace such process agent appointed by Citibank with prior written notice to Citibank; provided that any service of process that occurs before such notice of replacement shall be effective when served to the process agent appointed by Citibank]* The Supplier agrees that nothing in this Agreement shall affect Citibank’s right to serve process in any other manner permitted by law (including pursuant to the rules for foreign service of process authorized by the Hague Convention) or to commence legal proceedings or otherwise proceed against the Supplier in any other jurisdiction, and that failure by a process agent to notify the Supplier of the process will not invalidate the proceedings concerned. The Supplier agrees that nothing in this Agreement shall affect Citibank’s right to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Supplier in any other jurisdiction. The Supplier agrees that final judgment against it in any action or proceeding shall be enforceable in any other jurisdiction by suit on judgment, and any recovery by Citibank pursuant to any judgment that is expressed in or converted into any currency other than U.S. Dollars, shall not discharge the obligation except to the extent that such recovery results in the actual receipt by Citibank in New York of the full amount of U.S. Dollars owed.   5.15 Annex 4 Override. The provisions of Annex 4 shall apply to this Agreement and if there is any inconsistency between the other provisions of this Agreement and the provisions in Annex 4, the latter shall prevail to the extent of the inconsistency.   5.16 WAIVER OF JURY TRIAL. THE PARTIES WAIVE ANY RIGHTS THEY MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM THIS AGREEMENT. 5.17 Declaration. The Supplier confirms that it has received independent legal, tax and accounting advice in relation to the transactions contemplated by this Agreement. The Supplier confirms that it has not relied on any representation of Citibank in this regard.   5.18 Service Providers. Citibank is permitted to: (i) utilize service providers (which may be affiliates of Citibank or selected third parties) to assist with the processing of and/or to facilitate the transactions contemplated in this Agreement, and (ii) disclose information received by Citibank in connection thereof to such service providers on a confidential basis.       *Supplier can choose which option it prefers on this point   Page 7 of 14       POLAR POWER INC         (Supplier’s full registered legal name)   for and on behalf of Citibanks       By: /s/ Luis Zavala   By: /s/ Sally-Ann Gordon   (Signature)     (Signature) Name (printed):  LUIS ZAVALA   Name (printed):  Sally-Ann Gordon Title: CFO   Title: Vice President Date: May 20, 2019   Date: June 4, 2019   Supplier Name:  POLAR POWER INC   Citibank entity:  Citibank N.A.           Attention: LUIS ZAVALA   Attention: Vasilios Kontogianis Address: 249 E. GARDENA BLVD GARDENA,   Address: 388 Greenwich Street, 25th   CALIFORNIA, UNITED STATES     New York, NY Email: lzavala@polarpowerinc.com   Email: vasilios.kontogianis@citi.com Phone: (310) 830-9153 x 4117   Phone: 212-816-7096 Fax: (310) 719-2385   Fax: 1-866-443-2352      Note: The above address details are those referred to in Section 5.9.          Citibank entity:  Citibank Europe PLC                 Attention:         Address: I North Wall Quay         Dublin 1, Ireland       Email:         Phone: +353 (01) 622 6151       Fax: +353 (01) 622 2741   Page 8 of 14     CERTIFICATE OF INCUMBENCY AND AUTHORITY   INSTRUCTIONS   Note 1: In the case of Sole Proprietors, the COIA is not required.   Note 2: If you have your own Certificate of Incumbency, please provide in lieu of the attached.     1.Enter your Legal Company Name under name of Supplier wherever it appears.   2.Provide actual date that the Supplier Agreement is signed.   3.Please note the title of the party who will be certifying the agreement. This should be the Corporate Secretary.   4.Input Authorized officers’ names, email addresses and phone numbers and have them sign in the appropriate slot. This must be a “wet” signature. Electronic signatures are not accepted.   5.Corporate Secretary should fill in the date and complete the first signature box.   6.Another officer of the company will certify in the following section that the Corporate Secretary holds such role and that his/her signature is valid. That officer should sign in the second signature box.   7.This document should be submitted on your Company Letterhead.   Page 9 of 14     COMPANY LETTERHEAD   OF POLAR POWER INC (Name of Supplier)     This Certificate is being provided in connection with the Supplier Agreement, dated as of 2019-05-20 (Date of Agreement) (as amended or otherwise modified from time to time, the “Supplier Agreement”), between POLAR POWER INC (Name of Supplier) (“Supplier”) and Citibank, N.A., its branches and subsidiaries and affiliates from time to time party thereto (collectively, “Citibank”).   I, the undersigned, do hereby certify to Citibank that I am the CEO [corporate Secretary] of Supplier and am authorized to certify on behalf of Supplier as follows: (i) each of the person(s) named below (each an “Authorized Officer”) is a duly elected or appointed, qualified and acting officer of Supplier and holds the title, email address and phone number set forth next to such person’s name, (ii) the signature set forth next to the name of each Authorized Officer below is such Authorized Officer’s true and lawful signature, and (iii) each Authorized Officer is authorized on behalf of Supplier to (x) execute and deliver on behalf of the Supplier, the Supplier Agreement, related Setup Forms and all other agreements, documents and instruments required thereunder or contemplated thereby, (y) add, modify, or delete any employee of Supplier as a user that will or has access to the use of the System (as defined in the Supplier Agreement) in connection with the Supplier Agreement (“User Changes”) and (z) add, modify or delete Supplier details, Supplier bank account details or primary contact details in connection with the Supplier Agreement (“Supplier Bank Changes”).    Authorized Officer Name and Title  Signature  Email Address  Phone Arthur D. Sams, CEO  /s/ Arthur D. Sams  asams@polarpowerinc.com  424-286-4118 Luis Zavala, CFO  /s/ Luis Zavala  lzavala@@polarpowerinc.com  424-286-4117   In furtherance of the foregoing and without limitation thereof, Citibank may accept and rely on any communication, notice and instruction in connection with User Changes and/or Supplier Bank Changes that is sent or purported to be sent by any Authorized Officer (whether oral, telephonic, written, facsimile or electronic) and that such communication, notice and instruction is valid and binding on the Supplier, irrespective of any error or fraud contained therein or the identity of the individual who sent the communication, notice and instruction. If any communication, notice and instruction is sent to Citibank electronically via e-mail or otherwise, Supplier will not contest the validity, legally binding nature or enforceability of such communication, notice and instruction on the basis that the act of sending such communication, notice and instruction electronically is invalid or not binding on such party.    Any signature to this Certificate delivered by facsimile or email in “pdf” format shall be deemed an original signature hereto. This Certificate shall remain in effect until further notice in writing is received by Citibank from the Supplier. A change to this Certificate requires a new Certificate to be executed and delivered by the Supplier to Citibank and accepted by Citibank before such change takes effect.   This Certificate and the transactions contemplated hereby are governed by the   IN WITNESS WHEREOF, I have hereunto subscribed my name this 20th day of May, 2019.     By: /s/ Arthur D. Sams   Name:  Arthur D. Sams   Title: CEO   I,   Luis Zavala,  the   CFO of the Supplier do hereby certify that   Arthur D. Sams is the duly elected, qualified and acting     (Name)   (Title) (the above signor)                     CEO [corporate Secretary] of the Supplier and that the signature above is his true and genuine signature.      By: /s/ Luis Zavala   Name: Luis Zavala   Title: CFO   249 E. Gardena Blvd, Gardena, CA. 90248 ● Tel: (310) 830-9153 ● Fax: (310) 719-2385   Page 10 of 14     Annex 1   PRICING SCHEDULE   Supplier’s Legal Company Name (please complete): Polar Power, Inc. Buyer: AT&T Services Inc and as further set forth in clause (D) below (no intracompany relationship with Supplier). Citibank entity: Citibank NA and/or Citibank Europe PLC   A.Receivables Discounting Fees and Charges:   “Discount Charge” for each Discount Offer is defined as the Payment Amount multiplied by the Discount Rate;   Discount Charge = Payment Amount x Discount Rate.   Where:   “Discount Rate” means the annual percentage rate, calculated as the sum of the LIBOR prevailing on the Discount Date and the Spread, multiplied by the Discount Acceptance Period and divided by 360:   Discount Rate = (LIBOR + Spread) x (Discount Acceptance Period / 360).   “Spread” is equal to 1.00% per annum.   “LIBOR” (London Inter-Bank Offered Rate) is the LIBOR for the relevant currency for the relevant Discount Acceptance Period, as published by Bloomberg or if not available, any other page service specified by Citibank displaying the appropriate rate or if not available, as determined by Citibank; provided that (i) if the Discount Acceptance Period falls between any two LIBOR periods, then LIBOR shall be the rate for the higher of those two LIBOR periods and (ii) if at any time LIBOR is less than 0%, then LIBOR shall be 0%.   “Discount Acceptance Period” is the number of days in the period starting from (and including) the date the Discount Proceeds are remitted by Citibank to the Designated Account until (but excluding) the Payment Due Date.   “Discount Date” means the date that the System processes each Discount Offer.   B.Other Fees and Charges: Citibank reserves the right to assess processing fees   C.Effective Date:   1)The Effective Date of this initial Pricing Schedule is the date set forth in the first line of this Agreement.   2)The above pricing shall be effective commencing on the Effective Date and shall continue until termination of this Agreement in accordance with Section 5.7 thereof (the “Termination Date”); provided, however, Citibank may, at any time, change the above pricing (or any subsequent pricing) in its sole discretion upon at least thirty (30) days prior notice to the Supplier, with such new pricing to be effective commencing on the 30th day following such notice and continuing through and including the Termination Date.   D.Buyer:   1)For the purposes of this Pricing Schedule, “Buyer” shall mean AT&T Services Inc and its various subsidiaries and affiliates that are located in the jurisdictions set forth in clause (F) below.   E.Currencies:   1)The above pricing is only applicable for the following currencies unless otherwise agreed in writing by the Parties: USD   F.Jurisdictions:   1)The above pricing is only applicable to Buyers that are incorporated or otherwise organized in the following jurisdictions unless otherwise agreed in writing by the Parties: United States   Page 11 of 14     Annex 2   LICENSE SCHEDULE   Terms and Conditions     (a)Subject to the terms and conditions set forth in this Agreement, Citibank hereby grants the Supplier during the term of the Agreement a limited, revocable, personal, non-exclusive, non-transferable license and right, without the right to sublicense, to access and use the System and all tangible printed information (including any in electronic form) provided or made available from time to time by, or on behalf of, Citibank to the Supplier in connection with the use of the System (the “Policies and Procedures” and together with the System, the “Licensed Resources”), solely for the purposes contemplated by the Agreement (the “License”). Except as expressly set forth in the Agreement, the Supplier shall have no other right (including any ownership right or intellectual property right), title or interest to or in the Licensed Resources   The Supplier acknowledges that all right, title and interest in and to the System, including without limitation, all rights in inventions, patents, copyrights, design rights, database rights, trademarks and trade names, service marks, trade secrets, know-how and other intellectual property rights (whether registered or unregistered) and all applications and rights to apply for any of them anywhere in the world that apply to the Licensed Resources (together, the “Intellectual Property Rights”), are vested, and shall remain vested, in Citibank and its licensors. Notwithstanding anything to the contrary contained herein and except as otherwise may be expressly agreed in, writing, all right, title and interest in and to modifications, revisions, upgrades, updates, derivative works and other improvements to or development of the System shall vest solely in Citibank and its licensors. Except for the grant herein by Citibank to the Supplier of the License, nothing in this Agreement shall act to operate as an assignment or other transfer of any of such rights to the Supplier.   (b)The Supplier confirms that Citibank and its licensors may use any Message, Transaction data or other information posted by or on behalf of the Supplier for the purposes of providing services and processing Transactions under this Agreement and operating and maintaining System.   2.Usage.   (a)The Supplier shall access and use, and shall ensure that its Authorized Users access and use, the System only in accordance with this Agreement and the Policies and Procedures. Citibank may at its sole discretion amend the System or the Policies and Procedures at any time.   (b)The Supplier shall remain informed and notify its Authorized Users as to any updates to these Policies and Procedures that may be implemented from time to time. Approval and acceptance of an update to the Policies and Procedures shall be deemed to be given if the Supplier continues to utilize the System subsequent to the publication of any such update.   (c)The Supplier shall promptly use any successors, updates, new releases or replacements of any portion of any and all equipment provided by Citibank to the Supplier for the purposes of accessing or using the System, including all authentication products (together, the “Equipment”) or Licensed Resources or Software provided to it from time to time by Citibank or otherwise, for use in accessing the System, and cease to use the previous version or release of such portion.   (d)The Supplier shall have the right under the License to access the content of the website for the System on a computer screen, to print reasonable extracts from the website, and to save reasonable copies of data posted on the System to the Supplier’s hard drive, in each case solely for the purposes contemplated by this Agreement. All other copying, distribution or commercial use of any of the content of the website is strictly forbidden. Except for the limited right granted by this paragraph 2(d), no other right or license is granted in respect of the content of the website.   (e)The Supplier shall have no right to, and shall not, without the prior written consent of Citibank, alter or modify the whole or any part of the Licensed Resources.   Page 12 of 14     3.Security, Authorized Users and Access.   The Supplier shall safeguard and keep confidential, and put into effect and maintain commercially reasonable security measures to safeguard and keep confidential, the Licensed Resources. In furtherance of the foregoing, the Supplier agrees that:   (i)it will not knowingly interfere with, defeat, circumvent or tamper with a Message, or with the restrictions on use of functionality or access to information on any portion of the System, or attempt to do so;   (ii)it will not knowingly introduce into any portion of the System any virus or other data or code that harms, or may adversely affect, the operation of the System, and will put into effect and maintain commercially reasonable measures to prevent any such introduction;   (iii)it will ensure that all Messages being communicated by the Supplier through the System are sent in accordance with this Agreement and the Policies and Procedures;   (iv)the issuance of Logins to Authorized Users, to access the System and the rules and particular roles applicable to the various types of Authorized User shall be in accordance with the Policies and Procedures;   (v)the Supplier warrants that each of its Authorized Users is authorized to bind the Supplier, and agrees to be bound by any usage of the System that occurs under any of its Authorized Users’ Logins, unless it has previously notified Citibank in writing that particular Logins or Authorized Users are to be cancelled or their security has been compromised;   (vi)the Supplier shall ensure that only its Authorized Users access the System and shall procure that its Authorized Users: (a) maintain the secrecy of their Logins and do not disclose their Logins to any other person; and (b) are informed of and abide by the Policies and Procedures;   (vii)the Supplier shall immediately notify Citibank in writing if it becomes aware of any unauthorized use, loss or theft of its Authorized Users’ Logins or if the Supplier becomes aware or suspects that any of them have become known by an unauthorized person. Upon such notification Citibank may (at its absolute discretion) revoke, suspend or disable such Logins and/or issue new Logins to the Supplier;   (viii)the Supplier shall not, and shall procure that any of its representatives do not, access or attempt to gain access to any part of the System that is not permitted under its Logins; and   (ix)the Supplier shall not use the System as or in connection with a bureau service or for the provision of services to third parties.   4.Messages.   (a)The Supplier shall use the System to send all Messages under this Agreement (including, without limitation, Discount Offers and any updates to the Supplier’s list of Authorized Users) on the Supplier’s behalf.   (b)Any Message or Transaction which appears to Citibank to be sent and or entered into by the Supplier via the System is valid and binding on the Supplier, and Citibank is entitled to rely thereon, irrespective of any error or fraud contained therein or the identity of the individual who sent the Message, except to the extent that such error or fraud or use of the System by an unauthorized third party is a result of the failure by Citibank, as the case may be, to use commercially reasonable security measures to prevent unauthorized access to the System. The Supplier agrees that the act of sending a Message electronically in accordance with this Agreement is as legally binding as if the Supplier had manually executed and delivered that Message in written form, and that the Supplier will not contest the validity, legally binding nature or enforceability of that Message on the basis that the act of sending the Message electronically is invalid or not binding on the Supplier.   (c)Neither party shall use the System to communicate formal contractual notice.   5.System Availability.   The Supplier acknowledges and agrees that: (i) Citibank does not represent or warrant that the System will be error-free; (ii) Citibank provides no warranty as to the availability of the System and there will be downtime from time to time when the System cannot be accessed; and (iii) the Supplier is responsible for providing and maintaining, and Citibank does not have any liability or responsibility in respect of, equipment not supplied by or on behalf of Citibank, or utility services that the Supplier utilizes as a result of its participation in the System and maintaining a link to the System, or any failures, errors, unavailability or delays resulting from the use of such equipment or services.     Page 13 of 14     6.Confidentiality.   Notwithstanding Section 5.4 of this Agreement, Citibank may compile, copy, modify, license and exploit any and all data entered into the System by or on behalf of the Supplier, including without limitation Transaction data, Message data and statistical click-stream data, provided always that such data has been anonymized such that it does not compromise any personal data in contravention of any applicable personal data protection and privacy legislation and that it does not directly or indirectly identify any individuals, any Supplier or any other corporate entities.   7.Representations, Warranties and Covenants of Supplier.   The Supplier hereby represents, warrants and covenants to and with Citibank as follows:   (a)The Supplier has independently verified or shall independently verify the validity of the entity and the account information and any changes to such information stored on the System with respect to each Buyer. The Supplier acknowledges that Citibank has no obligation to inspect or view the content of Messages conveyed through the System, and that Citibank has no liability in the event that the Supplier is in breach of this obligation.   (b)The Supplier shall maintain sufficient records of all Messages and Transactions sent or entered into by it using the System and otherwise with respect to its obligations and activities in connection with this Schedule, including (without limitation) information with respect to any underlying commercial trade transaction (or associated disputes) to which it is a party, and with respect to compliance of such transactions with applicable laws and regulations (“Records”). The Supplier shall retain each Record required to be maintained under this Section 7 during the longer of (i) the term of this Agreement or (ii) as may be required by law or regulation.   (c)The Supplier shall provide Citibank with copies of any Records as Citibank may require, or the Supplier shall allow Citibank to examine and take copies of the Records, or any part of them, which are reasonably required in order to comply with an order, instruction or request from any authority of competent jurisdiction, or to ensure compliance with or in connection with the performance of the terms of this Schedule.     Page 14 of 14  

30th day of April, 2008, by and between Tenet Healthcare Corporation (“Tenet”) and E. Peter Urbanowicz, Jr. (“Covered Executive”). Each of the parties agrees as follows: 1. Covered Executive’s last day worked was March 6, 2008 (“Last Day Worked”) and thereafter he is not authorized to bind or make any commitments on behalf of Tenet. Covered Executive acknowledges having been paid all base salary due Covered Executive as of his Last Day Worked in respect of the period prior to the Last Day Worked, and Tenet shall pay Covered Executive all expense reimbursement in respect of the period prior to the Last Day Worked upon submission of his expenses in accordance with Tenet policy. Covered Executive acknowledges and agrees that (1) for all purposes his employment with and services to Tenet and all affiliates of Tenet in all capacities formally terminated in all respects as of his Last Day Worked, and (2) except as explicitly provided in this Agreement, Tenet will have no further obligation to Covered Executive following the Last Day Worked. 2. Covered Executive’s separation from Tenet will constitute a Qualifying Termination under the Tenet Executive Severance Plan (the “ESP”), and, as the former General Counsel of Tenet, Covered Executive is eligible for the payments and benefits applicable to his title as set forth in Article III, Section 3.1 (Severance Benefits prior to Change of Control) of the ESP, in each case as set forth herein. That certain Tenet Executive Severance Plan Agreement was acknowledged and accepted by Covered Executive on August 8, 2006 and, along with the ESP, is attached hereto and incorporated by reference as if set forth fully herein. 3. As severance pay under the ESP, Covered Executive is entitled to $2,414,425, to be paid, subject to the remainder of this Section 3, in 65 biweekly installments of $37,145 over the two and one-half years following the Last Day Worked (the “Severance Period”). Accordingly, the severance pay shall be paid as follows: (i) payment of the severance pay shall commence on May 16, 2008, and the first installment of severance pay shall be $167,152.50, which includes all of the severance pay that Covered Executive would have been paid for the period from March 6, 2008 through May 9, 2008 if this Agreement had been in effect on March 6, 2008; (ii) a further 59 bi-weekly installments of $37,145 shall be paid to Covered Executive on the next succeeding 59 bi-weekly payroll dates; and (iii) a final installment of $55,717.50 shall be paid on September 3, 2010. All payments under the ESP and this Agreement will be subject to standard withholdings and other deductions authorized by law. 4. During the Severance Period, Covered Executive will also be entitled to continue participation in Tenet’s medical, dental, vision and life insurance and long-term care benefit plans in which Covered Executive participated immediately prior to the Last Day Worked, subject to his paying his portion of the cost of such coverages as in effect as of the Last Day Worked. At the end of the Severance Period, Covered Executive will be eligible to elect COBRA benefits by making the required contribution. Any such coverage will be limited and reduced to the extent equivalent coverage is otherwise provided by (or available from or under) any other employer of the Covered Executive. Nothing in this Section 4 is intended to enlarge or diminish Covered Executive’s rights and obligations with respect to such coverages under the ESP. 5. The parties further agree to the following: a. SERP: As of the Last Date Worked, Covered Executive was an unvested participant in Tenet’s Supplemental Executive Retirement Plan (“SERP”). The parties agree that, as provided in the ESP, Covered Executive will receive age and service credit for purposes of the SERP for the Severance Period such that Covered Executive will be entitled to payment of a vested benefit under the SERP in accordance with the terms of the SERP. Tenet acknowledges that its obligations to Covered Executive under the SERP survive the Last Day Worked. b. AIP for 2007: Covered Executive is not entitled to any payment under Tenet’s Annual Incentive Plan (“AlP”) in respect of Tenet’s 2007 fiscal year. He will not be eligible for any AIP award for any period thereafter except as noted in paragraph c below. c. AIP for 2008: Executive will be eligible for a prorated AIP Award in respect of Tenet’s 2008 fiscal year on a similar basis as paid for Tenet senior management executives for that same period, with an expected payment date of March 15, 2009. Executive acknowledges that, pursuant to the terms of the AIP, the Compensation Committee of the Tenet Board of Directors may, in its sole discretion, reduce any or all bonuses payable under the AIP. Tenet acknowledges that its obligations to Covered Executive under the AIP in respect of Tenet’s 2008 fiscal year survive the Last Day Worked. d. Deferred Compensation: Covered Executive is not a participant in Tenet’s Executive Deferred Compensation Plan or Supplemental Savings Plan and is not entitled to any benefit from those plans. e. Stock Options and other Equity Compensation: As of his Last Day Worked, all of Covered Executive’s Tenet stock options and other equity compensation will become fully vested other than (i) the Career Restricted Stock Unit Awards granted to Covered Executive on March 1, 2007 (the “Career RSU Awards”), and (ii) the Performance Restricted Stock Units granted to Covered Executive on March 1, 2007 (the “Performance RSU Awards”), each of which shall become vested and/or be forfeited to the extent provided below. The outstanding restricted stock units granted to Covered Executive on March 1, 2007 (other than the Career RSU Awards and Performance RSU Awards) and on February 22, 2006 shall be deemed fully vested as of the Last Day Worked as provided in the ESP and shall be settled in shares of Tenet common stock (less a number of shares with a value equal to any required tax withholdings) on September 12, 2008. The Career RSU Awards shall be vested as to 75,000 shares as of the date of this Agreement, with the settlement thereof to occur in shares of Tenet common stock (net of a number of shares with a value equal to any required tax withholdings) on the first business day in January 2009, and the remainder of the Career RSU Awards shall be forfeited as of the date of this Agreement. The Performance RSU Awards shall remain outstanding for the entirety of the performance period applicable thereto and, at the end of such performance period, shall vest and/or be forfeited based on the applicable performance goals as if Covered Executive had remained continuously employed by Tenet through the date of such settlement and/or forfeiture. Covered Executive’s Tenet stock options shall be exercisable   2 of 7 until the last day of the Severance Period. As provided in the ESP, Covered Executive will not be entitled to any new equity-based compensation following the Last Day Worked. Tenet acknowledges that its obligations to Covered Executive with respect to the foregoing equity awards survive the Last Day Worked. f. Managers Time Off: Covered Executive acknowledges having received a payout of his accrued benefit under the Managers Time Off Plan (“MTO”) as of the last day worked according to MTO plan terms. Covered Executive will not be eligible for additional time off benefits under the MTO during the Severance Period. g. 401(k): As provided in the ESP and the Tenet 401(k) plan, Covered Executive will not be eligible to contribute to the 401(k) plan with respect to the period following the Last Day Worked. Covered Executive will retain his vested rights under the 401(k) plan. More information regarding the rollover of the 401(k) balance will be provided under separate cover if such information has not already been provided prior to the date hereof. h. Relocation. Tenet acknowledges its obligation to provide Covered Executive with relocation benefits in the event that he relocates within the continental United States within six (6) months of the Last Day Worked, to the extent provided under that certain letter delivered by Tenet to Covered Executive, dated June 29, 2004 and the relocation policy attached thereto. Tenet acknowledges that its obligation with respect to these relocation benefits survive the Last Day Worked. i. Attorney’s Fees. Upon presentation of an invoice within thirty (30) days following the date of this Agreement, Tenet shall pay Gardere Wynne Sewell LP any attorney’s fees and expenses actually incurred by Covered Executive in of $20,000. Other than as set forth in this Agreement, Covered Executive is not entitled to any further compensation or employee benefits from Tenet or any of its affiliates following the Last Day Worked. 6. Following the Last Day Worked, Tenet shall continue to provide Covered Executive with the same indemnification in respect of his services as an officer of Tenet and any subsidiary of Tenet (whether provided in Tenet’s by-laws or certificate of incorporation, in one or more separate agreements or as an previously in force) as is provided to other, similarly situated former officers of Tenet. 7. In consideration of a payment to Covered Executive of $533,000 (the “Special Payment”), Covered Executive agrees that he will reasonably cooperate with Tenet, upon request, in relation to (1) the defense, prosecution or other involvement in any continuing or future claims, lawsuits, charges, and internal or external investigations which arise out of events or business matters over which Covered Executive had responsibility, (2) acquisitions and dispositions by Tenet and its affiliates with which Covered Executive was involved while employed and (3) any other matter as Covered Executive may be reasonably directed by Tenet. Such continuing duty of cooperation shall include (x) deposition and witness appearances, (y) making himself reasonably available to Tenet or to one or more individuals as directed by Tenet, upon reasonable notice, for interviews, meetings or periodic updates on matters specified by Tenet and (z) furnishing information to Tenet, its legal counsel or such individuals upon request. The cooperation to be provided hereunder shall not exceed 15 hours per month, other than preparing for and attending depositions and witness appearances, which shall not be   3 of 7 limited as to duration. In addition, Tenet shall act reasonably and in good faith in connection with any request for such cooperation and shall take into account and accommodate to the extent practicable under the circumstances, in connection with any such request, Covered Executive’s other commitments, including, without limitation, commitments to any future employer of Covered Executive. Covered Executive shall also act reasonably and in good faith in the provision of such cooperation. The Special Payment shall be paid in five (5) equal installments, as follows: (i) $177.666.68, on the first payroll period occurring on or after March 6, 2009; (ii) $88,833.33 on the first payroll period occurring on or after each of June 6, 2009, September 6, 2009, December 6, 2009 and March 6, 2010, in the case of each of (i) and (ii), so long as, on each such payment date, Tenet has determined reasonably and in good faith that Covered Executive has fulfilled his obligations under this Section 7 with respect to the preceding period and is not otherwise in material breach of any material provision of this Agreement or the ESP after having been provided with notice of such material breach and a reasonable opportunity to cure such material breach, if curable (it being understood and agreed that Article III, Section 3.7 of the ESP is a material provision of the ESP and that any breach of such Section shall be material and not curable). In addition, Tenet will reimburse actual documented reasonable out-of-pocket expenses necessarily incurred in connection with this Section 7, such as out-of-town travel, lodging, and meals as if incurred under Tenet’s expense reimbursement policy for officers. Covered Executive acknowledges and agrees that the payments made to him under this Section 7 constitute an enhanced benefit which is conditioned on Covered Executive’s agreement to the matters set forth in this Agreement and exceeds any remuneration to which Covered Executive is otherwise entitled under the ESP. 8. The parties agree that no provision of this Agreement shall be construed or cooperating with any governmental agency in the performance of its investigatory or other lawful duties. 9. Covered Executive agrees to the Conditions of Payment of Severance Benefits as set forth in Article III, Section 3.7 of the ESP. Covered Executive acknowledges and agrees that these include covenants set forth in the ESP with respect to noncompetition, preservation of confidential Tenet information, nonsolicitation and nondisparagement, and that compliance with these covenants is of the utmost importance to Tenet and is a condition to his entitlement to severance payments and benefits under the ESP. In the event that Covered Executive so requests in writing, Tenet shall advise Covered Executive in writing whether any proposed conduct by Covered Executive will be construed by Tenet, acting reasonably and in good faith, as a violation of any such covenants. 10. Covered Executive covenants that he has no claim, grievance or complaint against any of the Tenet Releasees (as defined below) currently pending before any state or federal court, agency, or tribunal; and in exchange for the consideration set forth herein, he hereby releases and discharges Tenet, and all of its predecessor, successor, parent, subsidiary, affiliated and/or related entities and its and their directors, officers, supervisors, executives, representatives and agents (hereinafter, “Tenet Releasees”) from all statutory and common law claims, whether known or unknown, suspected or unsuspected, that Covered Executive has or may have against the any of the Tenet Releasees arising prior to Covered Executive’s execution of this Agreement, including arising out of or relating to his employment with Tenet or the termination thereof (herein, “Released Claims”). Without limitation, the Released Claims herein include Americans with Disabilities Act, the Civil Rights Act of 1991, the Age 1974, as amended, the Worker Adjustment and Retraining Notification Act, any analogous local or state laws or statutes in the states of:   4 of 7 Alabama, California, Florida, Georgia, Louisiana, Massachusetts, Mississippi, Missouri, Nebraska, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas, and any other claim based upon any act or omission of the Tenet Releasees occurring prior to Covered Executive’s execution of this Agreement. Nothing herein shall be deemed to release or waive (a) any retirement plan benefits which were vested as of Covered Executive’s Last Day Worked, (b) rights under Tenet’s employee benefit plans in accordance with the terms thereof to the extent such rights survive this Agreement pursuant to the terms of this Agreement, the terms of the applicable plans, or applicable law, or (c) rights 11. This Agreement constitutes a voluntary waiver and release of Covered Executive’s rights and claims under the Age Discrimination in Employment Act and, pursuant to the Older Workers Benefit Protection Act (“OWBPA”). Covered Executive acknowledges that he has been advised and is aware of his right to consult with legal counsel of his choice prior to signing this Agreement. He further acknowledges that he has until twenty-one (21) days after the date of notice during which to consider, sign and return this Agreement. Covered Executive may elect to return this Agreement earlier if he wishes. Covered Executive has the right to revoke this Agreement for a period of seven (7) days after his execution of it. This Agreement shall not become effective or enforceable until Covered Executive executes this Agreement and such revocation period has expired. Revocation of this Agreement by Covered Executive will constitute a revocation in its entirety, and, in the event of such revocation, this Agreement shall cease to be of force or effect. 12. Covered Executive represents that he has returned to Tenet all property in his possession or control, including without limitation, equipment, telephones, credit cards, keys, pagers, tangible proprietary information, documents, computers and computer discs, files and data, which Covered Executive prepared or obtained during the course of his employment with Tenet. If Covered Executive informs Tenet in writing within thirty (30) days of the date of this Agreement that items of his personal property are still in the possession or control of Tenet, Tenet shall, at its sole cost and expense, return such personal property to Covered Executive. 13. If Covered Executive provides Tenet in writing within thirty (30) days of the date of this Agreement with a forwarding email address and/or phone number, Tenet shall, for the period commencing ten (10) days after receipt of such writing and ending on the first anniversary of the Last Day Worked, use its reasonable efforts to provide such forwarding information to individuals who attempt to contact Covered Executive by contacting Tenet by phone or email. Tenet shall also forward to Covered Executive any mail received by Tenet after the date of this Agreement and prior to the first anniversary of the Last Day Worked that Tenet identifies as personal mail of the Covered Executive. To the extent not made prior to the date of this Agreement, Tenet shall cause any matching contributions under the Tenet Healthcare Foundation Matching Gift Program to be made with respect to charitable contributions made by Covered Executive. 14. To the extent necessary to comply with, and avoid penalties under, final regulations issued by the Internal Revenue Service and any additional guidance issued by the Internal Revenue Service with respect to Code Section 409A, Covered Executive and Tenet agree to negotiate in good faith to cause appropriate modifications to be made to this Agreement on or before 15. Covered Executive acknowledges that he has received a copy of Tenet’s Fair Treatment Process (the “FTP”) and has had an opportunity to review the FTP prior to executing this   5 of 7 Agreement. The procedures of the FTP shall be deemed incorporated into this Agreement. Covered Executive agrees that excluding claims subject to Section 4.6 of the ESP, to the full extent permitted by law that in lieu of a jury trial, any dispute over the validity, enforcement, scope, breach or interpretation of this Agreement and any dispute regarding unreleased claims or future claims between the parties, if any, shall be submitted and/or resolved in accordance with the terms of the FTP and any successor thereto, including final and binding arbitration pursuant to the provisions of the applicable Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”). The arbitrator shall have the authority to award any remedy that would have been available to Covered Executive in court under applicable law. A judgment upon the award thereof. Tenet agrees that Covered Executive’s maximum out-of-pocket expense for the arbitrator and the administrative costs of the AAA will be an amount equal to one day’s pay, the local civil filing fee or $150.00, whichever is less. 16. Neither this Agreement nor anything contained herein shall be admissible in any proceeding as evidence of or an admission by the Tenet Releasees of any violation of any law or regulation or of any liability whatsoever to Covered Executive. Notwithstanding the foregoing, this Agreement may be introduced into a proceeding solely for the purpose of enforcing this Agreement. 17. This Agreement, together with the ESP and any other documents or plans referenced therein and herein, contains the entire agreement and understanding between Tenet and Covered Executive and supersedes all prior negotiations and subject matter hereof. This is an integrated document. 18. Should any provision, part or term of this Agreement be held to be invalid 19. This Agreement shall be binding upon and shall inure to the benefit of Covered Executive, Tenet and the Tenet Releasees and their respective heirs, 20. This Agreement may be executed in counterparts, and each counterpart when executed shall have the efficacy of a signed original. Photographic copies of 21. This Agreement shall be construed and enforced in accordance with, and governed by, the laws of State of Texas (determined without regard to the conflicts of law principles thereof). 22. Covered Executive represents and affirms that he has carefully read and fully understands the provisions of this Agreement and that he is voluntarily   6 of 7 written below.   DATED: April 30, 2008     DATED: April 30, 2008     TENET HEALTHCARE CORPORATION             /s/ E. Peter Urbanowicz       E. Peter Urbanowicz     By:   Cathy Fraser       Its:   Senior Vice President, Human Resources   7 of 7

Title: what’s the worse that can happen to an 18 year old having sex with an 15 year old? Question:Ik in Texas there’s a special law for that type of thing but he lives in arizona, the parents had a restraining order on him so that’s the problem. What’s his current situation and what can he do? I think he has to go to court . How deep in shit is he? Answer #1: The age of consent in Arizona and Texas is 18. If you traveled to another state to have sex with her then you committed a federal crime. Don't talk to anyone but a lawyer and for the love of science, don't visit that girl or her parents again ESPECIALLY if they have a restraining order.

  Exhibit 10.1 SECURITIES PURCHASE AGREEMENT THE PURCHASERS VERICHIP CORPORATION and XMARK CORPORATION Dated: February 29, 2008     TABLE OF CONTENTS               Page                 1             2. Fees and Closing Shares     2             3. Closing, Delivery and Payment     2   3.1 Closing     2   3.2 Delivery     2                 3       3   4.2 Subsidiaries     3   4.3 Capitalization; Voting Rights     4   4.4 Authorization; Binding Obligations     5   4.5 Liabilities; Solvency     5   4.6 Agreements; Action     6   4.7 Obligations to Related Parties     7   4.8 Changes     8       9   4.10 Intellectual Property     10   4.11 Compliance with Other Instruments     11   4.12 Litigation     12   4.13 Tax Returns and Payments     12   4.14 Employees     12   4.15 Registration Rights and Voting Rights     13   4.16 Compliance with Laws; Permits     13   4.17 Environmental and Safety Laws     13   4.18 Valid Offering     14   4.19 Full Disclosure     14   4.20 Insurance     15   4.21 SEC Reports     15   4.22 Listing     15   4.23 No Integrated Offering     15   4.24 Stop Transfer     15   4.25 Dilution     16   4.26 Patriot Act     16   4.27 ERISA     16   4.28 Canada Pension Plans     17             5. Representations and Warranties of each Purchaser     17   5.1 Organization, Good Standing and Qualification     17   5.2 No Shorting     17   5.3 Requisite Power and Authority     17   5.4 Investment Representations     18   5.5 The Purchaser Bears Economic Risk     18   5.6 Acquisition for Own Account     18     i   TABLE OF CONTENTS               Page             5.7 The Purchaser Can Protect Its Interest     18   5.8 Accredited Investor     18   5.9 Legends     18             6. Covenants of the Companies     19   6.1 Stop-Orders     19   6.2 Listing     19   6.3 Market Regulations     19   6.4 Reporting Requirements     19   6.5 Use of Funds     21   6.6 Access to Facilities     21   6.7 Taxes     21   6.8 Insurance     23   6.9 Intellectual Property     24   6.10 Properties     25   6.11 Confidentiality     25   6.12 Required Approvals     25   6.13 Reissuance of Securities     27   6.14 Opinion     27   6.15 Margin Stock     27   6.16 FIRPTA     27   6.17 Intentionally Omitted     28   6.18 Investor Relations/Public Relations     28   6.19 Board Observation Rights     28             7. Covenants of the Purchasers     28   7.1 Confidentiality     28   7.2 Non-Public Information     28   7.3 Limitation on Acquisition of Common Stock of CHIP     28             8. Covenants of the Companies and the Purchasers Regarding Indemnification     29   8.1 Company Indemnification     29   8.2 Purchaser Indemnification     29             9. Intentionally Omitted     29             10. Registration Rights     29   10.1 Registration Rights Granted     29   10.2 Offering Restrictions     30             11. Miscellaneous     30   11.1 Governing Law, Jurisdiction and Waiver of Jury Trial     30   11.2 Severability     31   11.3 Survival, Etc.     31   11.4 Successors     32   11.5 Entire Agreement; Maximum Interest     33     ii   TABLE OF CONTENTS               Page             11.6 Amendment and Waiver     33   11.7 Delays or Omissions     33   11.8 Notices     34   11.9 Attorneys’ Fees     34   11.10 Titles and Subtitles     35   11.11 Signatures; Counterparts     35   11.12 Broker’s Fees     35   11.13 Construction     35   11.14 Joint and Several Obligations     35   11.15 Agency     36   11.16 Judgment Currency     36   11.17 Tool Hound Product Line     36     iii   LIST OF EXHIBITS       Form of Term Note   Exhibit A Form of Escrow Agreement   Exhibit B LIST OF SCHEDULES       Schedule 1   Purchaser Commitments Schedule 2   Closing Share Holders and Closing Shares Schedule 4.2   Subsidiaries Schedule 4.3   Capitalization Schedule 4.6   Extraordinary Agreements Schedule 4.7   Obligations to Related Parties Schedule 4.9 Schedule 4.10   IP Registration Schedule 4.12   Litigation Schedule 4.13   Taxes Schedule 4.14   Employees Schedule 4.15   Registration and Voting Rights Schedule 4.21   SEC Reports Schedule 6.12(e)   Indebtedness Schedule 11.12   Brokers   iv   SECURITIES PURCHASE AGREEMENT as of February 29, 2008, by and among VERICHIP CORPORATION, a Delaware corporation (“CHIP”), XMARK CORPORATION, a Canada corporation (“MARK” and together with CHIP, each a “Company” and collectively the “Companies”), the purchasers from time to time a party hereto (each a “Purchaser” and collectively, the “Purchasers”), LV Administrative Services, Inc., a Delaware corporation, as administrative and collateral agent for each Purchaser, (the “Agent” and together with the Purchasers, the “Creditor Parties”). RECITALS WHEREAS, the Companies have authorized the sale to each Purchaser of a Secured Term Note in the form of Exhibit A hereto in the principal amount set forth opposite such Purchaser’s name on Schedule 1 hereto (each as amended, restated, modified and/or supplemented from time to time, a “Note” and, collectively, the WHEREAS, CHIP wishes to issue to each Purchaser the number of shares of CHIP’s such Purchaser’s name on Schedule 2 (“Closing Shares”) in connection with such Purchaser’s purchase of the applicable Note; WHEREAS, each Purchaser desires to purchase the applicable Note and receive the Closing Shares on the terms and conditions set forth herein; and WHEREAS, each Company desires to issue and sell the applicable Note and, in the case of CHIP, issue the applicable Closing Shares, to each Purchaser on the AGREEMENT Companies shall sell to each Purchaser, and each Purchaser shall purchase from the Companies, the applicable Note. The sale of the Notes on the Closing Date shall be known as the “Offering.” The Notes will mature on the Maturity Date (as defined in the Notes). Collectively, the Notes and the Closing Shares are     2. Fees and Closing Shares. On the Closing Date: (a) CHIP will issue and deliver to each Purchaser the number of shares of Common Stock set forth opposite its name on Schedule 2 in connection with the Offering pursuant to Section 1 hereof. All the representations, covenants, warranties, the benefit of each Creditor Party by the Companies, to the extent relevant to the Closing Shares, are hereby also made and granted for the benefit of the holder of the Closing Shares, subject to Section 11.3. (b) Subject to the terms of Section 2(c) below, the Companies shall jointly and severally pay (i) to Valens Capital Management, LLC, the investment manager of the Purchasers (“VCM”), a non-refundable payment in an amount equal to one and one half percent (1.50%) of the aggregate principal amount of the Notes, plus with the entering into of this Agreement and the Related Agreements, plus expenses incurred in connection with each of VCM and/or Purchasers’ due diligence review of the Companies and their Subsidiaries and all other related matters (ii) to the Purchasers, a non-refundable payment in an aggregate amount equal to one percent (1.00%) of the aggregate principal amount of the Notes; and (iii) to the Purchasers, an advance prepayment discount deposit in an aggregate Notes, subject to rebate as set forth in Section 1.3 of the Notes as in effect on the date hereof. Each of the foregoing payments in clauses (i) and (ii) shall proration for any reason. (c) The payments and the expenses referred to in the preceding clause (b) (net of deposits previously paid by either Company) shall be paid at Closing (as defined below) out of funds held pursuant to the Escrow Agreement (as defined transactions contemplated hereby (the “Closing”) shall take place on the date hereof, at such time or place as the Companies and the Agent may mutually agree Date, the Companies will deliver to each Purchaser, among other things, the applicable Note and certificates evidencing the Closing Shares, in form and substance acceptable to Agent, and such Purchaser will deliver to the Companies, among other things, the amounts set forth opposite its name in the Disbursement Letter by certified funds or wire transfer. Each Company hereby acknowledges and agrees that each Purchaser’s obligation to purchase the applicable Note from the Companies on the Closing Date shall be contingent upon the satisfaction (or waiver by the Agent in its sole discretion) of the items and matters set forth in the final closing checklist provided by the Agent to the Companies on or   2   4. Representations and Warranties of the Company. Each Company hereby represents and warrants to each Creditor Party as follows: 4.1 Organization, Good Standing and Qualification. Such Company and each of its laws of its jurisdiction of organization or incorporation. Such Company and each of its Subsidiaries has the corporate, limited liability company or partnership, deliver (i) this Agreement, (ii) the Notes to be issued in connection with this Agreement, (iii) the Master Security Agreement dated as of the date hereof among the Companies and the Agent (as amended, restated, modified and/or supplemented from time to time, the “Master Security Agreement”), (iv) the Stock Pledge Agreement dated as of the date hereof among the Companies and the Agent (as amended, restated, modified and/or supplemented from time to time, the “Stock among the Companies, the Purchasers and the escrow agent referred to therein, substantially in the form of Exhibit B hereto (as amended, restated, modified and/or supplemented from time to time, the “Escrow Agreement”), (vi) the Intellectual Property Security Agreement dated as of the date hereof among the time to time, the “IP Security Agreement”) and (vii) all other documents, contemplated hereby and thereby (the preceding clauses (ii) through (vii), collectively, the “Related Agreements”); (2) issue and sell the Notes; (3) issue the Closing Shares; and (4) carry out the provisions of this Agreement and the Related Agreements and to carry on its business as presently conducted. Such individually or in the aggregate, a Material Adverse Effect. “Material Adverse operations of either Company and its Subsidiaries, taken individually and as a whole; provided, however, that no change, effect, event or occurrence to the there has been or will be, a Material Adverse Effect: (i) general business or economic conditions not specific or peculiar to any Company, (ii) acts of war or terrorism or natural disasters, (iii) catastrophic economic or significant regulatory or political conditions or changes, (iv) the announcement or including compliance with the covenants set forth herein, (v) changes in any stock 4.2 Subsidiaries. Each active Subsidiary of each Company, the direct owner of such Subsidiary and the direct owner’s percentage ownership thereof, is set   3   (a) The authorized capital stock of CHIP, as of the date hereof consists of 45,000,000 shares, of which 40,000,000 are shares of Common Stock, par value $0.01 per share, 10,740,766 shares of which are issued and outstanding, and 5,000,000 are shares of preferred stock, par value $0.001 per share of which no shares of preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of CHIP is set forth on Schedule 4.3. (b) The authorized capital stock of MARK, as of the date hereof consists of an both without par value, of which there are issued and outstanding 10,265,178 of Common Shares. MARK has no Subsidiaries. (c) Except as disclosed on Schedule 4.3, other than: (i) those reserved for issuance under either Company’s stock option plans; and (ii) those which may be or agreements of any kind for the purchase or acquisition from either Company of issuance or sale of any of the Notes, or the issuance of any of the Closing in a change in the price or number of any securities of either Company (d) Except as disclosed on Schedule 4.3, all issued and outstanding shares of each Company’s common stock: (i) have been duly authorized and validly issued (e) The rights, preferences, privileges and restrictions of the shares of each Company’s common stock are as stated in such Company’s Certificate or Articles of Incorporation or Articles of Amalgamation, as applicable (the “Charter”). The Closing Shares have been issued in compliance with the provisions of this Agreement and the applicable Company’s Charter and have been validly issued, fully paid and are non-assessable, and all Securities will be free of any liens or encumbrances; provided, however, that the Securities may be subject to   4   liability company, as the case may be, action on the part of each Company and the performance of all obligations of each Company and its Subsidiaries hereunder and under the other Related Agreements at the Closing and, the authorization, sale, issuance and delivery of the Notes and Closing Shares has been taken or will be taken prior to the Closing. This Agreement and the Related Subsidiaries, enforceable against each such person or entity in accordance with and legal remedies. The sale of the Notes are not and will not be subject to any preemptive rights The issuance of the Closing Shares is not subject to any preemptive rights or 4.5 Liabilities; Solvency. (a) Neither Company nor any of their Subsidiaries has any material liabilities, liabilities disclosed or recorded in CHIP’s filings under the Securities or made available to the Agent. (b) On the Closing Date each Company is and will be, Solvent. For purposes of this Section 4.5(b), “Solvent” means, with respect to a Company on a particular date, that on such date (i) the fair value of the assets of such Company is of such Company; (ii) the present fair salable value of the assets of such Company is not less than the amount that will be required to pay the probable liability of such Company on its debts as they become absolute and matured; (iii) such Company does not intend to, and does not believe that it will, incur debts or liabilities beyond such Company’s ability to pay as such debts and liabilities mature; and (iv) such Company is not engaged in a business or such Company’s property would constitute an unreasonably small capital. The   5   any Exchange Act Filing: (a) There are no agreements, understandings, instruments, contracts, judgments, orders, writs or decrees to which either Company or any of its Subsidiaries is a party or by which it is bound which may involve: (i) obligations (contingent or otherwise) of, or payments to, either Company or any of its Subsidiaries in excess of $250,000 (other than obligations of, or payments to, either Company or any of its Subsidiaries arising from purchase or sale agreements, contracts for services, marketing and advertising related agreements, etc. entered into in the copyright, trade secret or other proprietary right to or from either Company or any of its Subsidiaries (other than licenses arising from the purchase of “off the shelf” or other standard products); or (iii) provisions restricting the development, manufacture or distribution of either Company’s or any of its Subsidiaries’ material products or services; or (iv) indemnification by either Company or any of its Subsidiaries with respect to infringements of material proprietary rights. (b) Since September 30, 2007 (the “Balance Sheet Date”) to the date hereof, other than repayments of indebtedness by MARK to CHIP, dividends or distributions by MARK to CHIP and/or the repayment of indebtedness by MARK to CHIP, neither Company nor any of their Subsidiaries has: (i) declared or paid individually in excess of $150,000 or, in the case of indebtedness and/or liabilities individually less than $150,000, in excess of $250,000 in the aggregate; (iii) made any loans or advances in excess of $150,000, individually or $250,000 in the aggregate of all such loans and advances, other than ordinary either Company or any Subsidiary of either Company has reason to believe are (d) CHIP maintains disclosure controls and procedures (“Disclosure Controls”) designed to ensure that information required to be disclosed by CHIP in its Exchange Act Filings is recorded, processed, summarized, and reported, within the time periods specified in the Exchange Act and the applicable rules and forms promulgated by the Securities and Exchange Commission (“SEC”). (e) Each Company makes and keeps books, records, and accounts, that, in dispositions of such Company’s assets. Each Company maintains internal control the supervision of, such Company’s principal executive and principal financial officers, and effected by such Company’s board of directors, management, and United States of America (“GAAP”), including that: specific authorization; (ii) unauthorized acquisition, use, or disposition of such Company’s assets that detected;   6   statements in accordance with GAAP, and that such Company’s receipts and expenditures are being made only in accordance with authorizations of such assets; and differences. (f) There is no weakness in any of CHIP’s Disclosure Controls or Financial are no obligations of either Company or any of its Subsidiaries to officers, directors, stockholders or employees of either Company or any of its Subsidiaries other than: (b) reimbursement of reasonable expenses incurred on behalf of either Company plan approved by the Board of Directors of either Company and/or any Subsidiary of such Company, as applicable); and (d) obligations listed in either Company’s and each of its Subsidiary’s financial statements or disclosed in any of CHIP’s Exchange Act Filings.   7   Except as described above, or as set forth on Schedule 4.7, none of the officers, directors or, to such Company’s Knowledge (as defined herein), key employees or stockholders of either Company or any of its Subsidiaries or any members of their immediate families, are indebted to either Company or any of its Subsidiaries, individually or in the aggregate, in excess of $50,000 or have either Company or any of its Subsidiaries has a business relationship, or any firm or corporation which competes with either Company or any of its (representing less than five percent (5%) of such company) which may compete with either Company or any of its Subsidiaries. Except as described above or set forth on Schedule 4.7, no officer, director or, to the Company’s Knowledge, stockholder of either Company or any of its Subsidiaries, or any member of their contract with either Company or any of its Subsidiaries and no agreements, understandings or proposed transactions are contemplated between either Company or any of its Subsidiaries and any such person. Except as set forth on Schedule 4.7, neither Company nor any of their Subsidiaries is a guarantor or indemnitor of any indebtedness of any other person or entity. “Knowledge” means with respect to the applicable Company and any of its Subsidiaries, the actual knowledge after reasonable inquiry of the chief executive officer, chief financial officer, key officer and, if one is employed by the applicable Company, general counsel. 4.8 Changes. From the Balance Sheet Date to the date hereof, except as disclosed, in the case of CHIP, in any Exchange Act Filing or, in the case of each Company, in any Schedule to this Agreement or to any of the Related otherwise), properties, operations or prospects of either Company or any of its Adverse Effect; (b) any resignation or termination of any key officer, key employee or group of key employees of either Company or any of its Subsidiaries; contingent obligations of either Company or any of its Subsidiaries by way of (e) any express waiver by either Company or any of its Subsidiaries of a (f) any direct or indirect loans made by either Company or any of its Subsidiaries to any stockholder, employee, officer or director of either Company business; employee, officer, director or stockholder of either Company or any of its Subsidiaries;   8   assets of either Company or any of its Subsidiaries; (i) any labor organization activity related to either Company or any of its Subsidiaries; (j) except as set forth in Section 4.7, any debt, obligation or liability incurred, assumed or guaranteed by either Company or any of its Subsidiaries, material patents, trademarks, copyrights, trade secrets or other intangible assets owned by either Company or any of its Subsidiaries; (l) any change in any material agreement to which either Company or any of its Subsidiaries is a party or by which either Company or any of its Subsidiaries is Effect; (n) any arrangement or commitment by either Company or any of its Subsidiaries Schedule 4.9, each Company and each of its Subsidiaries has good and marketable (each for the foregoing, a “Lien”), other than the following (each a “Permitted Encumbrance”): (a) those in favor of the Agent, for the ratable benefit of the Creditor Parties; (b) those resulting from taxes, assessments or other government charges or levies which have not yet become delinquent; (c) minor Liens which do not materially detract from the value of the property subject thereto or materially impair the operations of either Company or any of its Subsidiaries, so long as in each such case, such Liens have no effect on the Lien priority of the Agent, for the ratable benefit of the Creditor Parties, in such property; (d) Liens in favor of Applied Digital Solutions, Inc. so long as such Liens are subordinate to the Liens in favor of Agent on terms acceptable to Agent, and other Liens set forth on Schedule 4.9;   9   (e) Liens securing indebtedness of either Company not to exceed $150,000 in the aggregate for the Companies; (f) Liens attaching only to inventory and arising by operation of law in favor suppliers, incurred in the ordinary course of business, and which Liens are for sums not yet delinquent and not in excess of $150,000 in the aggregate; (g) Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment insurance; (h) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business; (i) with respect to any real property, easements, rights of way, and zoning operation thereof; and (j) a banker’s Lien or right to setoff in favor of Royal Bank of Canada (“RBC”) with respect to amounts in accounts maintained by MARK at RBC up to an aggregate amount of $400,000 to secure a VISA credit card facility. All material machinery, equipment, fixtures, vehicles and other properties owned, leased or used by either Company or any of its Subsidiaries are in good purposes for which they are being used, reasonable wear and tear, casualty and obsolescence excepted. Each Company and its Subsidiaries are in compliance with Adverse Effect. 4.10 Intellectual Property. (a) Except as set forth on Schedule 4.10 hereto, each Company and each of its Subsidiaries either (i) owns sufficient legal rights to the patents, trademarks, conducted and, to each Company’s Knowledge, as presently proposed to be conducted, or (ii) has a license, agreement or other permission to use the licenses, and other proprietary rights and processes necessary for its business as now conducted (the “Intellectual Property”). There are no settlements or consents, covenants not to sue, non-assertion assurances, or releases to which either Company or any of its Subsidiaries is bound, which affects its rights to own or use any Intellectual Property in a material and adverse manner. (b) Except as set forth on Schedule 4.10 hereto, the conduct of each Company’s and each of its Subsidiaries’ business as now conducted, and as presently proposed to be conducted, does not (and will not) result in any material others.   10   (c) Schedule 4.10 (as such schedule may be amended or supplemented from time to Intellectual Property licenses under which either Company is (or any of its Subsidiaries are) a licensee, and which are either material to the business of either Company or relate to any material portion of either Company’s or any of its Subsidiaries’ inventory, including licenses for standard software having an annual maintenance fee of more than $50,000 (“Inbound Intellectual Property Licenses”). None of such Inbound Intellectual Property Licenses are reasonably such Company or any of its Subsidiaries. (d) Except as set forth on Schedule 4.10 hereto, there are no claims pending or, to the best of each Company’s Knowledge, threatened and neither Company nor any of their Subsidiaries has received any other communications alleging that either Company or any of its Subsidiaries has infringed, diluted, misappropriated, or otherwise violated any Intellectual Property rights of any other person or entity, nor is either Company or any of its Subsidiaries aware of any basis therefore. (e) Except as set forth on Schedule 4.10 hereto, neither Company nor any of other violation of its Intellectual Property by any other person or entity that could reasonably expected to have a Material Adverse Effect. (f) Except as set forth on Schedule 4.10 hereto, neither Company nor any of 4.11 Compliance with Other Instruments. Neither Company nor any of their Agreements to which it is a party, and the issuance and sale of the Notes by the Companies and the other Securities by CHIP each pursuant hereto and thereto, will not, with or without the passage of time or giving of notice, result (i) in any such material violation, or be in conflict with or constitute a material default under any such term or provision, (ii) in the creation of any Lien upon any of the properties or assets of either Company or any of its Subsidiaries, or (iii) the suspension, revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization or approval applicable to either   11   action, suit, proceeding or investigation pending or, to either Company’s Knowledge, currently threatened against either Company or any of its Subsidiaries that prevents either Company or any of its Subsidiaries from ownership of either Company or any of its Subsidiaries, nor is either Company aware that there is any basis to assert any of the foregoing. Neither Company nor any of their Subsidiaries is a party to or subject to the provisions of any Authority. There is no action, suit, proceeding or investigation by either Company or any of its Subsidiaries currently pending or which either Company or any of its Subsidiaries intends to initiate which could reasonably be expected to have a Material Adverse Effect. “Governmental Authority” means any nation or government, any state, provincial or political subdivision thereof and any 4.13 Tax Returns and Payments. Each Company and each of its Subsidiaries has timely filed all tax returns (federal, state, provincial and local) required to assessments imposed, and all other taxes due and payable by either Company or any of its Subsidiaries on or before the Closing, have been paid or will be paid prior to the time they become delinquent. Except as set forth on Schedule 4.13, neither the Company nor any of their Subsidiaries has been advised: (a) that any of its returns, federal, state, provincial or other, have been or its federal, state, provincial or other taxes. Neither Company has any Knowledge of any liability for any tax to be imposed adequately provided for. 4.14 Employees. Except as set forth on Schedule 4.14 or except, in the case of CHIP, as disclosed in the Exchange Act Filings, neither Company nor any of their There is no labor union organizing activity pending or, to either Company’s Knowledge, threatened with respect to either Company or any of its Subsidiaries. Except as disclosed on Schedule 4.14 or except, in the case of CHIP, as agreement. Except as set forth on Schedule 4.14, each employment contract and consultant contract to which either Company or any of its Subsidiaries is a party is valid and binding on such Company or its Subsidiaries, as the case may be, and , to such Company’s Knowledge, each other party thereto and is in full force and effect.   12   Neither Company nor any of their Subsidiaries is aware that any of its employees any nature) that would materially interfere with their duties to such Company or any of its Subsidiaries. Except for employees who have a current effective employment agreement with either Company or any of its Subsidiaries or as set forth on Schedule 4.14 or, with respect to CHIP, as disclosed in any Exchange Act Filing, no employee of either Company or any of its Subsidiaries has been granted the right to continued employment by either Company or any of its with either Company or any of its Subsidiaries. Except as set forth on Schedule 4.14, or, with respect to CHIP, as disclosed in any Exchange Act Filing, no Company is aware that any officer, key employee or group of employees intends to terminate his, her or their employment with such Company or any of its Subsidiaries, nor does either Company or any of its Subsidiaries have a group of employees. 4.15, neither Company nor any of their Subsidiaries is presently under any obligation, and neither Company nor any of their Subsidiaries has granted any rights, to register any of either Company’s or its Subsidiaries’ presently Except as set forth on Schedule 4.15, to each Company’s Knowledge, no stockholder of either Company or any of its Subsidiaries has entered into any agreement with respect to the voting of equity securities of either Company or 4.16 Compliance with Laws; Permits. Neither Company nor any of their 4.17 Environmental and Safety Laws. There are no pending actions, suits or proceedings by or before any arbitrator or Governmental Authority pending, or to be expected to form the basis of any such claim.   13   No Hazardous Materials are present or are used or have been used, stored, or released by either Company or its Subsidiaries, or to their Knowledge by any other Person, at any property currently owned, or, formerly owned, leased or operated by either Company or its Subsidiaries or disposed of at any other location by either Company or its Subsidiaries except (1) in compliance with Environmental Law; and (2) in quantities and under circumstances that would not require investigation or remediation by either Company or its Subsidiaries. Neither Company nor any of their Subsidiaries have assumed by contract or by operation of law the liabilities arising under Environmental Law of any other Person. Each Company and its Subsidiaries have provided to the Agent all material reports, audits and assessments in their possession or control regarding the environmental condition of any property currently or formerly owned or operated by such Company or any Subsidiary. “Environmental Law” means all applicable laws, rules, regulations, codes, ordinances, orders, decrees, entered into by any Governmental Authority, relating in any way to pollution or the environment , preservation or reclamation of natural resources, the management, generation, use, handling, treatment, transportation, storage, disposal or release or threatened release of or exposure to Hazardous Materials, or occupational health and safety. “Governmental Authority” means any nation or “hazardous substances”, “hazardous wastes” ,”toxic substances” or by words of and toxic mold. “Person” means any individual, sole proprietorship, partnership, limited liability partnership, joint venture, trust, unincorporated successors and assigns. of the Purchasers contained in this Agreement, the offer, sale and issuance of state securities laws. 4.19 Full Disclosure. Each Company and each of its Subsidiaries has provided the Purchasers with all information requested by the Purchasers in connection with the Purchasers’ decision to purchase the Notes and Closing Shares, including all information each Company and its Subsidiaries believe is reasonably necessary to the exhibits and schedules hereto and thereto nor the responses contained in any executed final questionnaire provided by the Companies to the Agent, contain any and other estimates provided to the Purchasers by either Company or any of its   14   4.20 Insurance. Each Company and each of its Subsidiaries has general 4.21 SEC Reports. CHIP has filed all proxy statements, reports and other documents required to be filed by it under the Exchange Act. Copies of the following documents are publicly available on EDGAR on the SEC’s website: (i) CHIP’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2006; and (ii) its Quarterly Reports on Form 10-Q for its fiscal quarter ended March 31, 2007, June 30, 2007 and September 30, 2007, and the Form 8-K filings which it has made or amended during the fiscal year 2006 to date (collectively, 4.22 Listing. The Common Stock is listed or quoted, as applicable, on a Principal Market (as hereafter defined) and satisfies and at all times hereafter until the Companies’ complete satisfaction of its obligations under this Agreement and the Related Agreements, will satisfy, all requirements for the continuation of such listing or quotation, as applicable. CHIP has not received NASDAQ Capital Market, NASDAQ National Markets System, American Stock Exchange 4.23 No Integrated Offering. To each Company’s Knowledge, no Company, nor any of their Subsidiaries or affiliates, nor any person acting on their behalf, has integrated with prior offerings by either Company for purposes of the Securities Act which would prevent either Company from selling the Securities pursuant to stockholder approval provisions, nor will either Company or any of its affiliates or Subsidiaries take any action or steps that would cause the this Agreement. Neither Company nor any of their Subsidiaries will issue any federal securities laws.   15   4.25 Dilution. CHIP specifically acknowledges that its obligation to issue the Closing Shares is binding upon CHIP and enforceable regardless of the dilution such issuance may have on the ownership interests of other stockholders of CHIP. 4.26 Patriot Act. Each Company certifies that, to the best of such Company’s Knowledge, neither Company nor any of their Subsidiaries has been designated, Executive Order 13224. Each Company hereby acknowledges that each of the Creditor Parties seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, each Company that either Company or any of its Subsidiaries will pay or will contribute to contribution or payment by either Company or any of its Subsidiaries to any and Anti-Terrorist Financing Act of 2001 or the Canadian Proceeds of Crime (Money Laundering) and Terrorist Financing Act 2001. Each Company shall promptly notify the Agent if any of these representations, warranties or covenants ceases to be true and accurate regarding either Company or any of its Subsidiaries. Each Company shall provide any Creditor Party all additional information regarding such Company or any of its Subsidiaries that such Creditor Party deems money laundering and similar activities. Each Company understands and agrees (i) neither Company nor any of their Subsidiaries has engaged in any non-exempt plan(s); (iv) neither Company nor any of their Subsidiaries has any fiduciary of persons other than such Company’s or such Subsidiary’s employees and their beneficiaries; and (v) neither Company nor any of their Subsidiaries has   16   4.28 Canada Pension Plans. Neither Company nor any of its Subsidiaries maintain or contribute to any plan, program or arrangement (other than the Canada Pension Plan) that is a pension plan for the purposes of any applicable pension benefits legislation or any tax laws of Canada or a province thereof, whether or not which there is or may be an obligation to contribute by, either Company or any of its Subsidiaries in respect of any Person’s employment in Canada with such 5. Representations and Warranties of each Purchaser. Each Purchaser hereby represents and warrants, severally and not jointly, to the Companies as follows: 5.1 Organization, Good Standing and Qualification. Such Purchaser is a Adverse Effect. 5.2 No Shorting. Neither such Purchaser nor any of its affiliates and investment partners has, nor will cause any person or entity, to directly engage in “short sales” of the Common Stock as long as any Note shall be outstanding. 5.3 Requisite Power and Authority. Such Purchaser has all necessary power and corporate action on such Purchaser’s part required for the lawful execution and delivery of this Agreement and the Related Agreements has been taken or will be and the Related Agreements will be valid and binding obligations of such Purchaser, enforceable in accordance with their terms, except: and   17   5.4 Investment Representations. Such Purchaser understands that the Securities in the Securities Act based in part upon such Purchaser’s representations contained in this Agreement, including, without limitation, that such Purchaser Securities Act. Such Purchaser confirms that it has received or has had full informed investment decision with respect to the applicable Note and Closing Shares to be purchased by it under this Agreement. Such Purchaser further from each Company regarding such Company’s and its Subsidiaries’ business, and the Securities and to obtain additional information (to the extent such effort or expense) necessary to verify any information furnished to such Purchaser or to which such Purchaser had access. 5.5 The Purchaser Bears Economic Risk. Such Purchaser has substantial experience companies similar to the Companies so that it is capable of evaluating the merits and risks of its investment in the Companies and has the capacity to protect its own interests. Such Purchaser must bear the economic risk of this 5.6 Acquisition for Own Account. Such Purchaser is acquiring the applicable Note and Closing Warrant Shares for such Purchaser’s own account for investment only, 5.7 The Purchaser Can Protect Its Interest. Such Purchaser represents that by reason of its, or of its management’s, business and financial experience, such such Purchaser is aware of no publication of any advertisement in connection 5.8 Accredited Investor. Such Purchaser represents that it is an accredited 5.9 Legends. (a) The applicable Note shall bear substantially the following legend: (B) AN EXEMPTION FROM SUCH REGISTRATION.”   18   (b) The applicable Closing Shares, if not issued by DWAC system (as hereinafter the SEC: 6. Covenants of the Companies. Each Company covenants and agrees with each 6.1 Stop-Orders. CHIP will, by written notice, advise the Agent, promptly after suspending any offering of any securities of CHIP, or of the suspension of the qualification of the Common Stock for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose. 6.2 Listing. CHIP will maintain the listing or quotation, as applicable, of its with CHIP’s reporting, filing and other obligations under the bylaws or rules of applicable. 6.3 Market Regulations. Such Company shall notify the SEC, NASD and applicable regulation, for the legal and valid issuance of the applicable Securities to each Purchaser and promptly provide copies thereof to such Purchaser. 6.4 Reporting Requirements. Such Company will deliver, or cause to be delivered, to the Agent each of the following, which shall be in form and detail acceptable to the Agent: of each fiscal year of such Company, such Company’s and each of its certified public accountants of recognized standing selected by such Company and reasonably acceptable to the Agent (the “Accountants”), which annual financial statements shall be without qualification and shall include such Company’s and the related statements of such Company’s and each of its Subsidiaries’ income, retained earnings and cash flows for the fiscal year then ended, prepared on a consolidating and consolidated basis to include each Company, each Subsidiary of each Company, all prepared in accordance with GAAP, together with (i) if and and (ii) a certificate of such Company’s President, Chief Executive Officer or of the occurrence of any Event of Default (as defined in each Note) and, if so,   19   end of each fiscal quarter of such Company, an unaudited/internal balance sheet and statements of income, retained earnings and cash flows of such Company and include each Company, each Subsidiary of each Company, all prepared in accordance with GAAP, subject to year-end adjustments and accompanied by a certificate of such Company’s President, Chief Executive Officer or Chief or not such officer has knowledge of the occurrence of any Event of Default (as defined in each Note) not theretofore reported and remedied and, if so, stating in reasonable detail the facts with respect thereto; (c) As soon as available and in any event within thirty (30) days after the end of each calendar month (first calendar month to be reported is February 2008), an unaudited/internal balance sheet and statements of income of such Company and its Subsidiaries as at the end of and for such month and for the year to date each Company, each Subsidiary of each Company all prepared in accordance with GAAP, subject to year-end adjustments and accompanied by a certificate of such (i) that such financial statements have been prepared in accordance with GAAP, not theretofore reported and remedied and, if so, stating in reasonable detail the facts with respect thereto; (d) CHIP shall timely file with the SEC all reports required to be filed termination. Promptly after (i) the filing thereof, copies of CHIP’s most recent which CHIP files with the SEC, and (ii) the issuance thereof, copies of such financial statements, reports and proxy statements as CHIP shall send to its stockholders; and (e) Such Company shall timely deliver, or cause the applicable Subsidiary of such Company to deliver, such other information as any Creditor Party shall reasonably request.   20   6.5 Use of Funds. The Companies shall use the proceeds of the sale of the Notes and the Closing Shares (i) to pay amounts owing by CHIP to Applied Digital Solutions, Inc. and (ii) for general working capital purposes only. 6.6 Access to Facilities. Such Company and each of its Subsidiaries will permit any representatives designated by the Agent (or any successor of the Agent), upon reasonable notice and during normal business hours, at Agent’s expense and such Company or any Subsidiary shall be required to accompany the Agent in the event the Agent believes such access is necessary to preserve or protect the Collateral (as defined in the Master Security Agreement) or following the occurrence and during the continuance of an Event of Default (as defined in each Note)), to: (a) visit and inspect any of the properties of such Company or any of its Subsidiaries; (b) examine the corporate and financial records of such Company or any of its Subsidiaries (unless such examination is not permitted by federal, state, provincial or local law or by contract) and make copies thereof or extracts therefrom; and (c) discuss the affairs, finances and accounts of such Company or any of its Subsidiaries with the directors, officers and independent accountants of such Notwithstanding the foregoing, neither Company nor any of their Subsidiaries will be obligated to provide any material, non-public information to any Creditor Party unless such Creditor Party signs a confidentiality agreement and 6.7 Taxes. (a) Such Company and each of its Subsidiaries will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all taxes, assessments business of such Company and its Subsidiaries; provided, however, that any such thereof shall currently and diligently be contested in good faith by appropriate the lien priority of the Agent in any property of such Company or any of its Subsidiaries and (iii) if such Company and/or such Subsidiary shall have set GAAP; and provided, further, that such Company and its Subsidiaries will pay all   21   (b) All payments made by either Company under this Agreement or any Note shall from any amounts payable to any Creditor Party under this Agreement or any Note, the amounts so payable to such Creditor Party shall be increased to the extent necessary to yield to such Creditor Party (after payment of all Non-Excluded Taxes and Other Taxes, including those imposed on payments made pursuant to this paragraph (b) of this Section 6.7 or any such other amounts payable in this Agreement or any Note at the rates or in the amounts specified herein or withholding or deductions been made provided, however, that neither Company this Section 6.7. (d) Whenever any Non-Excluded Taxes or Other Taxes are payable by either Company as promptly as possible thereafter, such Company shall send to the Agent for its certified copy of an original official receipt received by such Company showing payment thereof (or such other evidence reasonably satisfactory to the Agent). If either Company fails to pay any Non-Excluded Taxes or Other Taxes when due to (e) Each Purchaser (or its assignee) that is not a “United States Person” as deliver to the Companies and the Agent two completed originals of an appropriate Purchaser. Each Non-U.S. Purchaser shall promptly notify the Companies at any delivered certificate to the Companies (or any other form of certification Purchaser is not legally able to deliver. paragraph (f) shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder or thereunder or under any other Related Agreement.   22   As used in this Section 6.7, the following terms shall have the following located. 6.8 Insurance. (i) Such Company shall bear the full risk of loss from any loss of any nature whatsoever with respect to the Collateral (as defined in each of the Master Security Agreement, the Stock Pledge Agreement and each other security agreement entered into by such Company and/or any of its Subsidiaries for the benefit of the Creditor Parties) and such Company and each of its Subsidiaries will, jointly and severally, bear the full risk of loss from any loss of any nature whatsoever with respect to the assets pledged to the Agent, for the ratable benefit of the Creditor Parties, as security for the Obligations (as defined in the Master Security Agreement). Furthermore, such Company will insure or cause the Collateral to be insured against loss or damage by fire, flood, sprinkler leakage, theft, burglary, pilferage, loss in transit and other risks customarily insured against by companies in similar business similarly situated as such Company and its Subsidiaries including but not limited to workers compensation, public and product liability and business interruption, and such other hazards in amounts and under insurance policies and bonds by insurers consistent with current practice and reasonably acceptable to the Agent. All premiums thereon shall be paid by such Company, the policies shall be delivered to the Agent if requested by the Agent and each such policy shall be endorsed in the Agent’s name as an additional insured and lender loss payee, with an appropriate loss payable endorsement by each Company in form and substance satisfactory to the Agent. If either Company or any of its Subsidiaries fails to obtain the insurance and in such amounts of coverage as otherwise required pursuant to this Section 6.8, the Agent may procure such insurance and the cost thereof shall be promptly reimbursed by the Companies and shall constitute Obligations.   23   (ii) Neither Company’s insurance coverage shall be impaired or invalidated by any act or neglect of either Company or any of their Subsidiaries and the insurer will provide the Agent with no less than thirty (30) days notice prior of cancellation; (iii) The Agent, in connection with its status as a lender loss payee, will be 6.9 Intellectual Property. Each of the Company and its Subsidiaries shall licenses and other rights to Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business, (a) Such Company and each of its Subsidiaries shall maintain in full force and effect its existence, rights and franchises and all licenses and other rights to own or use Intellectual Property including registrations and applications therefore, that are necessary to the conduct of its business, as now conducted or as presently proposed to be conducted, and shall not do any act or omit to do any act whereby any of such Intellectual Property may lapse, or become abandoned, dedicated to the public, or unenforceable, or the Lien therein in favor of the Agent, for the ratable benefit of the Creditor Parties, would be adversely affected, (b) Such Company shall report to the Agent (i) the filing by such Company or any of its Subsidiaries of any application to register a copyright no later than ten register any other Intellectual Property with any Intellectual Property registry in the United States or Canada, and the issuance thereof, no later than thirty (30) days after such filing or issuance occurs and, in each case, shall, simultaneously with such report, deliver to the Agent fully-executed documents required to acknowledge, confirm, register, record or perfect the Lien in such Intellectual Property. In addition, each Company and its Subsidiaries hereby authorize the Agent to modify this Agreement by amending Schedule 4.10 to include any registrations or applications for Intellectual Property inadvertently omitted from such Schedule or are filed, registered, or acquired by either Company or any of their Subsidiaries after the date hereof and agree to cooperate with the Agent in effecting any such amendment to include such new items of Intellectual Property included in the Collateral. (c) Such Company shall, and shall cause each of its Subsidiaries to, promptly upon the reasonable request of the Agent, execute and deliver to the Agent any document or instrument required to acknowledge, confirm, register, record, or perfect the Lien of the Agent in any part of the Intellectual Property owned by such Company and/or its Subsidiaries. (d) Except with the prior written consent of the Agent, neither Company shall, and neither Company shall allow any of its Subsidiaries to, sell, assign, transfer, license, grant any option, or create or suffer to exist any Lien upon or with respect to Intellectual Property, except for the Permitted Encumbrances; provided however that, by way of clarifying example and not by way of limitation, the term “Permitted Encumbrances” expressly includes licenses that the Company or any of its Subsidiaries grant in the ordinary course of business to customers and others under Intellectual Property rights controlled by the Company (or any of its Subsidiaries) (collectively, “Ordinary Outbound Licenses”), and nothing in this Section 6.9(d) shall prevent either Company or its Subsidiaries from granting Ordinary Outbound Licenses.   24   6.10 Properties. Such Company and each of its Subsidiaries will keep its properties in good repair, working order and condition, reasonable wear, tear, casualty and obsolescence excepted; and such Company and each of its 6.11 Confidentiality. Neither Company will, and neither Company will permit any announcement, the name of any Creditor Party, unless expressly agreed to by such Creditor Party or unless and until such disclosure is required by law or Notwithstanding the foregoing, (i) each Company may disclose any Creditor Party’s identity and the terms of this Agreement and the Related Agreements to its current and prospective debt and equity financing sources, and (ii) each Company (and each employee, representative, or other agent of such Company) may transactions contemplated by this Agreement and the Related Agreements and the agreements referred to therein; provided, however, that neither Company (and no employee, representative or other agent of such Company) shall disclose pursuant to this clause (ii) any other information that is not relevant to understanding identity of any party); and, provided, further, that neither Company will, and neither Company will permit any of its Subsidiaries to, disclose any information violation of any U.S. federal or state securities law or similar law of another jurisdiction. Each Creditor Party shall be permitted to discuss, distribute or otherwise transfer any non-public information of either Company and their Subsidiaries in such Creditor Party’s possession now or in the future to potential or actual (i) direct or indirect investors in such Creditor Party and (ii) third party assignees or transferees of all or a portion of the obligations of either Company and/or any of their Subsidiaries hereunder and under the Related Agreements. 6.12 Required Approvals. (I) Neither Company, without the prior written consent of the Agent, shall, and no Company shall permit any of its Subsidiaries to: dividends paid to either Company, (ii) issue any preferred stock that is mandatorily redeemable prior to the one year anniversary of the Maturity Date (as defined in each Note) or (iii) redeem any of its preferred stock or other equity interests;   25   that in no event shall either Company or any of their Subsidiaries dissolve, liquidate or merge with any other person or entity without the prior written consent of the Agent, which consent shall not be unreasonably withheld); circumstances) restrict either Company’s or any of their Subsidiaries, right to (d) materially alter or change the scope of the business of either Company and of five percent (5%) of the fair market value of any Company’s and its Subsidiaries’ assets)) whether secured or unsecured other than (A) any Company’s indebtedness owed to each Purchaser; (B) indebtedness set forth on Schedule 6.12(e) attached hereto and made a part hereof and any extensions, refinancings or replacements thereof on terms no less favorable to the Purchasers than the indebtedness being extended, refinanced or replaced, (C) intercompany indebtedness owing from one Company to the other Company; provided, that: (1) each Company shall record all intercompany transactions on its books and records in a manner reasonably satisfactory to Agent; (2) the obligations of each Company under any such Intercompany Notes shall be subordinated to the Obligations of such Company hereunder in a manner reasonably satisfactory to Agent; (3) at the time any such intercompany loan or advance is made by any Company to any other Company and after giving effect thereto, each such Company shall be Solvent; and (4) no Event of Default would occur after giving effect to any such proposed intercompany loan; (D) any indebtedness incurred in connection with the purchase of assets (other than equipment) in the ordinary course of business, or any refinancings or replacements thereof on terms no less favorable to the Purchasers than the indebtedness being refinanced or replaced, so long as any lien relating thereto shall only encumber the fixed assets so purchased and no other assets of either Company or any of their Subsidiaries and (E) indebtedness expressly subordinated to the Obligations (as defined in the Master Security Agreement) incurred by either Company that, individually or in the aggregate, does not exceed $250,000 in principal or face amount and is reasonably acceptable to Purchaser; (ii) cancel any indebtedness owing to it in excess of $100,000 in the aggregate during any twelve (12) month entity, except the endorsement of negotiable instruments by either Company or any Subsidiary thereof for deposit or collection or similar transactions in the distribution in respect of any subordinated indebtedness of either Company or its Subsidiaries in violation of any subordination or other agreement made in favor of any Creditor Party; and (v) make any optional payment or prepayment on or redemption (including, without limitation, by making payments to a sinking fund or analogous fund) or repurchase of any indebtedness for borrowed money other than indebtedness pursuant to this Agreement; and   26   (II) Neither Company, without the prior written consent of the Agent, shall, nor shall either Company permit any of its Subsidiaries to, create or acquire any Subsidiary of either Company and (ii) such Subsidiary becomes a party to (A) the Master Security Agreement, the Stock Pledge Agreement and the IP Security agreement in respect thereof); (B) a guaranty in favor of the Purchasers in form and substance satisfactory to the Agent and (c) to the extent required by the Agent, satisfies each condition of this Agreement and the Related Agreements as if such Subsidiary were a Subsidiary on the Closing Date. 6.13 Reissuance of Securities. CHIP agrees to reissue certificates representing the Securities without the legends set forth in Section 5.8 above at such time as: CHIP agrees to cooperate with the Purchasers in connection with all resales allow such resales provided CHIP and its counsel receive reasonably requested representations from the applicable Purchasers and broker, if any. 6.14 Opinion. On the Closing Date, the Companies will deliver to the Creditor Parties an opinion reasonably acceptable to the Agent from the Companies’ external legal counsel. 6.15 Margin Stock. Neither Company will permit any of the proceeds of the Notes or the Closing Shares to be used directly or indirectly to “purchase” or “carry” 6.16 FIRPTA. Neither Company, nor any of their Subsidiaries, is a “United States real property holding corporation” as such term is defined in Section 897(c)(2) of the Code and Treasury Regulation Section 1.897-2 promulgated thereunder and neither Company nor any of their Subsidiaries shall at any time take any action or otherwise acquire any interest in any asset or property to the extent the effect of which shall cause such Company and/or such Subsidiary, as the case may be, to be a “United States real property holding corporation” as such term is promulgated thereunder.   27   6.17 Intentionally Omitted. 6.18 Investor Relations/Public Relations. CHIP hereby agrees to incorporate into its annual budget an amount of funds necessary to maintain a comprehensive investor relations and public relations program (an “IR/PR Program”), which similar size and in a similar industry as CHIP and its Subsidiaries. 6.19 Intentionally Omitted. 7. Covenants of the Purchasers. Each Purchaser covenants and agrees with the Companies as follows: 7.1 Confidentiality. No Purchaser will disclose, nor will it include in any public announcement, the name of either Company, unless expressly agreed to by 7.2 Non-Public Information. No Purchaser nor its officers, directors, employees, affiliates, agents, stockholders and control persons, will effect any sales in the shares of the Common Stock while in possession of material, non-public information regarding CHIP if such sales would violate applicable securities law. 7.3 Limitation on Acquisition of Common Stock of CHIP. Notwithstanding anything to the contrary contained in this Agreement, any Related Agreement or any document, instrument or agreement entered into in connection with any other transactions entered into by a Purchaser and either Company (and/or Subsidiaries or Affiliates of either Company), such Purchaser (and/or Subsidiaries or Affiliates of such Purchaser) shall not acquire stock in CHIP (including, without limitation, pursuant to a contract to purchase, by exercising an option or warrant, by converting any other security or instrument, by acquiring or convertible into shares of stock in CHIP, or otherwise, and such contracts, options, warrants, conversion or other rights shall not be enforceable or exercisable) to the extent such stock acquisition would cause any interest (including any original issue discount) payable by either Company to a Non-U.S. any, available to either Company, if a Purchaser exceeds the Stock Acquisition become null and void with respect to a Purchaser, without any notice to the Company, on and after the first date upon which such Lender and each of its Company.   28   8. Covenants of the Companies and the Purchasers Regarding Indemnification. 8.1 Company Indemnification. Each Company agrees to indemnify, hold harmless, reimburse and defend, on a joint and several basis, each Creditor Party, each of such Creditor Party’s officers, directors, agents, affiliates, control persons, and principal stockholders, against all claims, costs, expenses, liabilities, incurred by or imposed upon such Creditor Party which result, arise out of or are based upon: (i) any misrepresentation by either Company or any of its Subsidiaries or breach of any warranty by either Company or any of its Subsidiaries in this Agreement, any other Related Agreement or in any exhibits performance by either Company or any of its Subsidiaries of any covenant or undertaking to be performed by such Company or any of its Subsidiaries by such Company and/or any of its Subsidiaries and such Creditor Party relating hereto or thereto. 8.2 Purchaser Indemnification. Each Purchaser Party agrees to indemnify, hold harmless, reimburse and defend each Company and each of such Company’s officers, directors, agents, affiliates, control persons and principal stockholders, at imposed upon such Company which result, arise out of or are based upon: (i) any misrepresentation by such Purchaser or breach of any warranty by such Purchaser in this Agreement or in any exhibits or schedules attached hereto or any Related Agreement; or (ii) any breach or default in performance by such Purchaser of any covenant or undertaking to be performed by such Purchaser hereunder, under any other Related Agreement, or any other agreement entered into by such Company and such Purchaser relating hereto or thereto. 10.1 Registration Rights. In the event that a Purchaser or any assignee of a Purchaser attempts to sell any of the Closing Shares after the date which is six (6) months from the date such Closing Shares were issued to the Purchaser and is unable, for any reason, to do so pursuant to an exemption to registration under Rule 144, the Company shall, upon demand of the Purchaser or any assignee of the Closing Shares, file a registration statement within twenty-one (21) days of such demand covering such Closing Shares and use its best efforts to have such registration statement become effective within ninety (90) days of its filing (the “90 Day Period”) and enter into a registration rights agreement in favor of the Purchaser and any and all assignees of the Closing Shares in form and substance satisfactory to the Purchaser and such assignees. The Company’s obligations under this Section 10.1 shall (i) no longer be required if Purchaser or any assignee thereof is able to sell the Closing Shares pursuant to an exemption to registration under Rule 144 prior to the expiration of the 90 Day Period and (ii) terminate one year following the issuance of the Closing Shares so long as the Purchaser or such assignee of the Purchaser is, at such date of remain effective as provided herein shall not convey to any Purchaser or any assignee of the Closing Shares any rights to the recovery of monetary and or liquidated damages.   29   10.2 Offering Restrictions. Except for stock or stock options granted to employees, directors or consultants of either Company and its Subsidiaries (these exceptions hereinafter referred to as the “Excepted Issuances”), neither the Company nor any of their Subsidiaries will, prior to the repayment in full of the Notes, (x) enter into any equity line of credit agreement or similar with a variable/floating conversion and/or pricing feature which are or could be (by conversion or registration) (commonly known as “floorless convertible instruments”) free-trading securities (i.e. common stock subject to a registration statement). 11. Miscellaneous. THE ADDRESS SET FORTH IN SECTION 11.8 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON SUCH COMPANY’S ACTUAL RECEIPT THEREOF.   30   WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY CREDITOR PARTY AND/OR EITHER COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY impaired thereby. 11.3 Survival, Etc.. Notwithstanding anything herein to the contrary, the any investigation made by any Creditor Party and the Closing of the transactions contemplated hereby to the extent provided therein but shall terminate upon termination of this Agreement and be without further force or effect upon payment of the Obligations (as defined in the Master Security Agreement). All instrument delivered by or on behalf of either Company pursuant hereto in representations and warranties by such Company hereunder solely as of the date survive the execution, delivery and termination of this Agreement and the Note and the making and repayment of the Obligations for a period of twelve (12) months following the repayment of the Obligations; provided, however, that upon payment of the Obligations in full as a result of the sale of the Collateral (as defined in the Master Security Agreement), MARK shall be released from any indemnity obligations that survive payment of the Obligations (nothing contained in the foregoing proviso shall be deemed to be a consent to any such sale). All representations and warranties of the Companies set forth herein, to the extent not specifically made as of a specific date, shall be deemed made as   31   11.4 Successors. (a) Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, heirs, executors be enforceable by each person or entity which shall be a holder of the been sold by any Purchaser pursuant to Rule 144 or an effective registration statement. Upon notice to the Companies, each Purchaser may assign any or all of the Obligations to any Person and, subject to acceptance and recordation thereof by the Agent pursuant to Section 11.4(b) and receipt by the Agent of a copy of the agreement or instrument pursuant to which such assignment is made (each such agreement or instrument, an “Assignment Agreement”), any such assignee shall succeed to all of such Purchaser’s rights with respect thereto; provided that no Purchaser shall be permitted to assign its rights hereunder or under any Related Agreement to a direct competitor of either Company unless an Event of Default (as defined in each Note) has occurred and is continuing. Notwithstanding the foregoing, no notice to any Company shall be required in the event that such assignment is to a party that is an affiliate or under common control with a Purchaser. Upon such assignment, such Purchaser shall be released from all collateral deposit letter, pledge and other agreements which are executed by either Company or any of its Subsidiaries in favor of any Creditor Party) to the extent same is assigned to any transferee. Each Purchaser may from time to time sell or otherwise grant participations in any of the Obligations (as defined in the Master Security Agreement) and the holder of any such participation shall, subject to the terms of any agreement between such Purchaser and such holder, be entitled to the same benefits as such Purchaser with respect to any security for holder is a participant. Each Company agrees that each such holder may exercise any and all rights of banker’s lien, set-off and counterclaim with respect to Agreement) as fully as though such Company were directly indebted to such holder in the amount of such participation. Neither Company may assign any of its this Agreement shall inure to the benefit of each of the undersigned, and shall bind the representatives, successors and permitted assigns of each Company. (b) The Agent shall maintain, or cause to be maintained, for this purpose only as agent of the Companies, (i) a copy of each Assignment Agreement delivered to will register the name and address of each Purchaser and the name and address of each assignee of each Purchaser under this Agreement, and the principal amount of, and stated interest on, the Notes owing to each such Purchaser and assignee interest of the Purchasers and their assignees in and to such Notes shall be an interest in the Obligations hereunder for all purposes of this Agreement, writing or any Note. The Register shall be available for inspection by the reasonable prior notice.   32   maximum shall be credited against amounts owed by the Companies to the Purchasers and thus refunded to the Companies. Interest and payments shall be computed on the basis of actual days elapsed in a year of 360 days. Each rate of interest in this Agreement expressed as an annual rate of interest for the purposes of the Interest Act (Canada), shall be such rate multiplied by 365 (or, the Companies and the Agent. (b) The obligations of the Companies and the rights of the Creditor Parties under this Agreement may be waived only with the written consent of the Agent. (c) The obligations of the Creditor Parties and the rights of the Companies Companies. alternative.   33   11.8 Notices. All notices required or permitted hereunder, under the Master Security Agreement, the Stock Pledge Agreement or the IP Security Agreement shall be in writing and shall be deemed effectively given:       If to either Company, to:   c/o Verichip Corporation         Attention: William Caragol     Facsimile No.: 561-805-8001         Holland & Knight LLP           Facsimile: 954-463-2030                 Facsimile No.: 212-581-5037           345 Park Avenue               To the address indicated under its signature on the signature pages hereto or at such other address as either Company or the applicable Creditor Party may herewith. expenses of appeals.   34   construing this Agreement. 11.11 Signatures; Counterparts. This Agreement may be executed by facsimile or 11.14 Joint and Several Obligations. (a) All obligations and liabilities of each Company to each Creditor Party (the “Obligations”) shall be joint and several, and such obligations and liabilities on the part of the Companies shall in no way be affected by any extensions, renewals and forbearance granted by the Creditor Parties to any Company, failure of the Creditor Parties to give either Company any notice, any failure of the Creditor Parties to pursue to preserve its rights against either Company, the release by the Agent of any collateral now or thereafter acquired from either Company, and such agreement by either Company to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by any Creditor Party to either Company or any collateral for such Obligations or the lack thereof. such Company may now or hereafter have against the other or other person or entity directly or contingently liable for the Obligations, or against or with respect to any other’s property (including, without limitation, any property which is collateral for the Obligations), arising from the existence or performance of this Agreement, until all Obligations have been indefeasibly paid in full and this Agreement has been irrevocably terminated.   35   (c) Each Company represents and warrants to each Creditor Party that (i) such businesses and corporate activities of the Companies are closely related to, and (iii) the financial and other operations of the Companies are performed on a combined basis as if the Companies constituted a consolidated corporate group and (iv) the Companies will receive a substantial economic benefit from entering 11.15 Agency. Each Purchaser has pursuant to an Administrative and Collateral Agency Agreement designated and appointed the Agent as the administrative and collateral agent of such Purchaser under this Agreement and the Related Agreements. 11.16 Judgment Currency. If, for the purpose of obtaining or enforcing judgment against either Company in any court in any jurisdiction, it becomes necessary to Agreement in any currency (the “Obligation Currency”) other than the Judgment business day immediately preceding (a) the date of actual payment of the amount such date, or (b) the date on which the foreign court determines, in the case of of which such conversion is made pursuant to this section being hereinafter in this section referred to as the “Judgment Conversion Date”). If, in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available funds, the Companies shall pay, on a joint and several basis, such additional amount (if any, but in any event not a lesser amount) as Conversion Date. Any amount due from the Companies under this section shall be any other amounts due under or in respect of this Agreement. 11.17 Tool Hound Product Line. Mark shall be permitted to sell its “Tool Hound” product line and assets reasonably related thereto, provided, however, in the event net proceeds therefrom exceed $150,000, all such net proceeds shall be   36                     COMPANIES:       PURCHASER:                   VERICHIP CORPORATION       VALENS OFFSHORE SPV II, CORP.                   By:   /s/ William J. Caragol       By:   Valens Capital Management, LLC,                       Name: William J. Caragol       its investment manager                                                         Name: Scott Bluestein                 Title: Authorized Signatory                   XMARK CORPORATION                               By:                                         AGENT:                               LV ADMINISTRATIVE SERVICES, INC., as Agent                               By:                       Name: Scott Bluestein                 Title: Authorized signatory             signature page to securities purchase agreement       Schedule 1 Purchaser Commitments           Purchaser:   Total Notes Purchased:               $ 8,000,000               Schedule 2 Closing Shares           Purchaser:   Closing shares:                 120,000             39

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 10-Q [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2007 [ ] 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: 000-32409 UNITED MORTGAGE TRUST (Exact name of registrant as specified in its charter) Maryland 75-6493585 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1702 N. Collins Blvd, Suite 100 Richardson, Texas75080 (Address of principal executive offices)(Zip Code) (214) 237-9305 (Registrant’s telephone number, including area code) 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 X No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Large accelerated filer Accelerated filer Non-accelerated filer X Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No X The number of shares outstanding of the Registrant’s shares of beneficial interest, par value $0.01 per share, as of the close of business on October 15, 2007 was 6,686,490. UNITED MORTGAGE TRUST INDEX PART I - FINANCIAL INFORMATION Page ITEM 1. Financial Statements Consolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006 3 Consolidated Statements of Income for the three months and nine months ended September 30, 2007 and 2006 (unaudited) 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 (unaudited) 5 Notes to Consolidated Financial Statements (unaudited) 6 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 9 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 20 ITEM 4. Controls and Procedures 20 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings 21 ITEM 1A. Risk Factors 21 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 21 ITEM 3. Defaults Upon Senior Securities 22 ITEM 4. Submission of Matters to a Vote of Security Holders 22 ITEM 5. Other Information 22 Page 2 UNITED MORTGAGE TRUST CONSOLIDATED BALANCE SHEETS September 30, 2007 December 31, 2006 (unaudited) (audited) Assets Cash and cash equivalents $ 716,251 $ 3,661,724 Mortgage investments: Investment in trust receivable 5,330,846 5,473,508 Interim loans, affiliates 66,438,940 64,883,388 Interim loans 12,540,828 17,825,519 Allowance for loan losses (1,332,205 ) (1,011,975 ) Total mortgage investments 82,978,409 87,170,440 Line of credit receivable, affiliate 30,696,766 33,056,189 Accrued interest receivable 537,604 390,315 Accrued interest receivable, affiliate 4,401,727 3,331,204 Receivable from affiliate - 230,861 Recourse obligations, affiliates 14,612,605 11,975,234 Residential mortgages and contracts for deed foreclosed 292,394 359,517 Interim mortgages foreclosed 401,805 776,643 Equipment, less accumulated depreciation of $25,856 and $22,120, respectively - 3,737 Other assets 636,544 757,382 Total assets $ 135,274,105 $ 141,713,246 Liabilities and Shareholders' Equity Liabilities: Line of credit payable $ 23,597,236 $ 27,976,642 Dividend payable 835,813 806,000 Accounts payable and accrued liabilities 5,443 4,718 Total liabilities 24,438,492 28,787,360 Commitments and contingencies - - Shareholders' equity: Shares of beneficial interest; $.01 par value; 100,000,000 shares authorized; 8,079,111 and 7,985,423 shares issued, respectively; and 6,721,937 and 6,917,443 outstanding, respectively 80,791 79,854 Additional paid-in capital 142,656,509 140,783,690 Advisor's reimbursement 397,588 397,588 Cumulative distributions in excess of earnings (5,862,312 ) (7,366,618 ) 137,272,576 133,894,514 Less treasury stock of 1,357,174 and 1,067,980 shares, respectively, at cost (26,436,963 ) (20,968,628 ) Total shareholders' equity 110,835,613 112,925,886 Total liabilities and shareholders' equity $ 135,274,105 $ 141,713,246 See accompanying notes to consolidated financial statements. Page 3 UNITED MORTGAGE TRUST CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three months ended September 30, Nine months ended September 30, 2007 2006 2007 2006 Revenues: Interest income derived from affiliates $ 3,710,739 $ 3,380,556 $ 11,053,889 $ 9,477,248 Interest income 699,744 1,053,695 2,185,362 3,162,011 4,410,483 4,434,251 13,239,251 12,639,259 Expenses: Trust administration fee 254,352 214,714 625,081 641,916 Loan servicing fee 1,313 3,434 7,365 38,220 Merger expense - 11,975 - 1,039,606 General and administrative 203,979 392,934 694,576 796,363 Provision for loan losses 933,603 507,136 1,140,914 1,783,769 Interest expense 547,342 486,909 1,785,653 1,040,388 1,940,589 1,617,102 4,253,589 5,340,262 Net income $ 2,469,894 $ 2,817,149 $ 8,985,662 $ 7,298,997 Net income per share of beneficial interest $ 0.36 $ 0.40 $ 1.31 $ 1.04 Weighted average shares outstanding 6,770,599 7,001,511 6,849,920 6,991,424 Distributions per weighted share outstanding $ 0.37 $ 0.35 $ 1.09 $ 1.06 See accompanying notes to consolidated financial statements. Page 4 UNITED MORTGAGE TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the Nine Months Ended September 30, 2007 2006 Cash Flows from Operating Activities: Net income $ 8,985,662 $ 7,298,997 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 1,140,914 1,783,769 Depreciation 3,737 10,411 Net amortization of discount on mortgage investments - 166,404 Changes in assets and liabilities: Accrued interest receivable (1,217,812 ) (1,393,911 ) Other assets 120,839 1,305,570 Accounts payable and accrued liabilities 725 (128,001 ) Net cash provided by operating activities 9,034,065 9,043,239 Cash Flows from Investing Activities: Investment in residential mortgages and contracts for deed (573,904 ) (762,162 ) Principal receipts on residential mortgages and contracts for deed 631,478 1,491,000 Investment in interim mortgage notes (45,642,201 ) (70,452,168 ) Principal receipts on interim mortgage notes 45,794,655 56,827,360 Proceeds from recourse obligations, affiliates 645,678 910,541 Line-of-credit receivable, affiliate, net 2,359,423 (3,489,152 ) Receivable from affiliate 230,861 49,724 Net cash provided by (used in) investing activities 3,445,990 (15,424,857 ) Cash Flows from Financing Activities: Proceeds from issuance of shares of beneficial interest 1,873,756 2,015,767 Purchase of treasury stock (5,468,337 ) (4,077,608 ) Net borrowings (payments) on line-of-credit, payable (4,379,405 ) 11,140,462 Dividends (7,451,542 ) (7,376,284 ) Net cash provided by (used in) financing activities (15,425,528 ) 1,702,337 Net decrease in cash and cash equivalents (2,945,473 ) (4,679,281 ) Cash and cash equivalents at beginning of period 3,661,724 5,548,421 Cash and cash equivalents at end of period $ 716,251 $ 869,140 Supplemental Disclosure of Cash Flow Information Cash paid during the period for interest $ 1,785,653 $ 1,040,388 Supplemental Disclosure of Non-cash Information Transfer of loans into recourse obligations, affiliates $ 3,283,049 $ 3,180,403 See accompanying notes to consolidated financial statements. Page 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Nature of Business United Mortgage Trust (the “Company”) is a Maryland real estate investment trust which qualifies as a real estate investment trust (a “REIT”) under federal income tax laws. The Company invests in:(i) first lien secured mortgage loans with initial terms of 12 months or less for the acquisition and renovation of single family homes, which we refer to as “interim loans”; (ii) first lien secured construction loans for the acquisition of lots and construction of single-family homes, which we refer to as “construction loans”; (iii) lines of credit and secured loans for the acquisition and development of single-family home lots, referred to as “land development loans”; (iv) lines of credit and loans secured by developed single-family lots, referred to as “finished lot loans”; (v) lines of credit and loans secured by completed model homes, referred to as “model home loans”; and, formerly we invested in (vi) first lien, fixed rate mortgages secured by single-family residential property, which we refer to as “residential mortgages”. Additionally, our portfolio includes loans to affiliates of our Advisor, which we refer to as “recourse loans,” all of which are referred to as the Company’s “Mortgage Investments.” Such loans are originated by others to the Company’s specifications or to specifications approved by the Company. Most, if not all, of such loans are not insured or guaranteed by a federally owned or guaranteed mortgage agency. The Company has no employees. Effective August 1, 2006, the Company entered into a one-year advisory services agreement with UMTH General Services, L.P. (“UMTHGS”), an affiliate of the Company. Under the agreement, UMT pays a monthly trust administration fee for services relating to the Company’s daily operations, including payroll for its employees who are directly and indirectly involved in the day-to-day management of the Company.The advisory services agreement was extended on a month-to-month basis until December 31, 2007, while under review by the Trustees and UMTHGS. Prior to August 1, 2006, UMT Advisors, Inc. (“UMTA”) performed similar functions and was paid a monthly trust administration fee. 2. Basis of Presentation These financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2006. 3. Line of Credit Payable On November 8, 2004, with trustee approval, the Company entered into a three year loan agreement for a $15 million revolving credit facility with a commercial bank. The line of credit payable was collateralized by certain interim mortgages and construction loans.Interest on the outstanding balance accrues at the higher of the Prime Rate or the sum of the Federal Funds rate plus 1/2% per annum. On July 31, 2006 the Company executed the fourth modification of its credit facility to increase the borrowing base to $30,000,000. On July 1, 2007 the Company executed the fifth modification to its credit facility which, in addition to minor modifications, 1) added single family lots as eligible collateral, 2) increased the days past due for an eligible mortgage note from 20 to 60 days, 3) set a maximum aggregate loan limit to any one borrower at $2 million dollars and 4) modified the tangible net worth amount to $95 million dollars.Outstanding balances on the credit facility at September 30, 2007 and December 31, 2006 were $23,597,236 and $27,976,642, respectively. The interest rate at September 30, 2007 and 2006 was 8.75%. The Company is negotiating a new line of credit with its current lender and others. Page 6 4. Related Party Transactions The Company relies on affiliates of its Advisor for the sourcing and origination of a majority of its Mortgage Investments. a) Capital Reserve Group, Inc. (“CRG”) is a Texas corporation that is 50% owned by Todd Etter, an officer and principal shareholder of the former Advisor and shareholder and director of UMT Services, Inc. (“UMTSI”), the General Partner of UMTHGS. CRG was in the business of financing home purchases and renovations by real estate investors. The Company loaned money to CRG to make loans to other borrowers. During 2006 the Company took direct assignment with full recourse of the remaining CRG loans and has been liquidating them. The Company funded $ 37,571 on the former CRG loans in the nine months ended September 30, 2007. The unpaid principal balance (“UPB”) of the loans as of September 30, 2007 was $429,888. b) South Central Mortgage, Inc. (“SCMI”) is a Texas based mortgage bank of which the sole beneficial shareholder is Todd Etter, an officer and principal shareholder of the former Advisor and shareholder and director of UMTSI. Christine “Cricket” Griffin, the Company’s President and one of its trustees, was the Chief Financial Officer of SCMI from September 1995 until July 1996. The Company purchased first lien secured, fixed rate residential real estate mortgage loans sourced by or originated by SCMI. The loans were assigned to the Company when purchased. SCMI provided the Company with limited recourse on loans it sourced or originated and assigned to the Company. At September 30, 2007 and 2006, there was no remaining unpaid principal balance on loans sourced or originated by SCMI. c) Ready America Funding (“RAFC”) is a Texas corporation that is 50% owned by SCMI. RAFC is in the business of financing interim mortgages for the purchase of land and the construction of modular and manufactured single-family homes placed on the land by real estate investors. Although the Company no longer loans money to RAFC, it has continued to fund current projects directly to RAFC’s borrowers. The Company funded $ 4,380,062 in draws against the remaining properties in RAFC’s portfolio during the nine months ended September 30, 2007. The UPB of the loans as of September 30, 2007 was $22,297,537. d) UMT Holdings, LP (“UMTH”) is a Delaware limited partnership which is in the real estate finance business. Christine “Cricket” Griffin, the Company’s President; Todd Etter and Tim Kopacka, who own 100% of the Company's former Advisor; Craig Pettit, who owns 100% of Ready Mortgage Corp. and 100% of Eastern Intercorp Inc. which in turn owns 50% of RAFC; and William Lowe, who owns 50% of CRG, are limited partners in UMTH. Mr. Etter is a shareholder and director of UMTSI, the general partner of UMTH. UMTHGS is a subsidiary of UMTH and the Company’s Advisor. REO Property Company (“REOPC”) is a subsidiary of UMTH that provides real estate management services to the Company. Prospect Service Corp. (“PSC”) is a subsidiary of UMTH that acts as a mortgage servicer for the Company, and UMTH holds a 99% limited partnership interest in UMTH Land Development, L.P., which holds a 50% profit interest in UDF and acts as UDF's asset manager. e) UMTH Lending Company, L.P. (“UMTHLC”) is a Delaware limited partnership owned by UMTH. The Company has loaned and will continue to loan money to UMTHLC to make loans to other borrowers. The loans are then collaterally assigned to the Company as security for the promissory note between UMTHLC and the Company. The Company funded $36,746,706 in draws against existing loans and new loans during the nine months ended September 30, 2007. The UPB of the loans as of September 30, 2007 was $42,079,119.The deterioration in residential mortgage market, specifically the discontinuation of sub-prime and Alt – A products, (the “credit crisis”), and the continued slow down in existing home sales are directly and indirectly affecting the ability of the Company’s borrowers to sell the properties securing its loans, pay interest due the Company and repay the loans when due.Interim borrowers are experiencing difficulty in sourcing financing for retail buyers.As a result, increasing amounts of interim loans remain outstanding after maturity.Subsequent to September 30, 2007 the Company further reduced its interim loan portfolio by approximately $19 million. In addition the Company is currently considering accepting a secured note for shortfalls from foreclosed properties to enable UMTHLC to efficiently manage past due and foreclosed accounts throughout the duration of the “credit Page 7 crisis”. (See Executive Summary following for a discussion of the current conditions of the single family housing industry and mortgage markets). f) Recourse Obligations, Affiliates Secured Notes: The Company is aware that the principal balances of the Obligation have exceeded the maximum note balances for CRG, RAFC and SCMI by $680,896, $1,812,276 and $23,450 respectively. The Company and those affiliated parties analyzed why this occurred and found that the rate at which foreclosed properties were selling was faster than the original model anticipated. Although the minimum payments were met and exceeded, for the first two quarters of 2007, they were outpaced by the rapid sell off of REO properties. The Company and the affiliates are discussing modifications to the loan agreements, which include a pledge of additional collateral and loan modifications to allow for increased maximum note amounts through the remainder of the CRC and RAFC portfolio liquidations.Outstanding balances as of September 30, 2007 were: Name Loan Balances CRG $4,053,800 RAFC $7,086,712 SCMI $3,472,093 The Secured Notes bear interest at a rate of 10% per annum. The CRG and RAFC Secured Notes amortize over 15 years. The SCMI Secured Note amortizes over 22 years, which was the remaining term of the underlying notes SCMI had recoursed. The Secured Notes require the originating company to make monthly payments equal to the greater of (1) principal and interest amortized over 180 months and 264 months, respectively, or 2) the amount of any distributions paid to the originating company with respect to the pledged Class C units of UMTH. UMTH has also guaranteed the obligations of CRG, SCMI and RAFC under the Secured Notes up to the maximum loan amount defined in the respective notes.The “credit crisis” as well as the decline in new home sales have indirectly affected the earnings of UMTH which, in turn, is expected to affect the distributions associated with the security pledged on the Recourse Obligations.The Company is considering modifications to the Recourse Obligations rate and amortization requirement in response to the mortgage market and new home sales environments. (See Executive Summary following for a discussion of the current conditions of the single family housing industry and mortgage markets). g) UDF is a Nevada real estate finance company in which UMTH holds a limited partnership profit interest. On September 20, 2006, with Trustee approval, the Company extended and modified its line of credit with UDF. The term remained at five years and the interest rate was modified to a uniform 15% and the borrowing base increased to $45,000,000. UDF makes loans to real estate developers for the acquisition of land and development of single family residential lots. The Company funded $1,750,000 of draws during the nine months ended September 30, 2007. The UPB of the line of credit as of September 30, 2007 was $30,696,766. Effective September 1, 2006, United Development Funding III, L.P. (“UDF III”) issued a guaranty to the Company for the UDF debt to a maximum of $30,000,000 subject to reductions based on UDF equity. In conjunction with the issuance of the guaranty, the interest rate on the UDF line was reduced to 14%. h) The Company entered into an Advisory Agreement with UMTHGS effective August 1, 2006. Under the agreement, UMTHGS is paid an advisory fee calculated monthly as 1/12 of 1% of total income producing assets. Advisory services fees paid during the nine months ended September 30, 2007 were $625,081. As consideration for obtaining the advisory agreement, UMTHGS has paid the Company $500,000 in total over twelve monthly installments, the term of the agreement. The fee was recognized as a reduction of trust administration fees over a one-year term, concluding on August 1, 2007. The fee recognized during the nine months ended September 30, 2007 was $291,667, and was recorded as a reduction of trust administration fee expenses. Page 8 i) The Company paid loan servicing fees to PSC under the terms of a Mortgage Servicing Agreement to service its residential mortgages and contracts for deed in the amount of $7,365 during the nine months ended September 30, 2007. In addition, the Company paid PSC to sell its foreclosed properties.Fees paid during the nine months ended September 30, 2007 were $12,394. 5. Subsequent Event Subsequent to the end of the September 2007 quarter, UMTHLC acquired a bank line of credit and reduced its investment with the Company by approximately $19 million. This action was anticipated by the Company and reduced the Company’s investment in Interim Loans from approximately $42 million to approximately $23 million. The Company used the funds to reduce its own line of credit. By agreement and trustee approval, the Company retains a subordinated piece of UMTHLC’s pledged collateral not to exceed $12 million. At the time the transaction occurred the subordinated balance was approximately $8.5 million. On November 7, 2007 the Company’s line of credit with Texas Capital Bank matured.The Company is currently negotiating the renewal and extension of the line of credit.There is no assurance that the Company will be successful in negotiating a renewal and extension of the line of credit. ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement Regarding Forward-Looking Statements The following section contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and should be read in conjunction with the consolidated financial statements and related notes appearing in this Form 10-Q. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons including, but not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2006 under the caption “Risk Factors”, as well as those discussed in this report, as well as other unknown and unpredictable factors. You should not place undue reliance on these forward-looking statements. Such forward looking statements may be identified by the words “anticipate,” “believe,” “estimate,” “expect” or “intend” and similar expressions. Forward-looking statements are likely to address such matters as our business strategy, future operating results, future sources of funding for mortgage loans acquired by us, future economic conditions and pending litigation involving us. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-Q may not occur. We undertake no obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise. RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 General Investment Information United Mortgage Trust (the “Company”, “we” or “us”) is a Maryland real estate investment trust which qualifies as a real estate investment trust (a “REIT”) under federal income tax laws. The Company invests in:(i) first lien secured mortgage loans with initial terms of 12 months or less for the acquisition and renovation of single family homes, which we refer to as “interim loans”; (ii) first lien secured construction loans for the acquisition of lots and construction of single-family homes, which we refer to as “construction loans”; (iii) lines of credit and secured loans for the acquisition and development of single-family home lots, referred to as “land development loans”; (iv) lines of credit and loans secured by developed single-family lots, referred to as “finished lot loans”; (v) lines of credit and loans secured by completed model homes, referred to as “model home loans”; and, formerly we invested in (vi) first lien, fixed rate mortgages secured by single-family residential property, which we refer to as “residential mortgages”. Additionally, our portfolio includes loans to affiliates of our Advisor, which we refer to as “recourse loans,” all of which are referred to as the Company’s “Mortgage Investments.” Such loans are originated Page 9 by others to the Company’s specifications or to specifications approved by the Company. Most, if not all, of such loans are not insured or guaranteed by a federally owned or guaranteed mortgage agency. Material Trends Affecting Our Business Nationally, the number of new single-family residential homes sold has been declining, average sales prices have been falling, and the median sales price has been rising.The sales of new single-family residential homes in September 2007 were at a seasonally adjusted annual rate of 770,000 units, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.This is approximately 23% below the September 2006 estimate of 1,004,000 units.According to the same sources, the average sales price of new houses sold in September 2007 was $288,000; the median sales price was $238,000. This is approximately 2.8% below the September 2006 average sales price of $296,200 and approximately 5% above the September 2006 median sales price of $226,700.The seasonally adjusted estimate of new houses for sale at the end of September was 523,000, which represents a supply of 8.3 months at the September sales rate.The seasonally adjusted estimate of new houses for sale at the end of September 2006 was 560,000, which represents a supply of 6.8 months at the September 2006 sales rate. According to the same sources, new single-family residential home permits and starts have also declined nationally, as a result and in anticipation of a rising supply of new single-family residential homes and a declining demand for new single-family residential homes.Single-family homes authorized by building permits in September 2007 were at a seasonally adjusted annual rate of 868,000 units.This is 28.6% below the September 2006 estimate of 1,215,000 units.Single-family home starts were at a seasonally adjusted annual rate of 963,000 units.This is 30.8% below the September 2006 estimate of 1,391,000 units. While housing markets generally remain difficult across the nation, with those difficulties most pronounced in those markets that had experienced rapid growth, steep increases in property values and speculation, such as in California, Florida, Arizona and Nevada.However, a few markets, such as Texas, are continuing to remain fairly healthy.The table below illustrates the recent declines in annual home price appreciation rates nationally, as well as in California and Florida, while showing that Texas has not experienced such declines. 10 Year Home Price Appreciation Source: Office of Federal Housing Enterprise Oversight and Real Estate Center at Texas A&M University As of September 30, 2007, the great majority of our loans were secured by single-family homes in Texas.We believe the Texas markets have remained fairly healthy due to strong demographics, economies and housing affordability ratios.The National Association of Homebuilders estimates that the median new home prices for 2007 in the metropolitan areas of Austin, Houston, Dallas, San Antonio and Lubbock are $188,025, $204,895, $207,076, $160,764 and $97,199, respectively.These amounts are significantly below the September 2007 national median sales price of new homes sold of $238,000.Using the Department of Housing and Urban Development’s estimated 2007 median family income for the respective metropolitan areas of Austin, Houston, Dallas, San Antonio and Page 10 Lubbock, the median income earner in those areas has 1.25 times, 0.95 times, 1.02 times, 1.13 times and 1.71 times the income required to qualify for a mortgage to purchase the median priced new home in the respective metropolitan area.Using the U.S. Census Bureau’s income data to project estimated median income for the United States for 2007 of $59,000 and the September 2007 national median sales prices of new homes sold of $238,000, we conclude that the national median income earners has 0.84 times the income required to qualify for a mortgage loan to purchase the median priced new home in the United States.We further conclude that the above Texas metropolitan areas have new home housing affordability which exceeds the national new home housing affordability by between 1.13 to 2.0 times.The above housing affordability is determined as the ratio of median family income to the income required to qualify for a 90 percent, 30-year fixed-rate mortgage to purchase the median-priced new home, assuming an annual mortgage insurance premium of 45 basis points for private mortgage insurance and a cost that includes estimated property taxes and insurance for the home. The United States Department of Labor reports that as of September 2007, Texas led the nation with the largest job gains over the past twelve months with 217,400 new jobs created.This is nearly 33% more jobs created during this period than in the nation’s second largest state for job growth, California, and more than two times the jobs created during this period in the nation’s third largest state for job growth, Florida.The Texas Workforce Commission reports that as of September 2007, the Texas metropolitan areas of Austin, Houston, Dallas, San Antonio and Lubbock experienced, during the last twelve months, the creation of 25,900, 64,500, 67,900, 15,100 and 3,400 new jobs, respectively. The United States Census Bureau reported on June 28, 2007 that Texas’ five major cities – Austin, Houston, San Antonio, Dallas and Fort Worth – were among the top ten in the nation for population growth from 2005 to 2006.San Antonio wassecond in the nation with a population change of 33,084 from July 1, 2005 to July 1, 2006, Fort Worth wasthird in the nation with a population change of 30,201 during that period, Houston wasfourth in the nation with a population change of 26,554 during that period, Austin wassixth in the nation with population change of 18,630 during that period, and Dallas waseighth in the nation with a population change of 16,676 during that period. The Fall 2007 U.S. Market Risk Index, a study prepared by PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc., which ranks the nation’s 50 largest metropolitan statistical areas according to the likelihood that home prices will be lower in two years, reported that Texas cities lead the nation in home price stability.The San Francisco-based company recently analyzed housing price trends in 50 U.S. metropolitan areas for its quarterly report, released October 9, 2007.Major Texas cities in the study are considered among the least likely in the country to see home prices decline.The study predicts there is less than a 10% chance that the Dallas/Fort Worth-area and Houston home prices will fall during the next two years, a 12% chance that San Antonio home prices will fall during the next two years and a 15% chance that Austin home prices will fall during the next two years. In Texas markets, home builders and developers remain disciplined on new home construction and project development.New home starts have been declining year-on-year and are outpaced by new home sales in all of our Texas markets where such data is readily available.Inventories of finished new homes and finished lot supplies are healthy, with the exception of Dallas-Fort Worth where homebuilders have slowed housing starts as the market had become slightly oversupplied with finished new homes and finished lot supplies. The Real Estate Center at Texas A&M University has reported that the sales of existing homes remain healthy in our Texas markets, as well.As of September 2007, the number of existing homes sold year-to-date in Austin is 22,299, down 5% year-on-year; San Antonio is 18,699, down 8% year-on-year; Houston is 60,446, down 2% year-on-year, Dallas is 45,311, down 6% year-on-year, Fort Worth is 8,800, down 4% year-on-year, and Lubbock is 2,747, up 5% year-on-year.The median sales price increased 7% year-on-year in Austin, increased 6% year-on-year in San Antonio, increased 2% year-on-year in Houston, increased 2% year-on-year in Dallas, was flat year-on-year in Fort Worth, and increased 4% year-on-year in Lubbock.The number of months of home inventory for sale in Austin, San Antonio, Houston, Dallas, Fort Worth and Lubbock is 4.7 months, 6.3 months, 6.5 months, 6.7 months, 6.5 months, and 6.5 months, respectively.A 6-month supply of inventory is considered a balanced market with more than 6 months of inventory generally being considered a buyer’s market and less than 6 months of inventory generally being considered a seller’s market. In managing and understanding the markets and submarkets in which we make loans, we monitor the fundamentals of supply and demand.We monitor the economic fundamentals in each of the markets in which we Page 11 make loans, analyzing demographics, household formation, job growth, and housing affordability.We also monitor movements in home prices and the presence of market disruption activity, such as investor or speculator activity that can create false demand and an oversupply of homes in a market.Further, we study new home starts, new home closings, finished home inventories, finished lot inventories, existing home sales, existing home prices, absorption, prices with respect to new and existing home sales, finished lots and land, and the presence of sales incentives, discounts, or both, in a market. The residential homebuilding industry is cyclical and is highly sensitive to changes in general economic conditions, such as levels of employment, consumer confidence and income, availability of financing for acquisition, construction and permanent mortgages, interest rate levels and demand for housing.Sales of new homes are also affected by the condition of the resale market for used homes, including foreclosed homes.Housing demand is, in general, adversely affected by increases in interest rates, housing costs and unemployment and by decreases in the availability of mortgage financing. We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate and interest rates generally, including what is referred to as the “sub-prime or credit crisis” that we reasonably anticipate to have a material impact on either the income to be derived from our investments in mortgage loans, or in entities that obtain mortgage loans, other than those referred to in our Annual Report on Form 10-K.Despite the overall stability in the Texas market where we make the great majority of our loans, the recent disruption of mortgage markets stemming from the sharp rise in defaults in the sub-prime mortgage market, in combination with a significant amount of negative national press discussing chaos in mortgage markets and the poor condition of the national housing industry, including declining home prices and new home sales concessions and discounts, have made potential home purchasers and real estate lenders very cautious.We anticipate that this may result in a slowing of interim loan originations and of the sales of finished lots developed by clients of United Development Funding, L.P., (“UDF”) one of our major borrowers and an affiliate of our Advisor, in certain markets; however, we believe that the prices of those homes and lots should not change materially. The cautiousness being exhibited by lenders and borrowers as well as the publicity about the sub-prime crisis is also resulting in increased foreclosures and may affect the ability of our borrowers to sell the assets securing their loans, pay interest due us and repay the loans when due and may in the near term and longer term expose us to greater loan losses than we have historically experienced. Executive Summary Earnings for the first nine months of 2007 met our expectations, at $1.31 per share outstanding compared to $1.04 per share in the same 2006 period. Distributions to shareholders were $1.09 and $1.06 per share, respectively. Earnings for the 2007 and 2006 third quarters were $0.36 and $0.40 per share, respectively, and distributions to shareholders were $0.37 and $0.35 per share, respectively. Approximately 63% and 60% of our income was generated from interim loans during the nine months ended September 30, 2007 and 2006, respectively, and although the percentage invested in interim loans increased between comparable periods, the number of new loan originations decreased during the three and nine months of 2007 by 70% and 36% when compared to loan originations in comparable 2006 periods.The expected decline was a function of our intention to stop investing in interim construction loans and interim loans secured by modular and manufactured lots and homes. The deterioration in residential mortgage market, specifically the discontinuation of sub-prime and Alt – A products, referred to herein as the credit crisis, and the continued slow down in new home sales are directly and indirectly affecting the ability of our borrowers to sell the assets securing their loans, pay interest due us and repay the loans when due.New and existing home financing solutions are being introduced by both the private and public sectors.Housing inventories are slowly beginning to reduce to sustainable levels.However, consumer confidence remains low.Industry-wide lenders are reevaluating and restructuring credits affected by residential mortgage markets and the housing sales decline.Overall recovery of the single family housing industry is likely to be prolonged.We believe that a pragmatic and pro-active approach to managing our credits will allow us to maximize repayments and properly report asset values.In consideration of the above, we are: Page 12 · reducing our investment in interim loans dependent on sub-prime and Alt-A mortgage products for repayment of our loan.We funded 63% fewer loans in the three-months ended September 30, 2007 compared to the same period in 2006Interim loan payoffs as a percentage of loans originated during the three and nine-month comparable periods were 174% and 107% in 2007 compared to 90% and 83% during the 2006 periods.Subsequent to September 30, 2007 we reduced our investment in Interim Loans by approximately 45%, from $42million to $23 million. · considering accepting a secured note for shortfalls from foreclosed properties to enable UMTHLC to efficiently manage past due and foreclosed accounts throughout the duration of the credit crisis. · increasing loss reserves for non-recourse interim and construction loans where full collection of the indebtedness is not assured. · reevaluating collateral value on specific loans deemed to be affected by current mortgage and housing environments and reserving for unsecured deficiencies. UMTHLC also reports that foreclosures as a function of loans originated during 2007 increased to 15% compared to a four year historical rate of 8.77%.Accordingly UMTHLC has increased its loss reserves to accommodate projected losses. UMTHLC reports that the higher rate is a factor of different underwriting criteria employed during 2006 and the inability of its borrowers to sell properties to consumers because it is more difficult for consumers to qualify for mortgage loans in today’s economic environment. Approximately 25% of our income was derived from lines of credit and secured loans for the acquisition and development of single-family home lots, referred to as “land development loans” during the nine months ended September 30, 2007 and 2006, respectively.At September 30, 2007 our investment in the line of credit to our affiliate, UDF, was approximately $30.7 million.We had anticipated our investment in land development loans to grow to 35% by year end, but now project that increase to occur in the second quarter 2008, as we renegotiate our bank line of credit to accommodate land development loans as pledged collateral. We intend to use our line of credit to build this portion of our portfolio. In addition, we have been reviewing opportunities in two loan categories we have not yet entered:lot banking loans and model home banking loans. Our Advisor and Trustees are reviewing prospects for investment, and we hope to find suitable investments during the last quarter of the year. During the nine months ended September 30, 2007 and 2006, approximately 8% and 6% of our income, respectively, came from payments made by affiliates under secured promissory notes issued by them to us to evidence their accrued obligations to reimburse us for any defaulted loans that we acquire from them, which notes we refer to as “Recourse Obligations.”The Recourse Obligations have maximum note amounts which have been exceeded by SCMI and CRG.We intend to modify the maximum note amount with respect to SCMI and CRG affiliate loan and reclassify those amounts asRecourse Obligations, as each of those affiliates have liquidated substantially all of their portfolios and the value of the security pledged by both SCMI and CRG exceeds the proposed maximum note amounts.We anticipate that RAFC’s amount will continue to grow over the next twelve months, as it further liquidates its portfolio. The Secured Notes require the originating company to make monthly payments equal to the greater of (1) principal and interest amortized over 180 months and 264 months, respectively, or 2) the amount of any distributions paid to the originating company with respect to the pledged Class C units of UMTH. UMTH has guaranteed the obligations of CRG, SCMI and RAFC under the Secured Notes up to the maximum loan amount defined in the respective notes.The “sub-prime or credit crisis” as well as the decline in new home sales have indirectly affected the earnings of UMTH which, in turn, is expected to affect the distributions associated with the security pledged on the Recourse Obligations.The Company monitors the value of the security pledged by the originating companies and is considering modifications to the Recourse Obligations rate and amortization requirement to allow UMTH to structure payments under the Recourse Obligations in relation to its earnings as impacted by the mortgage market and new home sales environments. Page 13 Results of Operations · Our portfolio concentrations have shifted over ten years of investing, and particularly since 2000, as we have sought adequate supplies of suitable loans in a changing real estate finance market. The chart below demonstrates the transition from a portfolio with a concentration on long term 1st lien single family loans to one comprisedprimarily of first lien interim loans of 12 months or less in term for the purchase and renovation of single family homes and loans secured by 1st lien and subordinate single family lot development loans. We intend to continue to adapt to changes in the real estate finance market and thus the composition of our loan portfolio is likely to continue to evolve over time based on factors such as interest rates paid under various types of real estate loans, our assessment of the level of risk of the different types of loans, availability of loans, regulatory considerations and other factors. Subsequent to September 30, 2007 we reduced our investment in Interim Loans by approximately 45%, from $42million to $23 million.The chart below takes into consideration the subsequent reduction. Management estimates that investment in land development loans will grow to at least 35%, or to as much as 75%, of our portfolio by the end of 2008. Loans Purchased During the three and nine months ended September 30, 2007 and 2006, we acquired interim mortgages from both affiliates and others, and funded draws on the UDF line of credit. Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 Interim Mortgages Purchased Funded with affiliates $7,357,000 $19,618,000 $42,394,000 $53,395,000 Funded with others 320,000 6,533,000 3,248,000 17,057,000 Total funded $7,677,000 $26,151,000 $45,642,000 $70,452,000 Number of loans funded with affiliates 90 320 538 776 Number of loans funded with others - 74 5 118 Total number of loans funded 90 394 543 894 Principal paid off with affiliates $9,713,000 $10,980,000 $37,262,000 $37,422,000 Principal paid off with other 2,876,000 11,618,000 8,533,000 19,405,000 Total principal paid off $12,589,000 $22,598,000 $45,795,000 $56,827,000 Number of loans with affiliates paid off 163 196 571 661 Number of loans with other paid off 18 81 72 159 Total number of loans paid off 181 277 643 820 Line of Credit, Affiliate Draws funded $- $6,153,000 $1,750,000 $15,562,000 Paid down - (3,900,000) (4,109,000) (12,073,000) Net change $- $2,253,000 $(2,359,000) $3,489,000 Investment in Trust Receivable Residential Mortgages and Contracts for Deed Purchase price $278,000 $267,000 $574,000 $762,000 Number purchased from other sources 1 5 13 16 Aggregate principal balance 278,000 267,000 574,000 762,000 Average principal balance $278,000 $53,400 $44,200 $47,600 Page 14 Below is a table that summarizes our mortgage portfolio at the end of each quarter indicated: At September 30, 2007 2006 Interim Mortgages Balances at September 30 Affiliates unpaid principal balance $66,438,940 $60,177,157 Unpaid principal balance others $12,540,828 $22,196,251 Total $78,979,768 $82,373,408 Interim foreclosed, other $401,805 $1,259,238 Number of affiliate interim loans 819 819 Number of unaffiliated interim loans 169 268 988 1,087 Average unpaid principal balance $79,939 $75,781 Remaining term in months: less than 12 12 Yield on investments 13.03% 13.60% Line of Credit, Affiliate Balances at September 30 $30,696,766 $33,806,189 Term remaining in months 27 39 Yield on investment 13.86% 13.86% Recourse Obligations Balance at September 30 Recourse obligations $14,612,605 $11,534,095 Yield on investment 9.96% 9.81% Investment in Trust Receivable at September 30 Loans owned outright 63 46 Rental properties 1 2 Unpaid principal balance loans/properties owned outright $2,215,344 $1,763,171 Securitized loans B piece balance $3,115,502 $3,759,966 Term remaining in months 233 250 Yield on investments 12.95% 13.98% The following table illustrates percentage of our portfolio dedicated to each loan category: At September 30, 2007 2006 Interims with affiliates 51% 45% Interims with others 10% 17% UDF line of credit 24% 25% Recourse obligations 11% 9% Trust receivable - loan owned outright 2% 1% Trust receivable - securitized "B" piece 2% 3% Page 15 The pie charts below compare the percentages of income producing assets as of the periods indicated. All of the properties that are security for the mortgage investments are located in the United States. Each of the properties were adequately covered by a mortgagee’s title insurance policy and hazard insurance. During the three and nine-month periods ended September 30, 2007 and 2006, our investments generated approximately $4,410,000 and $4,434,000 and $13,239,000 and $12,639,000 of interest income, respectively, representing a 1% decrease and 5% increase over the prior periods. The decrease during the September quarter was a function of an overall smaller portfolio of income producing assets. Operating expenses for the three and nine-month periods ended September 30, 2007 and 2006 were approximately $1,941,000 and $1,617,000 and $4,254,000 and $5,340,000 respectively, representing 20% increase and 20% decrease between 2007 and 2006 comparable periods. The increase in the 2007 quarter was primarily due to an increase in provision for loan losses and the decrease between the nine-month periods was primarily due to the one time charge to merger expenses we took when the merger agreement terminated in September 2006 and lower provision for loan losses offset by higher interest expense. Other changes in major categories of operating expenses are explained below: Trust administration fee - $254,000 and $215,000 (a 18% increase) between the comparable three-month periods and $625,000 and $642,000 (a 3% decrease) between the comparable nine-month periods of 2007 and 2006, respectively. Effective August 1, 2006 we entered into an advisory services agreement with Page 16 UMTHGS and annual fees were increased from a blended rate of 0.8% to 1%. As part of the agreement, UMTHGS paid $500,000 to the Company, in 12 monthly installments. The fee was recognized as a reduction of trust administration fees over the 12 month term. The fee recognized during the three and nine months ended September 30, 2007 and 2006 were $42,000 and $83,000 and $292,000 and $83,000, respectively. General and administrative - $204,000 and $393,000 (a 48% decrease) between the comparable three-month periods and $695,000 and $796,000 (a 13% decrease) between the comparable nine-month periods of 2007 and 2006, respectively. The decreases were primarily decreases in amortization expense and legal fees. Interest expense - $547,000 and $487,000 (a 12% increase) between the comparable three-month periods and $1,786,000 and $1,040,000 (a 72% increase) between comparable nine-month periods of 2007 and 2006, respectively. In September 2006 we modified our line of credit to allow up to $30,000,000 in total borrowing, and have used the increase during 2007 to fund growth in our mortgage investments resulting in increased interest expense. Operating expenses, net of interest expense, provision for loan losses and merger expenses, as a percentage of income were 10.42% and 13.78% for the comparable three-month and 10.02% and 11.68% for the comparable nine-month periods of 2007 and 2006, respectively. As a percentage of average invested assets operating expenses, net, were 0.35% and 0.47% for the comparable three-month periods and 0.98% and 1.17% for the comparable nine-month periods, respectively. We recorded an allowance for loan losses for the quarter ended September 30, 2007 in the amount of approximately $934,000 compared to $507,000 for the 2006 quarter. Allowances for loan losses recorded during the nine months ended September 30, 2007 and 2006 were $1,141,000 and $1,784,000, respectively. We realized loan losses of approximately $966,000 and $424,000 during the comparable three-month periods of 2007 and 2006, respectively, and $1,837,000 and $2,217,000 during the comparable nine-month periods of 2007 and 2006, respectively. Loss reserves are estimates of future losses based on historical default rates and estimated loss on sale of real estate owned.The Company is currently reevaluating collateral value on specific loans deemed to be affected by current mortgage and housing environments and intends to establish reserves for any expected deficiencies that are not otherwise secured. From inception through September 30, 2007 we have acquired approximately $566 million of loans. We have recorded losses approximating 2.18% of those assets to date. We anticipate loan losses to continue, primarily in our long-term loan portfolio, and therefore continue to assess the adequacy of our loan loss reserve. Foreclosed residential mortgage and contracts for deed were 3.93% and 1.70% of the outstanding loans at September 30, 2007 and 2006, respectively. Foreclosed third party interim mortgages loans were 6.02% and 8.71% of outstanding loans at September 30, 2007 and 2006, respectively. Net income was approximately $2,470,000 and $2,817,000 for the three-month periods and $8,986,000 and $7,299,000 for the nine-month periods of 2007 and 2006, respectively, a 12% decrease and 23% increase. Earnings for the three months ended September 30, 2007 and 2006 were $0.36 and $0.40 per share and $1.31 and $1.04 for the nine months ended September 30, 2007 and 2006, respectively. Distributions to shareholders per share of beneficial interest in the 2007 and 2006 three-month periods were $0.37 and $0.35 and $1.09 and $1.06 for the nine-month periods, respectively. Page 17 CAPITAL RESOURCES AND LIQUIDITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 Our sources of funds for liquidity consist of our dividend reinvestment plan, our bank line of credit and repayments of principal on our loans made to purchase mortgage investments. Three Months Ended September 30, Nine months ended September 30, 2007 2006 2007 2006 Shares issued in dividend reinvestment 31,641 30,717 93,688 100,137 Gross proceeds 631,755 627,767 1,873,755 2,015,767 Share repurchases (3,076,337) (1,001,608) (5,468,337) (4,077,608) Principal receipts from Residential Mortgages and Contracts for Deed 364,478 432,000 631,478 1,491,000 Principal receipts from Interim Mortgages 12,618,655 23,593,360 45,794,655 56,827,360 Funding (payments) on Line of Credit, Affiliate - (2,253,152) 2,359,423 (3,489,152) Net advances (payments) on Line of Credit payable (3,375,405) 4,499,462 (4,379,405) 11,140,462 We are not currently offering shares in the public markets except to existing shareholders through our dividend reinvestment plan. In July 2006 we registered an additional 1,000,000 shares to be offered through our dividend reinvestment plan. Shares issued in the aggregate, as of September 30, 2007 and 2006, were 8,079,111 and 7,954,174, respectively. Shares retired to treasury through our share redemption plan in the aggregate were 1,357,174 and 1,027,782 through September 30, 2007 and 2006, respectively. Total shares outstanding were 6,721,937 and 6,926,392, respectively.Inception to date gross offering proceeds from all public offerings were approximately $161,382,000 and net proceeds after fees, marketing reallowance and commissions were approximately $142,737,000. Since entering into a three year loan agreement on November 8, 2004 with our lending bank, we have amended and restated the original $15 million revolving credit facility five times. The most recent amendment was effective July 1, 2007 which, in addition to minor modifications, 1) added single family lots as eligible collateral, 2) increased the days past due for an eligible mortgage note from 20 to 60 days, 3) set a maximum aggregate loan limit to any one borrower at $2 million dollars and 4) modified the tangible net worth amount to $95 million dollars.The line of credit was collateralized by certain interim mortgages, construction loans and land development loans Interest on the outstanding balance accrues at prime plus 0.5% per annum, or 8.75% at September 30, 2007 and 2006.On November 7, 2007 the Company’s line of credit with Texas Capital Bank matured.We are currently negotiating the renewal and extension of the line of credit.There is no assurance that we will be successful in negotiating a renewal and extension of the line of credit.The outstanding balance on the line of credit was approximately $23,597,000 and $24,949,000 at September 30, 2007 and 2006, respectively. Critical Accounting Policies and Estimates We prepare our accounting statements in accordance with GAAP. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accrual of interest income, loan loss reserves and valuation of foreclosed properties. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Significant accounting policies are described in the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2006. The following critical Page 18 accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: Interest is accrued monthly on outstanding principal balances. Payments are either received monthly for interest or at payoff. Any deficiencies in unpaid interest are either charged off to the reserve for loan losses or charged against the related recourse obligations. We maintain a reserve for loan losses for estimated losses resulting from the inability of our borrowers to make required payments resulting in property foreclosure and losses from the sale of foreclosed property If the financial condition of our borrowers was to deteriorate, resulting in an impairment of their ability to make payments or, if the market value of the properties securing our loans decreases additional reserves may be required. We record foreclosed properties at an estimated net realizable value based on our assessment of real estate market conditions and historical discount percentages on the sale of foreclosed properties. Should market conditions deteriorate or loss percentages increase, additional valuation adjustments may be required. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate changes primarily as a result of the method by which our bank credit facility is calculated at 1/2% over bank prime lending rate. Subsequent to the end of the September 2007 quarter the lending rate has decreased by one quarter percent to 7.5% and we do not anticipate increases during 2008. We have no long-term borrowings. We provide a line of credit to UDF.UDF is a real estate finance limited partnership which derives a substantial portion of its income by originating, purchasing, participating in and holding for investment mortgage loans made directly by UDF to persons and entities for the acquisition and development of real property as single-family residential lots that will be marketed and sold to home builders. Changes in interest rates may impact both demand for UDF’s real estate finance products and the rate of interest on the loans UDF makes.In most instances, the loans UDF will make will be junior in the right of repayment to senior lenders who will provide loans representing 70% to 80% of total project costs.As senior lender interest rates available to our borrowers increase, demand for our mortgage loans may decrease, and vice versa. Developers to whom UDF makes mortgage loans use the proceeds of such loans to develop raw real estate into residential home lots.The developers obtain the money to repay these development loans by selling the residential home lots to home builders or individuals who will build single-family residences on the lots, and by obtaining replacement financing from other lenders.If interest rates increase, the demand for single-family residences may decrease.Also, if mortgage financing underwriting criteria become more strict, demand for single-family residences may decrease.In such an interest rate and/or mortgage financing climate, developers may be unable to generate sufficient income from the resale of single-family residential lots to repay loans from UDF, and developers’ costs of funds obtained from lenders in addition to us may increase, as well.Accordingly, increases in single-family mortgage interest rates or decreases in the availability of mortgage financing could increase the number of defaults on development loans made by UDF, and correspondingly impact UDF’s ability to make payments under its line of credit. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures An evaluation was performed by the Company’s management, consisting of the individual who serves as our Chief Executive Officer and Chief Financial Officer, of the effectiveness of Company’s disclosure controls and procedures (as defined in Rule13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2007. Based on such evaluation, management has concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective. Page 19 Changes in Internal Controls Over Financial Reporting There have been no changes in the Company’s internal control over financial reporting that occurred during the nine months ended September 30, 2007, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate and interest rates generally, that we reasonably anticipate to have a material impact on either the income to be derived from our investments in mortgage loans and entities that make mortgage loans, other than those referred to in our Annual Report on Form 10-K. The recent disruption of mortgage markets, in combination with a significant amount of negative national press discussing chaos in mortgage markets and the poor condition of the national housing industry, including declining home prices, have made potential new home purchasers and real estate lenders very cautious.We anticipate that this may result in a slowing of the sales of finished lots developed by UDF’s clients in certain markets; however, we believe that the prices of those lots should not change materially. In addition, the deterioration in residential mortgage market, specifically the discontinuation of sub-prime and Alt – A products, (the “sub-prime” or “credit crisis”), and the continued slow down in existing home sales are directly and indirectly affecting the ability of the Company’s borrowers to sell the properties securing interim loans, pay interest due us and repay the interim loans when due.Interim borrowers are experiencing difficulty in sourcing financing for retail buyers.As a result, increasing amounts of interim loans remain outstanding after maturity. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS There is currently no established public trading market for our shares. As an alternative means of providing limited liquidity for our shareholders, we maintain a share redemption plan (“SRP”). Under our SRP, shareholders who have held the shares for at least one year are eligible to request that we repurchase their shares. In any consecutive 12 month period we may not repurchase more than 5% of the outstanding shares at the beginning of the 12 month period. The repurchase price is based on the value of our assets less our obligations or a fixed pricing schedule, as determined by the trustees' business judgment based on our book value, operations to date and general market and economic conditions and may not, in any event, exceed any current public offering price. We have also purchased a limited number of shares outside of our SRP from shareholders with special hardship considerations. Share repurchases have been at prices between NAV, which is calculated and adjusted as necessary on a quarterly basis, and $20 per share. Shares repurchased at the lower price were 1) shares held by shareholders for less than 12 months or 2) shares purchased outside of our SRP. Page 20 The following table sets forth information relating to shares of beneficial interest repurchased into treasury during the period covered by this report. Total number of shares purchased Average price per share Total number of shares purchased as part of publicly announced plan Total number of shares purchased outside of publicly announced plan Jan 17,803 $18.41 10,073 7,730 Feb 20,551 $18.22 10,534 10,017 Mar 12,223 $19.08 9,139 3,084 Apr 15,409 $19.01 11,250 4,158 May 13,793 $19.37 11,323 2,470 Jun 52,095 $17.21 10,747 41,347 Jul 40,859 $19.71 37,472 3,387 Aug 55,218 $19.67 50,006 5,211 Sep 61,244 $19.35 49,999 11,245 289,195 $18.91 200,543 88,649 ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION Subsequent to the end of the September 2007 quarter, UMTLC acquired a bank line of credit and reduced its borrowings from the Company by approximately $19 million. This action was anticipated by the Company. The Company used the funds to reduce its own line of credit. By agreement and trustee approval, the Company retains a subordinated piece of UMTHLC’s pledged collateral not to exceed $10 million. At the time the transaction occurred the subordinated balance was approximately $8.5 million. ITEM 6. EXHIBITS Exhibit 31. Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32. Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Page 21 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. UNITED MORTGAGE TRUST Date:November 14, 2007 By /s/Christine A. Griffin President and Chief Executive Officer Page 22

Exhibit 10.2 SUBORDINATED LOAN AND SECURITY AGREEMENT AMONG THE HILLSTREET FUND, L.P. Lender AND WR ACQUISITION, INC. Borrower Dated As of July 28, 2000 TABLE OF CONTENTS              Page ARTICLE 1.       INTERPRETATION    1.1    Definitions    1 1.2    Rules of Construction    12 ARTICLE 2.       LOAN TERMS AND AMOUNTS    2.1    Loan Commitment    12 2.2    Promissory Subordinated Note    13 2.3    Fees    13 2.4    Interest on Overdue Payments; Default Rate    14 2.5    Prepayments    14 2.6    Time and Place of Payments    14 2.7    Application of Funds    15 2.8    Use of Proceeds    15 2.9    Payments to be Free of Deductions    15 ARTICLE 3.       SECURITY INTERESTS    3.1    Grant of Security Interest    16 3.2    Additional Collateral    16 3.3    Additional Security for the Loan    16 ARTICLE 4.       REPRESENTATIONS AND WARRANTIES    4.1    Organization, Authority and Qualification    16 4.2    No Legal Bar    18 4.3    No Litigation    18 4.4    Financial Condition    18 4.5    No Change    18 4.6    No Default    18 4.7    Conditions Precedent    18 4.8    Ownership of Property; Liens    19 4.9    Intellectual Property    19 4.10    Compliance with Laws    19 4.11    Taxes    19 4.12    Environmental Matters    19 4.13    Place of Business    19   4.14    General Collateral Representation    20 4.15    Accounts    21 4.16    Equipment    21 4.17    ERISA    21 4.18    Undisclosed Liabilities    21 4.19    Disclosure    21 4.20    Solvency    22 4.21    Survival of Representations and Warranties    22 ARTICLE 5.       AFFIRMATIVE COVENANTS    5.1    Financial Statements    22 5.2    Conduct of Business and Maintenance of Existence    23 5.3    Maintenance of Property; Insurance    24 5.4    Liability Insurance    24 5.5    Inspection of Property; Books and Records    24 5.6    Notices    25 5.7    Environmental Laws    25 5.8    Inventory    25 5.9    Equipment    26 5.10    Collateral    26 5.11    Employee Benefit Plans    26 5.12    Further Documents    26 5.13    Life Insurance    27 5.14    Trademarks, Copyrights and Other Intellectual Property    27 5.15    Other Information    27 5.16    Board of Directors    27 ARTICLE 6.       NEGATIVE COVENANTS    6.1    Limitations on Restricted Payments    27 6.2    Limitations on Indebtedness    28 6.3    Limitation on Guarantee Obligations    29 6.4    Limitation on Fundamental Changes    29 6.5    Limitation on Dispositions of Assets    29 6.6    Limitation on Investments, Loans and Advances    29 6.7    Limitation on Payments and Modifications of Debt Instruments    30 6.8    Limitation on Creation or Acquisition of Subsidiaries    30 6.9    Corporate Documents    30 6.10    Dividends and Similar Transactions    30 6.11    Limitations on Management Fees    30   - ii - 6.12    Management Compensation    30 6.13    Changes Relating to Indebtedness    31 ARTICLE 7.       FINANCIAL COVENANTS    7.1    Limitations on Capital Expenditures    31 7.2    Minimum EBITDA    31 7.3    Senior Loan Agreement Covenants. Borrower shall comply with the covenants set forth in Section 3B of the Senior Loan Agreement, each of which is incorporated herein by reference    32 ARTICLE 8.       CONDITIONS PRECEDENT    8.1    Conditions Precedent to Initial Loan    32 ARTICLE 9.       EVENTS OF DEFAULT    9.1    Payments    35 9.2    Representations and Warranties    36 9.3    Covenants    36 9.4    Effectiveness of Loan Documents    36 9.5    Cross-Default to Other Indebtedness    36 9.6    Change of Control    36 9.7    Commencement of Bankruptcy or Reorganization Proceeding    36 9.8    Material Judgments    37 9.9    Remedies    37 9.10    Set-off    38 9.11    Rights Cumulative; Waiver    38 ARTICLE 10.       COLLECTION OF COLLATERAL AND NOTICE OF ASSIGNMENT    10.1    Notification of Debtors; Grant of Powers    39 10.2    Disclaimer of Liability    39   - iii - ARTICLE 11.       MISCELLANEOUS    11.1    Amendments and Waivers    40 11.2    No Waiver; Cumulative Remedies    40 11.3    Notices    40 11.4    Power of Attorney    41 11.5    Successors and Assigns    41 11.6    Assignment; Participation    41 11.7    Expenses    42 11.8    Post-Closing Expenses and Collection    42 11.9    Counterparts    42 11.10    Governing Law; Jurisdiction and Venue    42 11.11 11.12    Other Waivers    43   - iv - EXHIBITS   Exhibit A    Form of Assignment of Purchase Contract Exhibit B    Form of Compliance Certificate Exhibit C    Form of Mortgage Exhibit D    Form of Warrant Exhibit E    Form of Warrant Agreement Exhibit F    Form of Subordinated Term Promissory Note SCHEDULES   Schedule 1.1    Equipment Liens Schedule 3.1    Description of Mortgaged Property    Authorized Capital Stock; Outstanding Warrants or Options    Subsidiaries; Foreign Qualifications Schedule 4.9    Intellectual Property Schedule 4.11    Filed Tax Returns; Tax Liens Schedule 4.12    Environmental Matters Schedule 4.14    UCC Filing Offices Schedule 4.17    Employee Benefit Plans Schedule 4.7, 6.12, 6.13    Management Compensation   THIS SUBORDINATED LOAN AND SECURITY AGREEMENT is made as of the 28th day of July, 2000, by and between WR ACQUISITION, INC., an Ohio corporation (“Borrower”), and THE HILLSTREET FUND, L.P., a Delaware limited partnership, its permitted successors and assigns (“Lender”). NOW, THEREFORE, in consideration of the respective undertakings stated herein, ARTICLE 1 INTERPRETATION Section 1.1 Definitions. The following capitalized terms are defined as follows: “Account” or “Accounts” shall have the same meaning as defined in the UCC. “Account Debtor” shall have the same meaning as defined in the UCC. “Acquisition Transaction” means the acquisition by Borrower of all or substantially all of the assets of the Seller pursuant to the Purchase Agreement. “Affiliate” means any Person which directly or indirectly controls, or is controlled by, or is under common control with, any Person. The term “control” ownership of voting securities, by contract or otherwise. The term “Affiliate” does not include the Lender. “Agreement” or “this Agreement” means this Subordinated Loan and Security Agreement (including all Exhibits and Schedules annexed hereto) as originally executed, or if supplemented, amended, or restated from time to time, as so supplemented, amended, or restated. “Assignment of Life Insurance” means a collateral assignment, on terms acceptable to Lender, of the Life Insurance. “Assignment of Purchase Contract” means a Collateral Assignment of Purchase Contract between Borrower and Lender in the form of Exhibit A hereto, covering all of Borrower’s rights in and under the Purchase Agreement.   “Building” shall mean any building, structure or improvement now or hereafter located on the Mortgaged Property, “Business Day” means any day on which commercial banking institutions are open for business in Cincinnati, Ohio, other than a Saturday, Sunday or a legal holiday. “Capital Expenditures” means any amounts paid or incurred in connection with the purchase of plant, machinery, Equipment or similar expenditures (including any lease of any of the foregoing) which are required to be capitalized and depreciated in accordance with GAAP. “Capital Leases” means capital leases, conditional sales contracts and other title retention documents relating to the acquisition of capital assets (as classified in accordance with GAAP). “Capital Stock” means any and all equity interests and participations in any entity including, without limitation, corporate stock, whether common or preferred, subscription rights, warrants, convertible securities and other forms of equity interests such as partnership interests and interests in limited liability companies. “Change of Control” means the time at which (i) any Person (including a Person’s other than the existing shareholders of Borrower or a group controlled by the existing shareholders of Borrower, has become the beneficial owner of a twenty-five percent (25%), (ii) there shall be consummated any consolidation or merger of Borrower pursuant to which Borrower’s Capital Stock would be converted into cash, securities or other property, other than a merger or consolidation of Borrower in which the holders of the common stock of Borrower, or any Capital Stock convertible into common stock, immediately prior to the merger have the same proportionate ownership, directly or indirectly, of common stock or any Capital Stock convertible into common stock, of the surviving corporation immediately after the merger as they had of Borrower’s common stock immediately prior to such merger, or (iii) all or substantially all of Borrower’s assets shall be sold, leased, conveyed or otherwise disposed of as an entirety or substantially as an entirety to any Person (including an Affiliate or associate of Borrower) in one or a series of transactions, or (iv) Steven Runkel shall cease to perform his duties as a senior executive manager of Borrower and within ninety (90) days of such cessation a replacement senior executive manager reasonably acceptable to Lender has not been employed by Borrower. “Closing Date” means the Business Day on which all conditions precedent specified in Article 7 hereof shall have been satisfied in full.   - 2 - “Collateral” means all property of Borrower, whether now owned by Borrower or hereafter acquired or existing, and wherever located including, without limitation: (g) all Instruments and Documents; (h) all Related Collateral; (i) all accessions to and additions to, substitutions for, replacements, products; and (j) products and proceeds of any and all of the foregoing. The term “Collateral” shall also refer to any other property in which Lender is granted a Lien to secure any of the Obligations pursuant to an agreement supplemental hereto or otherwise (whether or not such agreement makes reference to this Agreement or the Obligations of Borrower hereunder). “Compliance Certificate” means the report required by Section 5.1(e) hereof, including schedules furnished by Borrower in the form of Exhibit B hereto. “Computation Date” means the last day of each of March, June, September and December. “Consolidated” means, with respect to any accounting matter or amount, such matter or amount computed on a consolidated basis for Borrower and its Subsidiaries, if any, in accordance with GAAP.   - 3 - “Contractual Obligation” means, with respect to any Person, any provision or requirement of any security issued by such Person or of any agreement, “Copyrights” means all present and future copyrights, registrations therefor, reversions thereof, and renewals and extensions of copyrights in all works of authorship (including software source code and documentation) in which Borrower or a Subsidiary of Borrower has any interest. “Default” means any of the events set forth in Article 9 which with giving of “Default Rate” means four percentage points (4.0%) in excess of the otherwise applicable interest rate on the Loan (but in no event more than the rate “ Disinterested Directors” means the members of the board of directors of Borrower other than directors owning Preferred Stock or controlled by or appointed by a Person owning Preferred Stock. “EBITDA” means for any period, and calculated on a Consolidated Basis, without duplication, Net Income; plus (i) for such period, any interest Expense deducted in the determination of Net Income; plus (ii) any income, ad valorem, and franchise taxes paid in cash and included in the determination of Net Income; plus (iii) amortization and depreciation deducted in determining Net Income for such period. Section 3(3) of ERISA, other than a multiemployer plan. of even date herewith between Borrower and Lender. regulations, ordinances, permits, orders, writs, judgments, injunctions, decrees, determinations, awards and consent decrees relating to hazardous substances and environmental matters applicable to Borrower’s business and facilities (whether or not owned by it), including, without limitation, the Resource Conservation and Recovery Act of 1976 (“RCRA”); the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”); the Toxic Substance Control Act; the Clean Water Act; and the Clean Air Act, all as amended from time to time; state and federal superfund and environmental cleanup programs; and U.S. Department of Transportation hazardous materials transportation regulations.   - 4 - “Equipment” shall have the meaning as defined in the UCC. “ERISA Affiliate” means, in relation to any Person, any trade or business is a member and is under common control within the meaning of the regulations promulgated under Section 414 of the Code. “Event of Default” has the meaning set forth in Article 9 hereof. “Financial Statements” has the meaning set forth in Section 4.4 hereof. “General Intangibles” shall have the meaning as defined in the UCC. “Guarantee Obligation” means, with respect to any Person, any direct or indirect liability, contingent or otherwise, with respect to any Indebtedness, lease or other obligation of another if the primary purpose or intent thereof in incurring the Guarantee Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, The amount of any Guarantee Obligation shall be deemed to be the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, or respect thereof. “Head Office” means the head office of Lender located at 300 Main Street, “HillStreet” means The HillStreet Fund, L.P., a Delaware limited partnership. “Indebtedness” means, without duplication all liabilities of a Person as determined under GAAP and all obligations which such Person has guaranteed or endorsed or is otherwise secondarily or jointly liable for, and shall include, without limitation, (a) all obligations for borrowed money or purchased assets, (b) obligations secured by assets whether or not any personal liability exists, (c) the capitalized amount of any capital or finance lease obligations, (d) the unfunded portion of pension or benefit plans or other similar liabilities, (e) obligations as a general partner, (f) contingent obligations pursuant to guaranties, including but not limited to all Guarantee Obligations, endorsements, letters of credit and other secondary liabilities, and (g) obligations for deposits.   - 5 - “Indebtedness for Borrowed Money” means (a) all liabilities for borrowed money, (i) for the deferred purchase price of property or services, and (ii) under leases which are or should be, under GAAP, recorded as Capital Leases, in each case in respect of which a Person is directly or indirectly, absolutely or of which such Person otherwise assures a creditor against loss, and (b) all liabilities of the type described in clause (a) above which are secured by (or secured by) any Lien upon property owned by such Person, whether or not such Person has assumed or become liable for the payment thereof. “Instruments and Documents” means all “instruments,” “documents,” “deposit accounts,” and “chattel paper,” as defined in Section 9-105 of the UCC, all securities, and includes (without limitation) all warehouse receipts and other documents of title, policies and certificates of insurance, checking, savings, and other bank accounts, certificates of deposit, checks, notes, drafts, bills, and acceptances, now or hereafter acquired, to the extent not included in Accounts or Investment Property. “Intellectual Property Security Agreement” means the Security Agreement of even “Intercreditor Agreement” means that Unconditional and Continuing Subordination Agreement dated as of the Closing Date among Lender and Senior Lender, in form and substance satisfactory to Lender, as amended from time to time. “Interest Payment Dates” shall mean the last Business Day of each month. “Investment Property” means all now owned or hereafter acquired securities, financial assets, securities entitlements and investment property of Borrower, as such terms are defined in Article 9 of the UCC. lien, charge or encumbrance of any kind or nature whatsoever (including, without filing of any Financing statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing). “Life Insurance” means one or more policies of life insurance and any substitute or replacement policies thereof, owned by Borrower (i) on the life of C. F. Chen in the aggregate face amount of not less than One Million and 00/100 Dollars ($1,000,000.00), (ii) on the life of Steven   - 6 - Runkel in the aggregate face amount of not less than One Million and 00/100 Dollars ($1,000,000.00), which such policies shall be free of any policy loans and encumbrances whatsoever, except the lien in favor of the Lender hereunder. “Loan Documents” means this Agreement, the Subordinated Note, the Security Documents, the Intercreditor Agreement, and all other documents, instruments, financing statements, certificates and other agreements executed in connection with the Loan. “Loan Year” means each period of twelve (12) consecutive months, commencing on the Closing Date and on each anniversary thereof. “Loan” means the term loan to be made to Borrower by Lender pursuant to Article 2 hereof. operations, property, Collateral or condition (financial or otherwise) of Borrower. “Mortgage” means one or more real estate mortgages or deeds of trust granted from time to time by Borrower to Lender, granting a second lien to Lender to secure the Loan, substantially in the form of Exhibit C hereto, and as they may “Mortgaged Property” means land, Buildings, fixtures and related personal property located in the City of Akron, County of Summit, and acquired by Borrower pursuant to the Agreement of Sale dated as of April 4, 2000 between Chen & Chen Associates, an Ohio general partnership and Borrower which property is more particularly described on Exhibit A to the Mortgage. “Net Income” means the Consolidated net income of Borrower determined in accordance with GAAP. “Obligations” means, without limitation, the Loan and all other debts, obligations, or liabilities of every kind and description of Borrower to the Lender, now due or to become due, direct or indirect, absolute or contingent, presently existing or hereafter arising, joint or several, secured or unsecured, whether for payment or performance, regardless of how the same arise or by what instrument, agreement or book account they may be evidenced, or whether evidenced by any instrument, agreement or book account including, without limitation, all loans (including any loan by renewal or extension), all overdrafts, all guarantees, all bankers acceptances, all agreements, all letters of credit issued by the Lender for Borrower and the applications relating thereto, all indebtedness of Borrower to the Lender, all undertakings to take or refrain from taking any action   - 7 - and all indebtedness, liabilities and obligations owing from Borrower to others which the Lender may obtain by purchase, negotiation, discount, assignment or otherwise. Obligations shall also include all interest and other charges all costs and expenses referred to in Section 11.8. “Permitted Liens” means the liens and interests in favor of the Lender granted in connection herewith and (a) liens under the Senior Loan Documents in an amount not to exceed $2,830,000.00 in the aggregate; (b) liens against Borrower to secure taxes, assessments and other government charges in respect of obligations not overdue or liens on properties to secure claims for labor, material or supplies in respect of obligations not overdue; (c) deposits or pledges made by Borrower in connection with, or to secure payment of workmen’s compensation, unemployment insurance, old age pensions or (d) liens against Borrower on properties other than the real property Collateral in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which Borrower shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review; (e) liens of carriers, warehousemen, mechanics and materialmen, and other like liens on properties of Borrower in existence less than ninety (90) days from the date of creation thereof in respect of obligations not overdue; (f) encumbrances on real estate of Borrower consisting of easements, rights of leases to which Borrower is a party, and other minor liens or encumbrances none of which in the opinion of Borrower interferes materially with the use of the property affected in the ordinary conduct of the business of Borrower, which defects do not individually or in the aggregate have a Materially Adverse Effect; (g) liens and encumbrances on the real property Collateral of Borrower as and to the extent permitted by the mortgage applicable thereto;   - 8 - nature. “Preferred Stock” means the 9% Series A Convertible Preferred Stock of Borrower in an aggregate amount of $1,300,000.00 issued to and owned by Development Capital Ventures, L.P. “Principal Office” means the principal office of Borrower at 662 Wolf Ledges Parkway, Akron, Ohio. “Principal Payment Dates” shall mean the last day of each February, May, August and November, beginning August 31, 2006. “Purchase Agreement” means the Asset Purchase Agreement dated as of April 4, 2000 by and between Borrower, Seller and the Stockholders named therein amended, “Real Estate” means all real property owned by Borrower and all real property hereafter acquired by Borrower, together with all fixtures, rights of way, privileges, liberties, tenements, hereditaments, and appurtenances belonging or in any way appertaining thereto, all easements now or hereafter benefitting such real property and all royalties and rights appertaining to the use and enjoyment of such real property, together with all of the Buildings, structures, and other improvements thereto. “Related Collateral” means all goodwill of Borrower; cash; deposit accounts; claims under insurance policies (whether or not proceeds of other Collateral); rights of set off; rights under judgments; tort claims and choses in action; computer programs and software, books and records (including, without limitation, all electronically recorded data); contract rights; and all contracts and agreements to or of which they are parties or beneficiaries, whether any of the foregoing be now existing or hereafter arising, now or hereafter received by or belonging to Borrower. “Requirements of Law” means, with respect to any Person, the Certificate of   - 9 - “Reference Period” means, with respect to any particular Computation Date, the period of four (4) consecutive fiscal quarters of Borrower ending on such Computation Date. The fiscal quarters of Borrower end on the last day of March, “Responsible Officer” means any authorized officer of Borrower. Subsidiary now or hereafter outstanding other than dividends on Preferred Stock; shares of any class of stock of Borrower or any Subsidiary now or hereafter outstanding other than redemption of the Preferred Stock subsequent to (i) repayment of all the Obligations and (ii) the seventh anniversary of the issuance of the Preferred Stock; (c) any payment or prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase, indebtedness other than the Senior Debt and the Preferred Stock; provided, however, that (i) payments of principal with respect to the Senior Debt in any twelve month period shall not exceed $400,000 except to provide for the last payment of principal on the Term Loan A (as such term is defined in the Senior Loan Agreement) and (ii) payment of dividends with respect to the Preferred Stock shall accrue but not be payable during the first and second Loan Year and thereafter at the discretion of the Disinterested Directors; and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, other than the Warrants, options or other rights to acquire shares of any class of Capital Stock of Borrower or any Subsidiary now or hereafter outstanding. “Security Documents” means all of the documents and instruments evidencing the collateral security of the Lender, including without limitation, all UCC Financing Statements with respect to the Collateral, the Mortgage, the Intellectual Property Security Agreement, the Environmental Indemnity Agreement, the Assignment of Life Insurance and the Assignment of Purchase Contract. “Seller” means Qua Tech, Inc., an Ohio corporation. “Senior Debt” means that portion of the principal amount owing to the Senior Lender under the Senior Loan Documents from time to time, together with all interest, fees and other amounts payable on or with respect thereto, not to exceed Two Million Three Hundred Thousand and 00/100 Dollars ($2,300,000.00) in the aggregate, and any refinance, replacement, amendment or modification thereof “Senior Lender” means National City Bank, a national banking association having a banking office at 1 Cascade Plaza, Akron, Ohio 44308.   - 10 - “Senior Loan Agreement” means that certain Credit Agreement of even date herewith among Borrower and Senior Lender, as the same may be amended, supplemented, replaced or refinanced from time to time in compliance with terms “Senior Loan Documents” means the Senior Loan Agreement, and all other documents which create, evidence or secure the Senior Debt from time to time as any of the same may be amended, supplemented, replaced or refinanced from time to time in compliance with the terms of the Intercreditor Agreement. “Senior Loans” means the loans made to Borrower pursuant to the terms of the Senior Loan Agreement. “Shareholders Agreement” means the Shareholders Agreement dated July 28, 2000 by and among Borrower and the Shareholders of Borrower named therein. “Subordinated Note” means the Subordinated Term Promissory Subordinated Note referred to in Section 2.2 hereof to evidence the Loan. limited liability company, or other entity of which shares of stock or other such corporation, partnership, limited liability company, or other entity are at the time owned, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to any Subsidiary or all Subsidiaries of Borrower (including Borrower), whether now in existence or hereafter organized. “Uniform Commercial Code” or “UCC” means the Uniform Commercial Code in each case in effect in the jurisdiction where the Collateral is located. “UCC Financing Statements” mean the UCC financing statements naming Borrower as debtor, and Lender as secured party or creditor, which UCC financing statements describe all or some portion of the Collateral and which together perfect “Warrant” or “Warrants” means one or more of the warrants in substantially the form as of Exhibit D, to be issued by Borrower to HillStreet pursuant to the Warrant Agreement. “Warrant Agreement” means the warrant agreement dated as of the Closing Date between Borrower and HillStreet in substantially the form as Exhibit E.   - 11 - (a) Use of Capitalized Terms. For purposes of this Agreement, unless the context otherwise requires, the capitalized terms used in this Agreement shall have the meanings herein assigned to them, and such definitions shall be applicable to both singular and plural forms of such terms. In addition, all terms defined in the Uniform Commercial Code shall have the meanings given therein unless otherwise defined herein. (b) Construction. All references in this Agreement to the single number and neuter gender shall be deemed to mean and include the plural number and all genders, and vice versa, unless the context shall otherwise require. (c) Headings. The underlined headings contained herein are for convenience only (d) Entire Agreement. This Agreement and the other Loan Documents shall matter hereof. (e) Severability. Any provision of this Agreement which is prohibited or other jurisdiction. (f) Governing Law. This Agreement and the Subordinated Note and the rights and obligations of the parties under this Agreement and the Subordinated Note shall State of Ohio. (g) Accounting Terms and Determinations. Unless otherwise defined or specified herein, all accounting terms used in this Loan Agreement shall be construed in accordance with GAAP. ARTICLE 2. LOAN TERMS AND AMOUNTS Section 2.1 Loan Commitment. Subject to the terms and conditions of this Agreement, the Lender hereby agrees to make a term loan to Borrower in the amount of Three Million and 00/100 Dollars ($3,000,000.00) (the “Loan”).   - 12 - Section 2.2 Promissory Subordinated Note. The absolute and unconditional obligation of the Borrower to repay to Lender the principal of the Loan and the interest thereon shall be evidenced by a subordinated term promissory note executed by the Borrower in substantially the form of Exhibit F (the “Subordinated Note”). The Subordinated Note shall include the following terms: (a) Term. The Subordinated Note shall be dated as of the Closing Date and shall mature and be due and payable in full on July 31, 2007. (b) Interest Rate. Except as provided in Section 2.4 hereof, the Subordinated elapsed over a 360-day year) on the daily outstanding principal balance thereunder at a rate per annum equal to fifteen percent (15%). (c) Interest Payment Dates. Interest on the Subordinated Note shall be payable in arrears monthly on each Interest Payment Date commencing August 30, 2000, and ending on the date the Loan is due (whether by maturity, acceleration or otherwise). (d) Principal Payments. Prior to August 31, 2005, provided that Lender has not accelerated the Loan pursuant to Section 9.9 hereof, Borrower shall not be obligated to make any payment of principal on the Loan. Beginning August 31, 2005, quarterly installments of principal on the Subordinated Note shall be payable on each Principal Payment Date in an amount equal to Three Hundred Sixty Two Thousand Five Hundred and 00/100 Dollars ($375,000.00), and on the date the Loan is due (whether by maturity, acceleration or otherwise), in an amount sufficient to pay in full the entire unpaid principal and accrued interest. Section 2.3 Fees. (a) Closing Fees. At Closing, the Lender shall receive its closing fee in the amount of One Hundred Thirty-Five Thousand and 00/100 Dollars ($135,000.00) less any deposits made by Borrower, payable in immediately available funds or as Lender otherwise directs. (b) Other Fees. The Borrower shall, promptly upon request, reimburse the Lender for all reasonable loan administration, travel and related out-of-pocket expenses, including reasonable attorney fees and expenses for the term of the Loan and the equity participation of Lender contemplated hereunder.   - 13 - Section 2.4 Interest on Overdue Payments; Default Rate. If any payment of interest or principal is not paid when due, or upon the occurrence of an Event of Default, the Lender, at its option, may charge and collect from the Borrower Section 2.5 Prepayments. (a) Permitted Prepayments - Prepayment from Life Insurance. In the event Borrower receives proceeds from payment of the Life Insurance, the proceeds shall be applied in the manner set forth in Section 2.7 hereof. (b) Optional Prepayment. Except as provided for in Section 2.5(c) hereto, Borrower shall have no right to prepay the Loan during the first three Loan Years. If Borrower shall prepay the Loan in whole or in part after the third Loan Year, Borrower shall pay to Lender, as liquidated damages and compensation for the costs of being prepared to make funds available to Borrower under this Agreement, and not as a penalty, an amount determined by multiplying (x) the amount of the prepayment times (y) (i) five percent (5%) if such prepayment occurs during the fourth Loan Year, four percent (4%) if such prepayment occurs during the fifth Loan Year, and three percent (3%) if such prepayment occurs during the sixth Loan Year (the “Prepayment Fee”) (a prepayment in the seventh Loan Year may be made without premium or penalty); provided, however, that if such prepayment occurs as a result of any event described in Section 2.5(a) or 2.5(c) hereof, no Prepayment Fee shall be required. (c) Notwithstanding the provisions of Section 2.5(b) above, Borrower shall have the right to prepay the Loan at any time, without a Prepayment Fee, in connection with (i) any consolidation or merger of Borrower pursuant to which Borrower’s Capital Stock would be converted into cash, securities or other of the common stock of Borrower, or any Capital Stock convertible into common stock, immediately prior to the merger have the same proportionate ownership, directly or indirectly, of common stock or any Capital Stock convertible into common stock, of the surviving corporation immediately after the merger as they had of Borrower’s common stock immediately prior to such merger, or (ii) the Borrower’s assets as an entirety or substantially as an entirety, to any Person, other than an Affiliate or associate of Borrower, in one or a series of transactions. Section 2.6 Time and Place of Payments. Notwithstanding anything in this Agreement or any of the other Loan Documents to the contrary, each payment payable by the Borrower to the Lender under this Agreement or any of the other Loan Documents, shall be made directly to the   - 14 - Lender, at Lender’s Head Office, not later than 12:00 p.m. local time, on the due date of each such payment in immediately available and freely transferable funds. Section 2.7 Application of Funds. Unless otherwise provided in this Article 2, the funds received by the Lender shall be applied toward the Obligations as follows: (a) First, to the payment of all fees, charges and other sums (with the exception of principal and interest) due and payable to the Lender under the Subordinated Note, this Agreement or the other Loan Documents at such time including, without limitation, all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by the Lender in or incidental to the collection of the Obligations hereunder or the exercise, protection, or enforcement by the Lender of all or any of the rights, remedies, powers and privileges of the Lender under this Agreement, the Subordinated Note, or any of the other Loan Documents and in and towards the provision of adequate indemnity to the Lender against all taxes or Liens which by law shall have, or may have priority over the rights of the Lender in and to such funds; (b) Second, to the payment of the interest that is due and payable on the principal of the Subordinated Note at the time of such payment; (c) Third, to the payment of principal then due on the Subordinated Note; and (d) Fourth, the surplus remaining (if any) to the Borrower or such other Person or Persons as may be determined by Borrower or any court of competent jurisdiction. Section 2.8 Use of Proceeds. Borrower represents, warrants and covenants to the Lender that all proceeds of the Loan shall be used by the Borrower to finance in part the Acquisition Transaction and the reasonable costs related thereto. Section 2.9 Payments to be Free of Deductions. Each payment payable by the Borrower to the Lender under this Agreement, the Subordinated Note, or any of the other Loan Documents shall be made in accordance with Section 2.6 hereof, without set-off or counterclaim and free and clear of and without any deduction of any kind for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature now or hereafter imposed or levied by any political subdivision or any taxing or other authority therein, unless the Borrower is compelled by law to make any such deduction or withholding.   - 15 - ARTICLE 3. SECURITY INTERESTS Section 3.1 Grant of Security Interest. To secure the payment and performance of all of the Obligations, the Borrower hereby grants to the Lender a continuing security interest in and assigns to the Lender all of the Collateral. To secure further such liabilities and Obligations, Borrower has granted to Lender a lien upon the real property described on Schedule 3.1, by executing and delivering to Lender a Mortgage subject only to the prior liens in favor of the Senior Lender as provided herein and in the Intercreditor Agreement. The Collateral shall also include the property and rights subject to the Assignment of Life Insurance with respect to the Life Insurance in a form reasonably satisfactory to the Lender. Section 3.2 Additional Collateral. Subject to the prior Liens of Senior Lender, immediately upon Borrower’s receipt of that portion of the Collateral which is evidenced or secured by an agreement, letter of credit, instrument and/or documents including, without limitation, promissory notes, documents of title, warehouse receipts and trade acceptances (the “Additional Collateral”), Borrower shall deliver the original thereof to Lender, together with appropriate endorsements, the documents required to draw thereunder (as may be relevant to letters of credit) and/or other specific evidence (in form and substance acceptable to Lender) of assignment thereof to Lender. Section 3.3 Additional Security for the Loan. As additional collateral security for the Obligations, Borrower shall deliver to Lender the Intellectual Property Security Agreement, and any other instrument required to perfect a security interest in any of the Collateral, which Agreements constitute part of the Security Documents hereunder. ARTICLE 4. REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement, Borrower hereby represents and warrants to the Lender on the date hereof that: Section 4.1 Organization, Authority and Qualification. standing under the laws of the State of Ohio, and has all requisite power and conducted. The execution,   - 16 - delivery and performance of this Agreement and the Subordinated Note have been duly authorized by all necessary company actions; there is no prohibition, either in law, in its charter documents, operating agreement, or bylaws, if any, or in any order, writ, injunction or decree of any court or arbitrator presently in effect having applicability to Borrower which in any way prohibits or would be violated by the execution and performance of this Agreement and the Subordinated Note in any respect; this Agreement and the Subordinated Note are and will be valid, binding and enforceable obligations of the Borrower; and the Borrower has adequate power and authority and has full legal right to enter into this Agreement and each of the other Loan Documents, and to perform, observe and comply with all of its agreements and obligations under each of such documents, including, without limitation the borrowings contemplated hereby. Borrower is, and will be after giving effect to the Acquisition Transaction, duly qualified or licensed and in good standing and duly authorized to do business in each jurisdiction in which the character of the properties owned or leased or the nature of the activities conducted makes such qualification or licensing necessary and in which the failure to be so qualified would have a materially adverse effect on the conduct of the business of Borrower. (b) The authorized Capital Stock of Borrower is as set forth on Schedule 4.1(b) hereto. Except for the Warrants, or as described on Schedule 4.1(b) hereto, there are no outstanding options, rights or warrants issued by Borrower for the acquisition of the Capital Stock of Borrower, nor any outstanding securities or obligations convertible into Capital Stock. (c) Borrower has no Subsidiaries except as set forth on Schedule 4.1(c) hereto. The Capital Stock of each Subsidiary is owned by Borrower free and clear of all Liens other than securities laws restrictions, the pledge pursuant to the Senior Loan Documents and those in favor of Lender. Each Subsidiary (i) is duly its incorporation, and (ii) has full corporate power and authority and full legal right to own or to hold under lease its Property and to carry on its business. Each Subsidiary is qualified and licensed in each jurisdiction wherein the character of the Property owned or held under lease by it, or the nature of its business makes such qualification necessary or advisable. Each Subsidiary is currently qualified in good standing as a foreign corporation in each jurisdiction set forth on Schedule 4.1(c). (d) Borrower does not own or hold of record (whether directly or indirectly) any shares of any class in the capital of any corporation, nor does Borrower own or hold (whether directly or indirectly) any legal and/or beneficial equity interest in any partnership, business trust or joint venture or in any other unincorporated trade or business enterprise.   - 17 - Section 4.2 No Legal Bar. The execution, delivery and performance of this Agreement, the Subordinated Note and the other Loan Documents and the consummation of the transactions contemplated thereby, will not in any material respect violate any Requirements of Law or any Contractual Obligation of Borrower. Section 4.3 No Litigation. No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or threatened by or against Borrower or against any of its properties or revenues, existing or future, (a) with respect to this Agreement, the Subordinated Note, any of the other Loan Documents or any of the transactions contemplated hereby or thereby, or (b) which, if adversely determined, would have a Material Adverse Effect. Section 4.4 Financial Condition. Attached to Schedule 4.4 are complete and correct copies of (i) the balance sheets of the Seller as of December 31, 1999 and 1998 and the related statements of operations, retained earnings and cash flows for the two-year period ended December 31, 1999, together with the related notes and schedules (the “Year-End Financial Statements”), (ii) the balance sheet of the Seller as of February 29, 2000, together with any related statements and notes, and (iii) the balance sheet and income statement of the Seller as of June 30, 2000, together with any related statements and notes (the “Interim Financial Statements”). The Year-End Financial Statements and the Interim Financial Statements are herein collectively called the “Financial Statements”. The Financial Statements have been prepared from the books and records of the Seller in conformity with generally accepted accounting principles applied on a basis consistent with preceding years and throughout the periods involved (“GAAP”) (except as disclosed therein or on Schedule 4.4 hereto), and present fairly in all material respects the financial position and results of operations of the Seller as of the dates of such statements and for the periods covered thereby. The books of account of the Seller have been kept transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Seller have been properly recorded Section 4.5 No Change. There has been no development or event which has had or Section 4.6 No Default. Borrower is not in default under or with respect to any of its Contractual Obligations, except where the default would not have a continuing. Section 4.7 Conditions Precedent. Prior to the funding of the initial Loan to Borrower under this Agreement, all conditions precedent listed in Article 8 hereof will have been satisfied.   - 18 - Section 4.8 Ownership of Property; Liens. Borrower has good and marketable title to all its property as listed on the Financial Statements or acquired pursuant to the Purchase Agreement, and none of such property is subject to any Lien except Permitted Liens. Section 4.9 Intellectual Property. Borrower possess all licenses, patents, permits, trademarks, trade names, copyrights, technology, know-how and processes necessary for the conduct of its businesses as currently conducted, taking into consideration consummation of the Acquisition Transaction, and all such licenses, patents, permits, trademarks, trade names, and copyrights are listed on Schedule 4.9 attached hereto and made a part hereof. Except as set forth on Schedule 4.9, no claim has been asserted and is pending by any Person challenging or questioning the use of any such property or rights or the validity or effectiveness of any such property or rights, nor is there any known basis for any such claim. Except as set forth on Schedule 4.9, the use of such property and rights by the Borrower does not infringe on the rights of any Person. Section 4.10 Compliance with Laws. Borrower is in compliance with all Requirements of Law, including all Environmental Laws applicable to it, except, in each case, where the failure to comply would not have a Material Adverse Effect. Section 4.11 Taxes. With respect to Borrower and any Subsidiary, except as set forth on Schedule 4.11, Borrower has filed or caused to be filed all tax returns which are required to be filed and have paid all taxes shown to be due and properties and all other taxes, fees or other charges imposed on it or any of conformity with GAAP have been provided on the books of the Borrower); no tax Section 4.12 Environmental Matters. Except as set forth on Schedule 4.12 hereto, to the Borrower’s knowledge, Borrower is in compliance with, and has no liability to any Person in respect of, all Environmental Laws except for such non-compliance or liabilities that would not have a Material Adverse Effect. Section 4.13 Place of Business. The Borrower maintains places of business and owns Collateral only at the Principal Office. Borrower maintains its books of account and records, including all records concerning the Collateral, only at the Principal Offices.   - 19 - Section 4.14 General Collateral Representation. Subject in each case, to the liens of the Senior Lender: (a) The Borrower is the sole owner of and has good and marketable title to the Collateral, free from all Liens, other than the Permitted Liens, and has full right and power to grant the Lender a security interest therein. All information which has been furnished to the Lender concerning the Collateral was complete, accurate and correct in all material respects when furnished, and all information which may be furnished to the Lender in the future concerning the Collateral will be complete, accurate and correct in all material respects when furnished. (b) No security agreement, financing statement, equivalent security or Lien (i) by Borrower in favor of Senior Lender pursuant to the Senior Loan Agreement, (ii) by Borrower in favor of Lender pursuant to this Agreement, or (iii) in respect of the items of Collateral subject to the Permitted Liens. (c) The provisions of this Agreement are sufficient to create in favor of the Lender, as of the Closing Date, a valid and continuing lien on, and security interest in, the types of the Collateral hereunder in which a security interest may be created under Article 9 of the UCC. Financing Statements on Form UCC-1 have been duly executed on behalf of Borrower and the description of such Collateral set forth therein is sufficient to perfect security interests in such Financing Statements under the UCC. When such Financing Statements are duly filed in the filing offices listed on Schedule 4.14 hereto, and the requisite filing fees are paid, such filings will be sufficient to perfect security interests in such of the Collateral described in the Financing Statements as can be perfected by filing, which perfected security interests will be prior to all other Liens in favor of others and rights of others (except for Permitted Liens), and as against any owner of real estate where any of the Equipment is located and as against any purchaser of such real property and any present or future creditor obtaining a Lien on such real estate. All action necessary to protect and perfect a security interest in each item of the Collateral has been or will be duly taken, or in the case of Equipment covered by certificates of title will be taken within ninety (90) days of the Closing Date. (d) Upon delivery to Lender and the filing with the U.S. Patent and Trademark Office of the Assignment of Trademarks and delivery to the Lender and the payment of the requisite filing fees, the Lender shall have a perfected security interest in the intellectual property listed on Schedule 4.10 and the other Collateral of a type described in such assignments, which perfected security interest will be prior to all other Liens in favor of others.   - 20 - Section 4.15 Accounts. As to each and every Account of Borrower, Borrower has full right and power to grant the Lender a security interest therein and the security interest granted in such Account to the Lender in Article 3 hereof, when perfected, will be a valid second security interest, subordinate only to Permitted Liens, the liens granted under the Senior Loan Documents, which will inure to the benefit of the Lender without further action, subject to Permitted Liens and the provisions of Section 4.14(c) hereof. Section 4.16 Equipment. All Equipment is located at Borrower’s Principal Offices. No Equipment is now stored with a bailee, warehouseman or similar party. All Equipment necessary for the conduct of Borrower’s business or reflected on the Financial Statements is currently usable or currently saleable in the normal course of Borrower’s business. Section 4.17 ER1SA. Schedule 4.17 contains a list of all Employee Benefit Plans maintained by Borrower. Borrower and its ERISA Affiliates are in compliance with any applicable provisions of ERISA and the regulations thereunder, and the Code, with respect to all such Employee Benefit Plans. Section 4.18 Undisclosed Liabilities. Borrower has no material obligation or liability (whether accrued, absolute, contingent, unliquidated, or otherwise, whether due or to become due) arising out of transactions entered into at or Date, except (a) liabilities reflected on the Financial Statements; (b) liabilities incurred in the ordinary course of business (none of which are liabilities for breach of contract, breach of warranty, torts, infringements, claims or lawsuits); (c) liabilities or obligations disclosed in the Schedules hereto; and (d) liabilities or obligations incurred pursuant to the Loan Documents, the Purchase Agreement and the agreements, documents and instruments contemplated thereby and the Senior Loan Agreement and the other Senior Loan Documents. Section 4.19 Disclosure. (a) All factual information furnished by or on behalf of Borrower in writing to Lender on or before the Closing Date (including all information contained in the transaction contemplated hereby is true and complete in all material respects on any untrue statement of a material fact or omits to state any material fact, it being understood and agreed that for purposes of this clause (a), such factual information shall not include projections and pro forma financial information. (b) The projections and pro forma financial information contained in the factual information referred to in clause (a) above (including the pro forma consolidated financial   - 21 - statements delivered hereunder) were or are based on good faith estimates and projections may differ significantly from the projected results. Section 4.20 Solvency. Borrower is solvent and will continue to be solvent after consummation of the Acquisition Transaction, and creation of the Obligations hereunder and under the Senior Loan Documents, the security interests of Lender and Senior Lender and the other transactions contemplated hereby and by the Senior Loan Documents. Borrower is able to pay its debts as they mature and has Section 4.21 Survival of Representations and Warranties. The foregoing representations and warranties are made by the Borrower with the knowledge and intention that the Lender will rely thereon, and shall survive the execution and delivery of this Agreement and the making of the Loan hereunder. ARTICLE 5. AFFIRMATIVE COVENANTS So long as the Subordinated Note remains outstanding and unpaid or any other Obligation is owing to the Lender, the Borrower agree as follows: (a) Year End Report. (i) As soon as available, but in any event within ninety (90) days after the end of each fiscal year of Borrower. Borrower shall deliver to the Lender copies of the Consolidated audited financial statements of Borrower and any Subsidiary, including the balance sheets, as at the end of such year and the related statements of income, cash flow and retained earnings for such year, in each case containing in comparative form the figures for the previous year. The Consolidated audited financial statements of Borrower shall be accompanied by an audit opinion of independent certified public accountants of nationally or regionally recognized standing, stating that such financial statements fairly present the respective financial positions of Borrower and any Subsidiary and the results of operations and changes in cash flows for the fiscal year then ended in conformity with GAAP, and (ii) as soon as available, but in any event thirty (30) days prior to the last day of each fiscal year of Borrower, Borrower shall deliver Consolidated and consolidating   - 22 - financial projections and a management-prepared budget for Borrower prepared on a monthly basis for the next year. (b) Quarterly Reports. As soon as available, but in any event not later than thirty (30) days after the end of each quarter, the Borrower shall deliver to the Lender copies of the Consolidated balance sheets of Borrower and any Subsidiary as of the end of such quarter and the related unaudited statements of income, cash flow and retained earnings for such quarter and the portion of the Officer of Borrower and prepared in accordance with GAAP applied on a basis consistent with the preceding years’ statements (subject to normal year-end audit adjustments). fifteen (15) days after the end of each month, the Borrower shall deliver to the Lender copses of the Consolidated balance sheets of Borrower and any Subsidiary as of the end of such month and the related unaudited statements of income, cash flow and retained earnings for such month and the portion of the fiscal year Borrower and prepared in accordance with GAAP applied on a basis consistent with the preceding years’ statements (subject to normal year-end audit adjustments). (d) Reports to Management. Simultaneously with the delivery of the financial statements described in Sections 5.1(a), 5.1(b) and 5.1(c), the Borrower shall also deliver to Lender copies of reports to management and management letters prepared by the accountants to the Borrower, each certified as true and correct (e) Compliance Certificates. Simultaneously with the delivery of the financial statements described in Section 5.1(b), the Borrower shall furnish to the Lender a Compliance Certificate executed by a Responsible Officer of Borrower (i) setting forth in reasonable detail the calculations supporting and used to determine Borrower’s compliance with the financial covenants contained in Article 7 hereof, along with supporting schedules; and (ii) stating that such Default, except as specified in such Compliance Certificate. (f) Borrower shall promptly furnish to Lender copies of all material reports and notices delivered to Senior Lender pursuant to the Senior Loan Documents or to the shareholders of Borrower pursuant to the Shareholders Agreement. Section 5.2 Conduct of Business and Maintenance of Existence. Borrower shall continue to engage in business of the same general type in all material respects as now conducted by it and   - 23 - reasonable action to maintain all rights, privileges and franchises necessary for the normal conduct of its business. Borrower shall comply with all Section 5.3 Maintenance of Property; Insurance. Borrower shall keep all property maintain all workers’ compensation insurance required by law; maintain with financially sound and reputable insurance companies insurance on all of its real and personal property in amounts consistent with past practices of Borrower (in amounts sufficient to insure one hundred percent (100%) of the actual replacement costs thereof) (subject to normal deductibles and/or self-insured retentions in amounts not in excess of the amounts in place as of the date of this Agreement) and against at least such risks as are usually insured against or, in case of an Event of Default, as the Lender may reasonably specify from time to time, that Lender may reasonably request from time to time, and furnish to the Lender, promptly after written request, any information as to the insurance carried, If Borrower fails to do so, the Lender may obtain such insurance and charge the cost thereof to the Borrower’s account and add it to the Obligations. The Borrower agrees that, if any loss should occur, the proceeds of all such insurance policies may be applied to the payment of all or any part of the Obligations, as the Lender may direct. Lender shall be named an additional named insured, lender loss payee and mortgagee on such insurance policies, as the case may be, to the extent that such policies insure the Collateral, In the event of any casualty for which the proceeds of insurance are less than Twenty Five Thousand and 00/100 Dollars ($25,000.00), however, the Borrower shall be entitled to retain such proceeds for the purpose of repairing or replacing the insured property, provided that the Borrower promptly execute and deliver to the Lender such documents, instruments, financing statements or other agreements as may be necessary to perfect the security interest of the Lender in all such property. All policies shall provide for at least thirty (30) days’ written notice of cancellation to the Lender, except premium nonpayment cancellation which shall be ten (10) days’ written notice. Section 5.4 Liability Insurance. Borrower shall, at all times, maintain in full other insurance as may be reasonably required by the Lender, such insurance to be provided by insurer(s) reasonably acceptable to the Lender; and, if requested by the Lender, such insurance shall name the Lender as an additional insured. Section 5.5 Inspection of Property; Books and Records. Borrower shall maintain in all material respects complete and accurate books of accounts and records in Requirements of Law in all material respects shall be made of all dealings and transactions in relation to the Collateral and the operations of the Borrower; and grant to the Lender, or its representatives, full and complete access to the Collateral and all books of account, records, correspondence and other papers relating to the Collateral during normal   - 24 - business hours and Borrower grant to Lender the right to inspect, examine, verify and make abstracts from the copies of such books of account, records, correspondence and other papers, and to investigate during normal business hours such other records, activities and business of the Borrower as they may deem reasonably necessary or appropriate at the time. Section 5.6 Notices. Borrower shall promptly give notice to the Lender of: relating to any Indebtedness of Borrower, and any (ii) litigation, Investigation or proceeding which may exist at any time between Borrower and any governmental authority, which in either case, if not cured or if adversely determined, as the (c) the commencement, existence or written threat of any action or proceeding by or before any governmental or political subdivision or any agency, authority, domestic, against or affecting Borrower, which action or proceeding, as the case (d) any change in the business, operations, property, condition (financial or otherwise) of Borrower which would reasonably be expected to have a Material Adverse Effect. to therein and stating what action the Borrower propose to take with respect thereto. Section 5.7 Environmental Laws. Borrower shall comply in all material respects with all Environmental Laws and obtain and comply with and maintain in all material respects any and all licenses, approvals, registrations or permits Section 5.8 Inventory. With respect to the Inventory, Borrower shall: (a) sell or dispose of the Inventory only to buyers in the ordinary course of business and consistent with past practices of Seller (which may include disposing of obsolete inventory or Inventory of de minimus value in the ordinary course of business and in accordance with past practices of such Borrower); and   - 25 - (b) promptly notify the Lender of any change in location of any of the Inventory and, prior to any such change, execute and deliver to the Lender such UCC financing statements satisfactory to the Lender as the Lender may request. Section 5.9 Equipment. Borrower shall: (a) keep and maintain the Equipment in good operating condition and repair, excluding normal wear and tear, and shall make all necessary replacements thereof so that the value, utility and operating efficiency thereof shall at all times be maintained and preserved in materially the same condition as on the Closing Date, except to the extent items of Equipment become obsolete in the ordinary course of business, and not permit any such items to become a fixture to real estate or accession to other personal property; and (b) upon an Event of Default or as reasonably requested by Lender, immediately on demand thereof by Lender, deliver to Lender any and all evidence of ownership of any of the Equipment (including, without limitation, certificates of title and applications for the title). Section 5.10 Collateral. Borrower shall maintain the Collateral, as the same is constituted from time to time, free and clear of all Liens, except Permitted Liens, and defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein and pay all costs and defense. Section 5.11 Employee Benefit Plans. Borrower will and will cause each of its ERISA Affiliates to (a) comply in all material respects with all requirements imposed by ERISA and the Code applicable from time to time to any Employee Benefit Plans of Borrower or any ERISA Affiliates; (b) make full payment when due of all amounts which under the provisions of such Employee Benefit Plans or under applicable law, are required to be paid as contributions thereto; (c) file on a timely basis all reports, notices and other filings required by any governmental agency with respect to any such Employee Benefit Plans; (d) furnish to all participants, beneficiaries, and employees under any such Employee Benefit Plan, within the periods prescribed by law, all reports, notices and other information to which they are entitled under applicable law, and (e) take no action which would cause any such Employee Benefit Plan to fail to meet any qualification requirement imposed by the Code. Section 5.12 Further Documents. Borrower shall, at or prior to the Closing Date: (a) cause Lender’s Lien to be noted on each document of ownership or title as to which evidence of Lender’s Lien is necessary or, in Lender’s or Lender’s counsel’s opinion,   - 26 - advisable to be shown in order to perfect Lender’s Lien on the Collateral covered by such document; and if reasonably practicable (b) execute and deliver such financing statements, documents and instruments, and perform all other acts as the Lender deems reasonably necessary or desirable, to carry out and perform the intent and purpose of this Agreement, and pay, upon demand, all expenses (including reasonable attorney’s fees) incurred by the Lender in connection therewith. Section 5.13 Life Insurance. Within 30 days of the Closing Date, Borrower shall obtain the Life Insurance and assign the same to Lender as collateral security hereunder pursuant to an Assignment of Life Insurance acceptable to Lender, and keep and maintain the Life Insurance in accordance with the terms hereof until all of the Obligations are satisfied and this Agreement is terminated. Section 5.14 Trademarks, Copyrights and Other Intellectual Property. Promptly upon the filing by Borrower or any Subsidiary of any application for letters patent or the registration of any trademarks, trade names or copyrights, Borrower shall notify Lender in writing and furnish such documentation as Lender may request to perfect Lender’s security interest in such property. Section 5.15 Other Information. Borrower shall furnish to the Lender such other financial and business information and reports in form and substance satisfactory to the Lender as and when the Lender may from time to time reasonably request. Section 5.16 Board of Directors. For so long as (a) the Obligations, or (b) the Warrant or Capital Stock issued upon the exercise thereof remain outstanding and owned or held by Lender, Lender shall be entitled to designate one (1) Person as a member of the Board of Directors of Borrower and to attend the meetings of any committee thereof and Lender shall be entitled to receive at least ten (10) days’ prior written notice of all such meetings. Borrower shall promptly reimburse such member of the Board of Directors for all reasonable out-of-pocket expenses incurred in attending such meetings and legal expenses incurred in fulfilling the fiduciary or other duties and responsibilities of such member. ARTICLE 6. NEGATIVE COVENANTS The Borrower covenant and agree with the Lender and warrants that, as long as the Loan or Warrant shall remain unpaid or unexercised, as the case may be: Section 6.1 Limitations on Restricted Payments. Without the prior written consent of Lender, the Borrower shall not, at any time, enter into, participate in, or make any Restricted Payment.   - 27 - Section 6.2 Limitations on Indebtedness. The Borrower will not at any time create, incur or assume, or become or be liable (directly or indirectly) in respect of, any Indebtedness, other than: (a) the Obligations incurred pursuant to this Agreement; (b) the obligations incurred relative to the Senior Loan Documents and the Preferred Stock or permitted by the Senior Loan Documents; (c) Guarantee Obligations permitted under Section 6.3 hereof; (d) current liabilities of Borrower incurred in the ordinary course of business (i) not incurred through the borrowing of money, or (ii) the obtaining of credit (e) Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, worker’s compensation, materials and supplies to the extent any of the foregoing shall not otherwise be payable in accordance herewith; (f) Indebtedness in respect of judgments or awards that have been in force for levied thereunder or in respect of which Borrower shall at the time in good (g) endorsements for collection, deposit or negotiation and warranties of (h) Indebtedness in respect of performance, surety, statutory, insurance, appeal (i) except to the extent prohibited by Section 6.6, Indebtedness of the Borrower incurred to refinance or replace Indebtedness of such Person permitted hereunder; provided, that (i) the principal amount (or committed principal amount) of such refinancing Indebtedness shall not exceed the outstanding principal amount (or committed principal amount) of the Indebtedness being refinanced, (ii) the terms of such refinancing are not more   - 28 - onerous taken as a whole to such Person than the terms of the Indebtedness being refinanced, and (iii) the Lender shall have consented to the incurrence of such refinancing Indebtedness; and (j) Indebtedness pursuant to the Purchase Agreement. Section 6.3 Limitation on Guarantee Obligations. The Borrower shall not create, incur, assume or suffer to exist any Guarantee Obligation except in the ordinary course or for (i) product warranties; and (ii) return or replacement guaranties and similar assurances made by Borrower with respect to products sold to customers in the ordinary course of business and in accordance with the past practices of such Borrower. Section 6.4 Limitation on Fundamental Changes. Borrower shall not merge, consolidate or amalgamate, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or make any material change in its business or its present method of conducting business as contemplated by the Acquisition Transaction. Section 6.5 Limitation on Dispositions of Assets. Without the prior written consent of Lender, which shall not be unreasonably withheld, Borrower shall not convey, sell, lease, license, assign, transfer or otherwise dispose of a substantial part (more than ten percent (10%) in the aggregate during the term hereof) of its property, business or assets (including, without limitation, except for the sale of Inventory and obsolete Equipment or the disposal of de minimus amounts of Equipment and Inventory in the ordinary course of business and except for dispositions permitted under the definition of Restricted Payments. Section 6.6 Limitation on Investments, Loans and Advances. Borrower shall not make or permit to exist any advances or loans to, or guarantee or become leases, stock or dividends of, or own, purchase or make any commitment to purchase any stock, bonds, notes, debentures or other securities of, or any interest in, or make any capital contributions to (all of which are sometimes collectively referred to herein as “Investments”) any Person except for (a) purchases of direct obligations of the federal government, (b) deposits in commercial banks, (c) commercial paper of any U.S. corporation having the highest ratings then given by the Moody’s Investors Services, Inc. or Standard & Poor’s Corporation, (d) endorsement of negotiable instruments for collection in the ordinary course of business, (e) advances to employees for business travel and other expenses incurred in the ordinary course of business, (f) any extension of trade credit in the ordinary course of business and investments in customer accounts for Inventory sold or services rendered in the ordinary course of business, (g) any investments in cash equivalents, (h) investments received in connection with the bankruptcy of suppliers and customers or received pursuant to a plan of reorganization, in each case,   - 29 - in settlement of delinquent obligations or disputes; and (i) transactions contemplated by, or required of Borrower, under the Purchase Agreement, Warrant Section 6.7 Limitation on Payments and Modifications of Debt Instruments. The Borrower shall not: (a) make any optional payment or prepayment on any Indebtedness for Borrowed Money (other than Obligations under this Agreement and prepayments of accounts payable in the ordinary course of business to obtain discounts by the terms of payment); and (b) amend, modify or change or consent or agree to any amendment, modification or change to any of the terms relating to the payment or prepayment of principal of or interest on, any such Indebtedness for Borrowed Money, or any capital or finance lease obligations, without the consent of Lender. Section 6.8 Limitation on Creation or Acquisition of Subsidiaries. Borrower will not create or form any new Subsidiary. Section 6.9 Corporate Documents. Borrower shall not make any material change, amendment or modification to its Articles of Incorporation or By-Laws without Section 6.10 Dividends and Similar Transactions. Except as otherwise permitted under Section 6.1, Borrower shall not declare or pay any dividends or make any other payments on its capital stock; issue, redeem, repurchase or retire any of its capital stock; grant or issue any warrant, right or option pertaining thereto (except for stock options granted by Borrower to management employees not to exceed, in the aggregate, ten percent (10%) of the outstanding Capital Stock of Borrower on a fully-diluted basis at a price not less than the greater of fair market value at the time of issuance or as of the date hereof) or other security convertible into any of the foregoing except for such grants and issuances of Capital Stock or other securities convertible into Capital Stock in compliance with the terms of Warrant Agreement and Warrant; or make any Section 6.11 Limitations on Management Fees. Neither Borrower nor any Subsidiary shall pay or obligate itself to pay, directly or indirectly, any management fee or similar compensation to any Person, or to any director, officer, shareholder or employee of such Person. Section 6.12 Management Compensation. Neither Borrower nor any Subsidiary shall pay or enter into an agreement to pay any management employee of Borrower yearly Compensation in excess of the amounts set forth on Schedule 6.12. As used herein, “Compensation” shall mean all   - 30 - forms of direct and indirect remuneration and include, without limitation, salaries, commissions, bonuses, securities, property, insurance benefits, personal benefits and contingent forms of remuneration. Section 6.13 Changes Relating to Indebtedness. Without the consent of Lender, such consent not to be unreasonably withheld, Borrower will not, and will not permit any of its Subsidiaries to change or amend the terms of (i) the Senior Debt if such change or amendment would have the effect of (a) increasing the any liability of the Borrower under the Senior Debt, or the amount of any fees payable under the Senior Debt, or require the Borrower to pay any additional fees under or with respect to the Senior Debt (other than ordinary and customary fees in connection with giving effect to amendments and waivers otherwise permitted by this Agreement), (b) shortening the maturity of or requiring the earlier payment of the Senior Debt, (c) imposing any additional prepayment obligations on the Borrower with respect to the Senior Debt, (d) increasing the aggregate principal amount of the Senior Debt, or (e) permitting the incurrence of additional indebtedness, or (ii) the Shareholders Agreement. ARTICLE 7. FINANCIAL COVENANTS Section 7.1 Limitations on Capital Expenditures. The Borrowers shall not, without first obtaining the written consent of the Lender, make Capital Expenditures from the date hereof through the end of its first fiscal year or during any subsequent fiscal year in an aggregate amount greater than the amounts specified below:   Closing through end of first fiscal year:    $ 65,000 Second full fiscal year:    $ 135,000 Third full fiscal year: (and each full fiscal year thereafter)    $ 20,000 Section 7.2 Minimum EBITDA. On each time period set forth below, the Borrower shall not permit its Consolidated EBITDA to be less than the minimum amount set forth below:   TIME PERIOD    MINIMUM EBITDA The Closing Date up to and including September 30, 2000    $ 250,000.00 October 1, 2000 up to and including December 31, 2000    $ 375,000.00 any period of twelve (12) consecutive months thereafter    $ 1,500,000.00   - 31 - Section 7.3 Senior Loan Agreement Covenants. Borrower shall comply with the covenants set forth in Section 3B of the Senior Loan Agreement, each of which is ARTICLE 8. CONDITIONS PRECEDENT Section 8.1 Conditions Precedent to Initial Loan. The obligation of Lender to make the initial Loan to Borrower under this Agreement on the Closing Date is subject to the satisfaction of the following conditions precedent (in form, substance and action as is satisfactory to Lender, in its sole discretion): (a) Certified Copies of Charter Documents. Lender shall have received from Borrower a copy, certified by a duly authorized officer of Borrower to be true and complete on and as of the Closing Date, of the charter or other organization documents and by-laws of Borrower as in effect on the Closing Date (together with all, if any, amendments thereto); and (ii) the charter or other organization documents of Borrower certified by the applicable Secretary of State; (b) Proof of Appropriate Action. Lender shall have received from Borrower a on and as of the Closing Date, of the records of all action taken by Borrower to authorize the Acquisition Transaction and the execution and delivery of this Agreement and any other agreements entered into on the Closing Date and to which it is a party or is to become a party as contemplated or required by this Agreement, and its performance of all of its agreements and obligations under each of such documents; (c) Incumbency Certificates. Lender shall have received from Borrower an incumbency certificate, dated the Closing Date, signed by a duly authorized officer of Borrower and giving the name and bearing a specimen signature of each individual who shall   - 32 - be authorized (i) to sign, in the name and on behalf of Borrower this Agreement and each of the other Loan Documents to which such person is or is to become a party on the Closing Date, and (ii) to give notices and to take other action on behalf of Borrower under such documents; made by and on behalf of the Borrower to the Lender in this Agreement and in the other Loan Documents shall be true and correct when made, shall, for all purposes of this Agreement, be deemed to be repeated on and as of the Closing Date, and shall be true and correct in all material respects on and as of such date; (e) Loan Documents, Etc. The Subordinated Note and each of the other Loan Documents and Warrant and Warrant Agreement, shall have been duly and properly authorized, executed and delivered to the Lender by the respective party or parties thereto and shall be in full force and effect on and as of the Closing Date; (f) Acquisition Transactions. Lender shall have received from Borrower certified copies of documents relative to the Acquisition Transaction, including, without limitation, the Purchase Agreement and all schedules thereto, as Lender may request and such documents shall be in form and substance satisfactory to Lender; (g) Intercreditor Agreement. Lender shall have received the Intercreditor Agreement in form and substance satisfactory to Lender; (h) Equity Contribution. Borrower shall have received (i) an equity contribution from Development Capital Ventures, L.P. satisfactory to Lender, in the aggregate amount of not less than One Million Three Hundred and 00/100 Dollars ($1,300,000.00) (ii) an equity contribution from William J. Roberts and other investors satisfactory to Lender in an aggregate amount of not less than Five Hundred Thousand and 00/100 Dollars ($500,000.00), and evidence of such contributions shall have been delivered to Lender. (i) Insurance. Lender shall have received evidence that Borrower’s properties and assets are fully insured in such amounts, against such risks, and with such insurers as may be reasonably satisfactory to Lender, with loss payable to Lender, together with the policies (containing a standard mortgagee clause, if appropriate) or certificates evidencing such insurance; (j) Performance, Etc. Borrower shall have duly and properly performed, complied with and observed its covenants, agreements and obligations contained in each of   - 33 - the Loan Documents. No event shall have occurred on or prior to the Closing Date, and no condition shall exist on the Closing Date, which constitutes a (k) Legal Opinion. The Lender shall have received a written legal opinion of counsel to Borrower, addressed to the Lender, dated the Closing Date, which shall be acceptable to the Lender; (l) Mortgage and Title Insurance. The following documents each of which shall be executed (and, where appropriate, acknowledged) by Persons satisfactory to the Lender: (i) the Mortgage, duly executed and delivered by Borrower (and where appropriate by the trustee thereunder) in recordable form (in such number of copies as the Lender shall have requested), together with such Uniform Commercial Code financing statements as may be needed in order to perfect the security interests granted by the Mortgage in any fixtures and other property therein described which may be subject to the Uniform Commercial Code, in each case appropriately completed and duly executed and in proper form for filing in all offices in which required; (ii) with respect to the Real Estate covered by the Mortgage, an ALTA Standard Form title insurance policy issued by Chicago Title Insurance Company, (the “Title Company”), in an amount equal to Six Hundred Thousand and 00/100 Dollars ($600,000.00), insuring the validity and priority of the Liens created under the Mortgage, subject only to the encumbrances permitted by the Mortgage and which shall not contain exceptions for mechanics liens, persons in occupancy or matters which would be shown by a survey (Lender hereby agrees that the survey exception can be deleted after the Closing Date), shall not insure over any Lender in its reasonable discretion, and shall contain such endorsements and affirmative insurance as the Lender, in its discretion, may require. Borrower shall have paid to the Title Company all expenses and premiums of the Title Company in connection with the issuance of such policies. In addition, Borrower shall have paid to the Title Company or the Lender’ an amount equal to all mortgage and mortgage recording taxes, intangibles taxes, stamp taxes and other taxes payable in connection with the execution and delivery of the Mortgage and the obligations secured thereby and the recording of the Mortgage in the appropriate land offices. (m) Consents. The Lender shall have received from the Borrower copies of all consents necessary for the completion of the transactions contemplated by this Agreement.   - 34 - the Subordinated Note, each of the Loan Documents, and all Instruments and Documents incidental thereto; (n) Financial Statements. The Lender shall have received from the Borrower the Financial Statements of Seller, Borrower and any Subsidiary and such other Financial Statements requested by Lender and Lender shall be satisfied with the results of all entities reflected therein; (o) Legality of Transactions. It shall not be unlawful (a) for the Lender to which the Lender is a party on the date of such Loan, or (b) for the Borrower and any Subsidiary to perform any of its respective agreements or obligations under any of the Loan Documents or the Acquisition Transaction to which they are a party on such date; (p) Officer’s Certificate. Lender shall have received from Borrower a certificate dated as of the Closing Date, signed by a duly authorized officer on behalf of Borrower and certifying that all of the representations and warranties made by and on behalf of Borrower to Lender in this Agreement and in the other (q) Due Diligence. Lender shall have conducted and completed due diligence on Borrower, Seller and the Acquisition Transaction to Lender’s full satisfaction; (r) Post-Closing Availability. After giving effect to the consummation of the transactions contemplated hereby, by the Senior Loan Documents and by the Acquisition Transaction (including the payment of any fees and expenses associated therewith), the difference, as of the Closing Date, between (i) the lesser of (A) the Borrowing Base and (B) the Revolving Credit Commitment and (ii) the aggregate outstanding principal amount of the Revolving Loans as such terms are defined in the Senior Loan Agreement, shall be at least [Four Hundred Sixty Thousand and 00/100 Dollars ($460,000.00)]; and ARTICLE 9. EVENTS OF DEFAULT Section 9.1 Payments. Failure by the Borrower to pay any Obligation within three (3) business days of when due and payable.   - 35 - Section 9.2 Representations and Warranties. Any representation or warranty made by the Borrower, or a Subsidiary, or any officer of Borrower, in this Agreement or in any Loan Document, including any certificate, document or financial or other statement furnished by Borrower at any time in connection herewith or therewith shall prove to have been untrue in any material respect. Section 9.3 Covenants. Default by Borrower or any Subsidiary in the observance or performance of any covenant or agreement contained herein or in any Loan Document and, if such default is capable of being cured, and if such correction is being sought diligently, such default is not corrected within 30 days. Section 9.4 Effectiveness of Loan Documents. Any Loan Document shall cease to be legal, valid, binding or enforceable in accordance with the terms thereof in any material respect, or any of the Liens intended to be created by any Loan Document ceases to be or are not valid and perfected liens having the priority contemplated thereby. Section 9.5 Cross-Default to Other Indebtedness. Borrower shall default in any payment of principal of or interest on any of its Indebtedness in excess of Fifty Thousand and 00/100 Dollars ($50,000.00) (other than any such default in respect of the Subordinated Note) or in the payment of any Guarantee Obligation relating to Indebtedness in excess of Twenty-Five Thousand and 00/100 Dollars ($25,000.00), beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created or relating to any such Indebtedness or Guarantee Obligation or contained in any beneficiaries) to cause, with the giving of notice or the passage of time or both, if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable. Section 9.6 Change of Control. Any Change of Control shall occur. Section 9.7 Commencement of Bankruptcy or Reorganization Proceeding. (a) Borrower shall commence any case, proceeding or other action (i) under any wind-up, liquidation, dissolution, composition or   - 36 - (b) There shall be commenced against Borrower any such case, proceeding or other adjudication or appointment or remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (c) There shall be commenced against Borrower any case, proceeding or other entry thereof; or (d) Borrower shall suspend the operation of its business or take any action in any of the acts set forth above in this Section 9.7; or (e) Borrower shall generally not, or shall be unable to, or shall admit in Section 9.8 Material Judgments. One or more judgments or decrees shall be entered against Borrower or any Subsidiary involving in the aggregate a liability (not covered by insurance) of Fifty thousand and 00/100 Dollars ($50,000,00) or more and all such judgments or decrees shall not have been vacated, satisfied, discharged or bonded pending appeal within thirty (30) days Section 9.9 Remedies. Upon the occurrence of an Event of Default described in this Article 9, the Lender, at its option, may: (a) declare the Obligations of the Borrower immediately due and payable, without presentment, notice, protest or demand of any kind for the payment of all or any part of the Obligations (all of which are expressly waived by the Borrower) and exercise all of its rights and remedies against the Borrower and any Subsidiary and any Collateral provided herein or in any other agreement among the Borrower and the Lender or any other party; and (b) exercise all rights granted to a secured party under the Uniform Commercial Code or otherwise.   - 37 - Upon the occurrence of an Event of Default, the Lender may take possession of the Collateral, or any part thereof, and Borrower hereby grants the Lender authority to enter upon any premises on which the Collateral may be situated, and remove the Collateral from such premises or use such premises, together with the materials, supplies, books and records of the Borrower, to maintain possession and/or the condition of the Collateral and to prepare the Collateral for sale. The Borrower shall, upon demand by the Lender, assemble the Collateral and make it available at a place designated by the Lender which is reasonably convenient to all parties. Unless the Collateral is perishable or threatens to market, the Lender will give the Borrower reasonable notice of the time and place of any public sale thereof or of the time after which any private sales or other intended disposition thereof is to be made. The requirement of reasonable the Borrower set forth in Section 11.3 hereof at least ten (10) days prior to Section 9.10 Set-off. The Lender shall have the right, without prior notice to the Borrower, as provided by applicable law, any such notice being expressly any of the Obligations, whether matured or unmatured, any amount owing from the Lender to the Borrower at, or at any time after, the happening of any Event of Default, and such right of set-off may be exercised by the Lender against the against Borrower or such trustee in bankruptcy, debtor in possession, assignee been exercised by the Lender prior to the making, filing or issuance, or service upon the Lender of, or of notice of, any such petition, assignment for the receiver, or issuance of execution, subpoena, order or warrant. The Lender made by the Lender; provided, that the failure to give such notice shall not Section 9.11 Rights Cumulative; Waiver. The rights, options and remedies of the Lender shall be cumulative and no failure or delay by the Lender in exercising any right, option or remedy shall be deemed a waiver thereof or of any other right, option or remedy, or waiver of any Event of Default hereunder, nor shall remedy hereunder. The Lender shall not be deemed to have waived any of the Lender’s rights hereunder or under any other agreement, instrument or paper signed by Borrower unless such waiver shall be in writing and signed by the Lender   - 38 - ARTICLE 10. Section 10.1 Notification of Debtors; Grant of Powers. Lender shall have the right at any time after the occurrence of an Event of Default to notify Account Debtors of its security interest in the Accounts and to require payments to be made directly to the Lender at such address or in such manner as the Lender may deem appropriate. Upon request of the Lender at any time after the occurrence of an Event of Default, the Borrower will so notify the Account Debtors and will indicate on all billings to the Account Debtors that the Accounts are payable to the Lender. To facilitate direct collection, Borrower hereby appoints the Lender and any officer or employee of the Lender as the Lender may from time to time designate, as attorney-in-fact for Borrower if after the occurrence of an Event of Default to (a) receive, open and dispose of all mail addressed to Borrower and take therefrom any payments on or proceeds of Accounts, (b) take over the Borrower’s post office boxes or make other arrangements, in which the Borrower shall cooperate, to receive the Borrower’s mail, including notifying the post office authorities to change the address for delivery of mail addressed to Borrower to such address as the Lender shall designate, (c) endorse the name of notes, acceptances or other evidences or payment or Collateral that may come into the Lender’s possession, (d) sign and endorse the name of Borrower on any invoice or bill of lading relating to any of the Accounts, on verifications of Accounts sent to any Account Debtor, to drafts against Account Debtors, to assignments of Accounts and to notices to Debtors, and (e) do all acts and things necessary to carry out this Agreement, including signing the name of the Borrower on any instruments required by law in connection with the transactions contemplated hereby and on Financing Statements as permitted by the Uniform Commercial Code. The Borrower hereby ratifies and approves all acts of such attorneys-in-fact, and neither the Lender nor any other such attorney-in-fact shall be liable for any acts of commission or omission, or for any error of judgment or mistake of fact or law, excluding acts of the Lender or such attorney-in-fact that are willful, malicious or grossly negligent. This power, being coupled with an interest, is irrevocable if after the occurrence of an Event of Default so long as any of the Obligations remain unsatisfied. Section 10.2 Disclaimer of Liability. The Lender shall not, under any circumstances, be liable for any error or omission or delay of any kind occurring in the settlement, collection or payment of any Accounts or any instruments received in payment thereof or for any damage resulting therefrom, unless caused by the Lender’s willful, malicious or grossly negligent acts. Lender may, without notice to or consent from the Borrower, sue upon or cash, credit or otherwise upon any terms, any of the Accounts or any securities, Lender is authorized to accept the return of the goods represented by any of the Accounts, without notice to or consent by the Borrower, or without discharging or in any way   - 39 - affecting the Obligations hereunder. The Lender shall not be liable for or prejudiced by any loss, depreciation or other damage to Accounts or other Collateral unless caused by the Lender’s willful, malicious or grossly negligent act, and the Lender shall have no duty to take any action to preserve or collect ARTICLE 11. MISCELLANEOUS Section 11.1 Amendments and Waivers. The Borrower and the Lender may amend this Agreement, the Subordinated Note, or the other Loan Documents to which they are parties, and the Lender may waive future compliance by the Borrower with any provision of this Agreement, the Subordinated Note, or such other Loan Documents, but no such amendment or waiver shall be effective unless in a written instrument executed by an authorized officer of the Lender and Borrower and provided any such amendment does not violate the terms of the Intercreditor Agreement. Section 11.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay provided by law. Section 11.3 Notices. All notices, consents, requests and demands to or upon the respective parties hereto shall be in writing and, unless otherwise expressly facsimile, telex or telegraphic notice, when sent, addressed as follows:   If to the Lender:    The HillStreet Fund, L.P.    300 Main Street    Cincinnati, Ohio 45202    Telephone: (513) 412-3682    Facsimile:  (513) 412-3680    Attention:   John P. Vota   - 40 - With a copy to:    Keating, Muething & Klekamp, P.L.L.    1400 Provident Tower    Cincinnati, Ohio 45202    Telephone: (513) 579-6595    Facsimile:  (513) 579-6457    Attention:   Timothy B. Matthews, Esq., If to the Borrower:    WR Acquisition, Inc.    662 Wolf Ledges Parkway    Akron, Ohio 44311    Attention: Steven Runkle With a copy to:    Richard D. Rose, Esq    Buchanan Ingersoll    301 Grant Street    One Oxford Center    Pittsburgh, PA 15219 Notices of changes of address shall be given in the same manner. Section 11.4 Power of Attorney. Borrower acknowledges and agrees that its appointment of Lender as its attorney and agent-in-fact after the occurrence of an Event of Default for the purposes specified in this Agreement is an Obligations are satisfied and this Agreement is terminated. Section 11.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and its respective successors the Lender, such consent not to be unreasonably withheld or delayed. Section 11.6 Assignment; Participation. Lender may assign, or sell a participation interest in, its rights and obligations under this Agreement, the Subordinated Note and the other Loan Documents only with the prior written consent of Borrower, such consent not to be unreasonably withheld or delayed. In the case of an assignment, upon receipt of notice of such assignment, Borrower shall deliver such documents necessary to evidence or perfect such assignment. Any such assignee shall be deemed a party hereto, and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such agreement, such assignee shall have the rights and obligations of a Lender hereunder.   - 41 - Section 11.7 Expenses. Borrower shall be responsible for payment of Lender’s preparation and negotiation of this Agreement and the making of the Loan hereunder, including the reasonable fees and expenses of the Lender’s counsel, and for all UCC search, filing, recording and other costs connected with the perfection of the Lender’s security interest in the Collateral, (excluding any stamp, excise, or mortgage tax, levy or other taxes payable in connection with the consummation of the transactions contemplated hereby), whether or not the Section 11.8 Post-Closing Expenses and Collection. All costs and expenses incurred by the Lender after the closing of the transactions contemplated by this Agreement, in the administration of the Loan, Warrant Agreement or Warrant, and to obtain, enforce or preserve the security interests granted by this Agreement and to collect the Obligations, all reasonable costs to maintain and preserve the Collateral and all reasonable attorneys’ fees and legal expenses incurred in obtaining or enforcing payment of any of the Obligations or foreclosing the Lender’s security interest in any of the Collateral, whether through judicial proceedings or otherwise, or in enforcing or protecting its right’s and interests under this Agreement or under any other instrument or document delivered pursuant hereto, or in protecting the rights of any holder or holders with respect thereto, or in defending or prosecuting any actions or proceedings arising out of or relating to this Agreement, shall be paid by the Borrower to the Lender, upon demand, or, at the Lender’s election, charged to the Borrower’s account and added to the Obligations, and the Lender may take judgment against the Borrower for all such costs, expense and fees in addition to all other amounts due from the Borrower hereunder. Section 11.9 Counterparts. This Agreement may be executed by one or more of the instrument. Section 11.10 Governing Law; Jurisdiction and Venue. THE LENDER ACCEPTS THIS AGREEMENT AT CINCINNATI, OHIO BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE BETWEEN BORROWER, LENDER, OR ANY OTHER HOLDER OF SECURED OBLIGATIONS LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE SUBSTANTIVE INTERNAL LAWS AND STATUTES OF LIMITATION (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF OHIO. The Lender and Borrower hereby designate all courts of record sitting in proceeding in respect of or arising out of   - 42 - this Agreement, the Subordinated Note, Loan Documents, or the transactions contemplated by this Agreement shall be prosecuted as to all parties, its successors and assigns, and by the foregoing designations the Lender and Borrower consent to the jurisdiction and venue of such courts. Borrower WAIVES JURISDICTION WITHIN THE STATE OF OHIO FOR THE PURPOSES OF LITIGATION TO ENFORCE SUCH OBLIGATIONS OF SUCH BORROWER. Section 11.11 Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE LENDER TO EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY WAY FROM THE OBLIGATIONS. Section 11.12 Other Waivers. Borrower waives notice of nonpayment, demand, notice of demand, presentment, protest and notice of protest with respect to the Obligations, or notice of acceptance hereof, notice of Loan made, credit Remainder of page intentionally left blank Signature pages follow   - 43 - IN WITNESS WHEREOF, the parties have duly executed this Subordinated Loan and Security Agreement by their duly authorized officers as of the date first above written.   BORROWER: By:   Name:   William J. Roberts Title:   President LENDER: By:   HillStreet Capital, Inc. Its:   Investment Manager By:   /s/ John P. Vota Name:   John P. Vota Title:   EVP  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 28, 2014 The Providence Service Corporation (Exact name of registrant as specified in its charter) Delaware 001-34221 86-0845127 (State or other jurisdiction of incorporation) (CommissionFile Number) (IRS Employer Identification No.) 64 East Broadway Blvd., Tucson, Arizona (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (520)747-6600 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On May 28, 2014, The Providence Service Corporation (“Providence”) entered into the first amendment (the “First Amendment”) to its Amended and Restated Credit and Guaranty Agreement, dated August 2, 2013 (the “Credit Facility”) with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, SunTrust Bank, as syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and SunTrust Robinson Humphrey, Inc., as joint lead arrangers and joint book managers and other lenders party thereto. The First Amendment provides for, among other things, an increase in the amount of the revolving credit facility from $165 million to $240 million in aggregate and other modifications in connection with the consummation of the Acquisition (described below). The foregoing description of the First Amendment does not purport to be complete and is subject to, and is qualified in its entirety by, the full text of the First Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference. Item 2.01 Completion of Acquisition or Disposition of Assets. On May 30, 2014, Providence acquired (the “Acquisition”) all of the outstanding equity of Ingeus Limited (“Ingeus”) pursuant to a Share Sale Agreement (the “Sale Agreement”), dated as of March31, 2014. Providence also, pursuant to an Australian Share Sale Agreement Side Deed (the “Side Deed”), dated as of March31, 2014, guaranteed the obligations of its newly-acquired, wholly-owned subsidiary, Ingeus Europe Limited, in that subsidiary’s purchase of the share capital of Ingeus UK Limited from Deloitte LLP, as of May 30, 2014. Pursuant to the Sale Agreement and the Side Deed, Providence paid at closing a purchase price comprised of (i) a GBP £35million cash payment on May 30, 2014 and (ii) the issuance on May 30, 2014 of restricted shares of Providence common stock and payment of cash with a combined value of GBP £14,345,794, subject to a vesting schedule of 25% per year over a four year period. Providence will also pay contingent earn-out consideration of up to GBP £75million, payable over a five year period, based on the achievement of certain levels of Ingeus’ earnings before interest, taxes, depreciation and amortization and other defined criteria. The foregoing description of the Sale Agreement and the Side Deed does not purport to be complete and is subject to, and is qualified in its entirety by, the full text of the Sale Agreement, which was filed as Exhibit 2.1, and Side Deed, which was filed as Exhibit 2.2, to our Current Report on Form 8-K that was filed with the Securities and Exchange Commission on April 1, 2014, and are each incorporated herein by reference. On June 3, 2014, Providence issued a press release announcing the completion of the Acquisition, a copy of which is filed as Exhibit 99.1 and is incorporated herein by reference. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The information set forth in Section 1.01 above is incorporated by reference into this Item 2.03. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. As a condition to the consummation of the Acquisition, Ingeus Europe Limited entered into a new employment agreement (“Employment Agreement”) with Thérése Rein, Chief Executive Officer of the combined global operations and companies of the business known as “Ingeus”. The effective date of the Employment Agreement was April 10, 2014, the term of the Employment Agreement began upon the consummation of the Acquisition, and the Employment Agreement remains in force following the Acquisition. The following description of the Employment Agreement is qualified in its entirety by reference to a copy of the Employment Agreement, attached hereto as Exhibit 10.2, and incorporated herein by reference. The Employment Agreement’s term is perpetual, although each of Ingeus Europe Limited and Ms. Rein may terminate the Employment Agreement with 12 months’ prior written notice to the other party. Following service of notice to terminate the Employment Agreement by either party, or if Ms. Rein purports to terminate the Employment Agreement in breach of contract, Providence may, by written notice, place Ms. Rein on Garden Leave (as defined in the Employment Agreement) for the whole or part of the remainder of the appointment. Ingeus Europe Limited may also, in its sole discretion, terminate the Employment Agreement at any time and with immediate effect by notifying Ms. Rein that it is exercising its right to make a payment in lieu of notice (“Payment in Lieu”) to Ms. Rein, provided that the Payment in Lieu or an installment of such payment must be made within 28 days of such notice. The Payment in Lieu is equal to either: (1) the basic salary (as at the date of termination) that Ms. Rein would have been entitled to receive under the Employment Agreement (the “Basic Salary”) during the 12-month notice period referred to above (or, if notice has already been given, during the remainder of the notice period) less income tax and national insurance contributions; or (2) the Basic Salary plus the bonus provided for in the Employment Agreement (which is further described below) if Ms. Rein enters into Providence’s standard form settlement agreement. In addition, Ingeus Europe Limited may terminate the Employment Agreement for Cause (as defined in the Employment Agreement), with immediate effect, without notice and with no liability to make any further payment to Ms. Rein. The Employment Agreement provides for compensation, term life insurance, private health insurance, pension, relocation expenses and restrictive covenants. Under the Employment Agreement, the annual Basic Salary for Ms. Rein is GBP £276,000 per annum. Ms. Rein’s salary will be reviewed annually, the first such review to take place on the same date as the salary review for other senior executives of Providence. Ingeus Europe Limited is under no obligation to award an increase following a salary review. There will be no review of the salary after notice has been given by either party to terminate the Employment Agreement. In respect of the fiscal year ending on December 31, 2014, Ms. Rein will be entitled to a cash bonus in an amount of up to 75% of her Basic Salary, subject to the terms of the Providence Service Corporation 2014 Executive Pay for Performance Compensation Plan (the “Bonus Plan”). In respect of all fiscal years beginning on or after January 1, 2015, Ms. Rein will be entitled to receive a bonus with a target of at least 75% of her salary in accordance with the Bonus Plan, which will be on the same terms as the other executives participating in the plan. All bonuses are purely discretionary. The Employment Agreement contains restrictive covenants providing for Ms. Rein’s non-competition, non-solicitation/non-piracy and non-disclosure. The term of the non-competition and non-solicitation covenants is for a period that includes the term of the Employment Agreement, and for a period of 12 months after the Employment Agreement is terminated for any reason. Item 9.01 (a) Financial Statements of Businesses Acquired. Financial statements relating to the Acquisition are not included in this Current Report on Form 8-K, and to the extent required by this Item 9.01, will be filed by amendment to this Current Report on Form 8-K within seventy-one (71) calendar days from the date that this Current Report on Form 8-K must be filed. (b) Pro Forma Financial Information. Pro forma financial information relating to the Acquisition are not included in this Current Report on Form 8-K, and to the extent required by this Item 9.01, will be filed by amendment to this Current Report on Form 8-K within seventy-one (71) calendar days from the date that this Current Report on Form 8-K must be filed. (c) Exhibits First Amendment to the Amended and Restated Credit and Guaranty Agreement dated as of May 28, 2014, among The Providence Service Corporation, Bank of America, N.A. SunTrust Bank, BMO Harris Bank, Merrill Lynch, Pierce, Fenner & Smith Incorporated, SunTrust Robinson Humphrey, Inc. and HSBC Bank USA, National Association. Employment Agreement dated April 10, 2014 between Ingeus Europe Limited and Thérése Rein . Press release, dated June 3, 2014. 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. THE PROVIDENCE SERVICE CORPORATION Date: June3, 2014 By: /s/ Robert E Wilson Name: Robert E. Wilson Title: Chief Financial Officer

Consent of Independent Registered Public Accounting Firm The Board of Trustees of Dreyfus Investment Funds and The Board of Directors of Dreyfus BNY Mellon Funds, Inc. : We consent to the use of our reports, dated November 26, 2014, with respect to the financial statements of Dreyfus Diversified Emerging Markets Fund, Dreyfus/Newton International Equity Fund, Dreyfus/The Boston Company Small/Mid Cap Growth Fund, Dreyfus/The Boston Company Small Cap Growth Fund, Dreyfus/The Boston Company Small Cap Value Fund, and Dreyfus Tax Sensitive Total Return Bond Fund , each a series of Dreyfus Investment Funds, as of September 30, 2014, incorporated herein by reference and to the references to our firm under the headings “Financial Highlights” in the Prospectuses and “Counsel and Independent Registered Public Accounting Firm” in the Statement of Additional Information. We also consent to use of our report dated January 21, 2014, with respect to the statement of assets and liabilities (in organization) of Dreyfus Global Emerging Markets Fund, a series of Dreyfus BNY Mellon Funds, Inc., as of January 15, 2014, included in the Statement of Additional Information. /s/ KPMG LLP New York, New York January 26, 2015

Exhibit 99.COE CODE OF BUSINESS CONDUCT AND ETHICS As mandated by the Securities and Exchange Commission, this Code of Business Conduct and Ethics (this “Code”) sets forth legal and ethical standards of conduct for the directors, officers and employees of EULAV Asset Management and Subsidiaries1 (the “Company”) and the Value Line Mutual Funds (collectively, the “Funds” or individually, the “Fund”). This Code is intended to deter wrongdoing and to promote the conduct of all Company business in accordance with high standards of integrity and in compliance with all applicable laws and regulations. This Code applies to the Company, its subsidiaries and each of the Funds and applies to each director and employee including the principal executive officer, principal financial officer, principal accounting officer or controller of each entity and persons performing similar functions. If you have any questions regarding this Code or its application to you in any situation, you should contact the Chief Executive Officer. COMPLIANCE WITH LAWS, RULES AND REGULATIONS The Company requires that all employees, officers and directors comply with all laws, rules and regulations applicable to the Company wherever it does business. You are expected to use good judgment and common sense in seeking to comply with all applicable laws, rules and regulations and to ask for advice when you are uncertain about them. If you become aware of the violation of any law, rule or regulation by the Company, whether by its officers, employees, directors, or any third party doing business on behalf of the Company, or if you become aware of any violation of this Code, it is your responsibility to promptly report the matter.You may contact an officer of the Company.While it is the Company’s desire to address matters internally, nothing in this Code should discourage you from reporting any illegal activity, including any violation of the securities laws, antitrust laws, environmental laws or any other federal, state or foreign law, rule or regulation, to the appropriate regulatory authority. Employees, officers and directors shall not discharge, demote, suspend, threaten, harass or in any other manner discriminate or retaliate against an employee because he or she reports any such violation, unless it is determined that the report was made with knowledge that it was false. This Code should not be construed to prohibit you from testifying, participating or otherwise assisting in any state or federal administrative, judicial or legislative proceeding or investigation. 1 For purposes of this Code, “Subsidiaries” includes EULAV Securities LLC, the principal underwriter of each of the Funds (“EULAV Securities”).References in this Code to EULAV shall be interpreted to include EULAV Securities unless the context clearly otherwise requires. Exhibit 99.COE CONFIDENTIALITY Employees, officers and directors must maintain the confidentiality of confidential information entrusted to them by the Company, except when disclosure is authorized by the Chief Executive Officer or legally mandated. Confidential information includes lists of clients, personal information about employees or shareholders and the like. Unauthorized disclosure of any confidential information is prohibited. Additionally, employees should take appropriate precautions to ensure that confidential or sensitive business information is not communicated within the Company except to employees who have a need to know such information to perform their responsibilities for the Company. Third parties may ask you for information concerning the Company. Employees, officers and directors (other than the Company’s authorized spokesperson) must not discuss internal Company matters with, or disseminate internal Company information to, anyone outside the Company, except as authorized by the Chief Executive Officer. All responses to inquiries on behalf of the Company must be approved by the Company’s authorized spokesperson currently Mitchell Appel. If you receive any inquiries of this nature, you must decline to comment and refer the inquirer to the Company’s authorized spokesperson. HONEST AND ETHICAL CONDUCT AND FAIR DEALING Employees, officers and directors should endeavor to deal honestly, ethically and fairly with the Company’s suppliers, customers, competitors and employees. Statements regarding the Company’s products and services must not be untrue, misleading, deceptive or fraudulent. PROTECTION AND PROPER USE OF CORPORATE ASSETS; RELATED PERSON TRANSACTIONS Employees, officers and directors should seek to protect the Company’s assets. Theft, carelessness and waste have a direct impact on the Company’s financial performance. All of us must use the Company’s assets and services solely for legitimate business purposes of the Company and not for any personal benefit or the personal benefit of anyone else. All of us must always act in the best interests of the Company. You must refrain from engaging in any activity or having a personal interest that presents a “conflict of interest.” A conflict of interest occurs when your personal interest interferes with the interests of the Company. A conflict of interest can arise whenever you, as an officer, director or employee, take action or have an interest that prevents you from performing your Company duties and responsibilities honestly, objectively and effectively. 2 Exhibit 99.COE The Company recognizes that Related Person Transactions (as defined below) can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company.Nevertheless, the Company recognizes that there are situations where Related Person Transactions may be in, or may not be inconsistent with, the best interests of the Company.Therefore, the Company has adopted the procedures set forth below for the review, approval or ratification of Related Person Transactions. For the purposes of this Code of Conduct and Business Ethics, a “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $50,000, and in which any Related Person had, has or will have a direct or indirect material interest; provided, however, that the following are not Related Person Transactions: 1. the transaction involves compensation approved by the Company’s Chief Executive Officer; 2. the transaction is available to all employees generally; and 3. indebtedness due from the Related Person for purchases of goods and services subject to usual trade terms, for ordinary business travel and expense payments and for other transactions in the ordinary course of business. For purposes of this Code of Business Conduct and Ethics, a “Related Person” means: 1. any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director or officer of the Company or a nominee to become a director of the Company; 2. any person who is known to be the beneficial owner of more than 5% of the Company’s voting interests; 3. any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner; and 4. any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest. 3 Exhibit 99.COE A Related Person Transaction shall be consummated or shall continue only if the Chief Executive Officer shall approve or ratify such transaction and if the transaction is fair and reasonable to the Company. BUSINESS OPPORTUNITIES All of us are bound to advance the Company’s business interests when the opportunity to do so arises. You must not take for yourself business opportunities that are discovered through your position with the Company or the use of property or information of the Company. ACCURACY OF BOOKS AND RECORDS AND PUBLIC REPORTS Employees, officers and directors must honestly and accurately report all Company business transactions. You are responsible for the accuracy of your records and reports. Accurate information is essential to the Company’s ability to meet legal and regulatory obligations. All Company books, records and accounts shall be maintained in accordance with all applicable regulations and standards and accurately reflect the true nature of the transactions they record. The financial statements of the Company shall conform to generally accepted accounting rules and the Company’s accounting policies. No undisclosed or unrecorded account or fund shall be established for any purpose. No false or misleading entries shall be made in the Company’s books or records for any reason, and no disbursement of corporate funds or other corporate property shall be made without adequate supporting documentation. It is the policy of the Company to provide full, fair, accurate, timely and understandable disclosure in reports and documents filed with, or submitted to, the Securities and Exchange Commission and in other public communications. CONCERNS REGARDING ACCOUNTING OR AUDITING MATTERS Anyone with concerns regarding questionable accounting or auditing matters or complaints regarding accounting, internal accounting controls or auditing matters may confidentially, and anonymously if they wish, communicate such concerns or complaints to any of the Company’s officers. A record of all complaints and concerns received will be provided to the Company’s Board of Trustees. 4 Exhibit 99.COE DISCIPLINARY ACTION Disciplinary measures will be taken against: ● Any employee, officer or director who authorizes, directs, approves or participates in any violation of the Code or of any applicable law, rule or regulation; ● Any employee, officer or director who has deliberately failed to report a violation of the Code or of any applicable law, rule or regulation, who has concealed any such violation or who has deliberately withheld or misstated relevant information concerning such a violation; ● Any employee, officer or director who retaliates, directly or indirectly, or encourages others to do so, against any other employee, officer or director because of a report by that person of a suspected violation of the Code or of any applicable law, rule or regulation; ● Any employee, officer or director who knowingly refers a false allegation of a violation of the Code or of any applicable law, rule or regulation or who deliberately abuses the procedures established for investigating suspected violations of the Code; and ● Any employee, officer or director who refuses to return a signed certification of the Code or who fails to return a signed certification of the Code after reasonable opportunity to do so. In addition, persons who violate any applicable law, rule or regulation may be subject to criminal and civil penalties and payment of civil damages to the Company or third parties. DISSEMINATION AND AMENDMENT This Code shall be distributed to each new employee, officer and director of the Company upon commencement of his or her employment or other relationship with the Company. Company reserves the right to amend, alter or terminate this Code at any time for any reason. This document is not an employment contract between the Company and any of its employees, officers or directors and does not alter the Company’s at-will employment policy. 5 Exhibit 99.COE CERTIFICATION I, do hereby certify that: (Print Name Above) 1.I have received and carefully read the Code of Business Conduct and Ethics of EULAV Asset Management and the Value Line Mutual Funds. 2.I understand the Code of Business Conduct and Ethics. 3.I have complied and will continue to comply with the terms of the Code of Business Conduct and Ethics. Date: (Signature) EACH EMPLOYEE, OFFICER AND DIRECTOR IS REQUIRED TO SIGN, DATE AND RETURN THIS CERTIFICATION TO THE COMPLIANCE DEPARTMENT WITHIN 30 DAYS OF ISSUANCE. FAILURE TO DO SO MAY RESULT IN DISCIPLINARY ACTION.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 o ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 000-50302 TREY RESOURCES, INC. (Exact name of Registrant as specified in its charter) New Jersey 16-1633636 (State of incorporation) (IRS Employer Identification Number) 5 Regent Street Livingston, NewJersey 07039 (Address of principal executive offices) (973) 958-9555 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by checkmark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesoNo x Indicate by checkmark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes oNo x Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YesxNoo Check whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesoNo x Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition 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 filer o(Do not check if smaller reporting company) Smaller reporting company x Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Act).Yeso No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2010, based on a closing price of $.00019 was approximately $1,596,399.As of March29, 2011, the registrant had 8,053,568,518 shares of its common stock, par value $0.001, outstanding. Table of Contents TABLE OF CONTENTS PART I Page Item 1. Business 4 Item 1A. Risk Factors 8 Item 1B. Unresolved Staff Comments 13 Item 2. Properties 14 Item 3. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 PART II Item 5. Market for Common Equity and Related Stockholder Matters And Issuer Purchases ofEquity Securities 15 Item 6. Selected Financial Data 18 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 22 Item 8. Financial Statements 22 Item 9A. Controls and Procedures 22 Item 9B. Other Information PART III Item 10. Directors, Executive Officers And Corporate Governance 23 Item 11. Executive Compensation 24 Item 12. Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters 27 Item 13. Certain Relationships and Related Transactions And Director Independence 28 Item 14.

April 26, 2012 ATTORNEYS AT LAW , SUITE 3800 MILWAUKEE, WISCONSIN53202-5306 414.271.2400 TEL 414.297.4900 FAX www.foley.com Wall Street EWM Funds Trust 55 East 52nd Street 23rd Floor New York, NY10055 Ladies and Gentlemen: We have acted as counsel for you in connection with the preparation of an amendment to your Registration Statement on Form N-1A relating to the sale by you of an indefinite amount of shares of beneficial interest of Evercore Wealth Management Macro Opportunity Fund (such shares of beneficial interest being hereinafter referred to as the “Shares”), in the manner set forth in the Amended Registration Statement to which reference is made.In this connection we have examined:(a)the Amended Registration statement on Form N-1A; (b) your Declaration of Trust and By-Laws, as amended to date; (c) trustee proceedings relative to the authorization for issuance of the Shares; and (d) such other proceedings, document and records as we have deemed necessary to enable us to render this opinion. Based upon the foregoing, we are of the opinion that the shares of Stock when sold as contemplated in the Amended Registration Statement will be legally issued, fully paid and nonassessable. We hereby consent to the use of this opinion as an exhibit to the Form N-1A Registration Statement.In giving this consent, we do not admit that we are experts within the meaning of Section 11 of the Securities Act of 1933, as amended, or within the category of persons whose consent is required by Section 7 of said Act. Very truly yours, /s/ Foley & Lardner LLP Foley & Lardner LLP

Exhibit 99.1 For Immediate Release Patrick Industries, Inc. Announces Second Quarter 2016 Earnings Release and Conference Call Webcast on July 28, 2016 ELKHART, IN – July 15, 2016 – Patrick Industries, Inc. (NASDAQ: PATK), a major manufacturer and distributor of building and component products for the recreational vehicle (“RV”), manufactured housing and industrial markets, expects to release its second quarter 2016 financial results before the market opens on Thursday, July 28, 2016. Patrick Industries also expects to host a conference call on Thursday, July 28, 2016 at 10:00 a.m. Eastern Time to discuss results and other business matters. Participants on the call will be Todd Cleveland - Chief Executive Officer, Andy Nemeth - President, and Josh Boone - Chief Financial Officer. Participation in the question-and-answer session of the call will be limited to institutional investors and analysts. The dial-in number for the live conference call is (888) 771-4371. The access code is 42935600. Interested parties are invited to listen to a live webca st of the call on Patrick’s website at www.patrickind.com under “Investor Relations.” A replay of the conference call will also be available via the Company’s investor relations website. About Patrick Industries Patrick Industries, Inc. (www.patrickind.com) is a major manufacturer of component products and distributor of building products serving the recreational vehicle, manufactured housing, kitchen cabinet, office and household furniture, fixtures and commercial furnishings, marine, and other industrial markets and operates coast-to-coast through locations in 14 states. Patrick’s major manufactured products include decorative vinyl and paper laminated panels, countertops, fabricated aluminum products, wrapped profile mouldings, slide-out trim and fascia, cabinet doors and components, hardwood furniture, fiberglass bath fixtures, fiberglass and plastic component products, softwoods lumber, interior passage doors, RV painting, simulated wood and stone products, and slotwall panels and components. The Company also distributes drywall and drywall finishing products, electronics and audio systems components, wiring, electrical and plumbing products, cement siding, raw and processed lumber, FRP products, interior passage doors, roofing products, laminate and ceramic flooring, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and other miscellaneous products. Forward-Looking Statements This press release contains certain statements related to future results, our intentions, beliefs and expectations or predictions for the future, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any projections of financial performance or statements concerning expectations as to future developments should not be construed in any manner as a guarantee that such results or developments will, in fact, occur. There can be no assurance that any forward-looking statement will be realized or that actual results will not be significantly different from that set forth in such forward-looking statement. The Company does not undertake to publicly update or revise any forward-looking statements except as required by law. Factors that may affect the Company’s operations and prospects are contained in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and in the Company's Form 10-Qs for subsequent quarterly periods, which are filed with the Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. ### Contact: Julie Ann Kotowski Patrick Industries, Inc. 574-294-7511 / kotowskj@patrickind.com

      Exhibit 10.7 - Mudrick Distressed Opportunity Fund Backstop Commitment Letter       Execution Version LEE ENTERPRISES, INCORPORATED Davenport, IA 52801-1939     December 2, 2011   c/o Mudrick Capital Management, LP Backstop Commitment Letter Ladies and Gentlemen:   Lee Enterprises, Incorporated (“Lee” or the “Company”) and the Company’s direct intend to effect a restructuring (as below, collectively, the “Restructuring”) of the Company Parties’ respective obligations under:   (i) the Amended and Restated Credit Agreement, dated as of December 21, 2005 (as without limitation, by the Fourth Amendment thereto dated December 2, 2011, the “Credit Agreement”), among the Company, the lenders party thereto from time to time, Deutsche Bank Trust Company Americas, as administrative agent (the “Agent”), Deutsche Bank Securities Inc. (“DBSI”) and Suntrust Capital Markets, Inc., as joint lead arrangers, DBSI, as book running manager, Suntrust Bank, as Of Tokyo-Mitsubishi, Ltd., Chicago Branch, as co-documentation agents; and   (ii) the Note Agreement dated as of May 1, 2000 (as amended, supplemented or otherwise modified from time to time, the “Note Agreement”) among St. Louis Post-Dispatch LLC as borrower and the noteholders party thereto from time to time,   all on the terms as more fully set forth in:   (a) the Support Agreement, dated as of August 11, 2011 (including the Term Sheet referred to therein and attached thereto (the “Lee Term Sheet”), in each case as amended on the date hereof (such amendment, the “Lee SA Amendment”) and as it accordance with the terms thereof, the “Lee Support Agreement”) among the Company Parties and the Consenting Lenders referred to and defined therein, in the form attached hereto as Exhibit A1; and   (b) the Support Agreement, dated as of December 2, 2011 (including the Term Sheet referred to therein and attached thereto (the “Pulitzer Term Sheet”), in accordance with the terms thereof, the “Pulitzer Support Agreement”; and together with the Lee Support Agreement, the “Support Agreements” and each individually a “Support Agreement”), among the Company Parties, Star              meanings assigned to such terms in the Lee Support Agreement.       2   Publishing Company and the Consenting Noteholders referred to and defined therein, in the form attached hereto as Exhibit B.   In accordance with the terms of the Support Agreements, such Restructuring will be effectuated  through a prepackaged plan of reorganization for the Company Parties dated as of the date hereof (the “Plan”), with the Company Parties filing voluntary petitions (the date of such filing, the “Petition Date”) for Court for the District of Delaware (the “Bankruptcy Court” and the bankruptcy cases of the Company Parties, the “Bankruptcy Cases”).   In connection therewith, each Consenting Lender will be afforded an opportunity to convert a pro rata portion of its funded existing loans under the Credit Agreement (the “Existing Loans”), in an aggregate principal amount of up to $166,250,000 (but no less than $150,000,000 in aggregate for all Consenting Lenders (including the Backstop Parties)), into a ratable portion of (i) Second Lien Term Loans in an aggregate principal amount of up to $175,000,000 (but no less than $157,500,000 in the aggregate of all Second Lien Term Loans on the date on which the Plan and all Definitive Documentation has been consummated and become effective in accordance with the terms thereof (the “Closing Date”), ratably including original issue discount of up to approximately $8,750,000; and (ii) duly and validly issued fully paid and non-assessable Lee common stock (the “New Shares”)2 in an aggregate amount equal to 15% of all issued and outstanding common shares of Lee at the Closing Date, before giving effect to the closing.  For purposes of the foregoing, each Consenting Lender’s pro rata amount of Existing Loans shall be determined as of the date of its execution of the Lee Support Agreement, based on the amount listed in Schedule 2 to the Lee Support Agreement, subject to (x) reduction as a result of any sale, assignment or transfer of Existing Loans by such Consenting Lender thereafter but on or before the Closing Date to another Consenting Lender, and (y) increase as a result of any sale, assignment or transfer of Existing Loans by another Lender under (and as defined in) the Credit Agreement to such Consenting Lender thereafter but on or before the Closing Date.  The Company acknowledges and agrees that, as a condition to the obligations of the Backstop Party hereunder, the Second Lien Term Loans will, when issued, have a minimum aggregate outstanding principal balance (including original issue discount) of $157,500,000.   Subject to the terms, conditions and limitations set forth in this letter agreement (including the attached Schedule I and Exhibit A and Exhibit B hereto, collectively, this “Backstop Commitment Letter”), on the Closing Date, Mudrick Distressed Opportunity Fund Global, LP (the “Backstop Party” or “you”; and together with the other Initial Backstop Lenders listed in Schedule I hereto (collectively, the “Other Backstop Parties”), the “Backstop Parties”)3 hereby agrees, on a several basis (and not jointly with any Other Backstop Party), to convert as described immediately below all or a portion of its Existing Loans and, if necessary, pay Backstop Cash (as defined below) to the Company, in the aggregate amount set forth opposite “Maximum Backstop Commitment” under its name in Schedule I hereto (the “Backstop Commitment”).  Further, the Backstop Party hereby confirms and agrees that, as of the Closing Date, except to the extent of any commitment hereunder assigned as expressly permitted hereby it will own or control sufficient Existing Loans such that, after giving effect to the conversion thereof and the payment of the Backstop Cash (if any), all as provided herein, it will be able to acquire Backstop Loans and New Shares (as defined above) in an amount not less than its Backstop Commitment.  The Backstop Party agrees to fully exercise its right as a Consenting Lender under the Lee Support Agreement, as described above, to convert its pro rata portion of its Existing Loans to the extent such Existing Loans constitute                     2   New Shares will be issued pursuant to an exemption under Section 1145 of the Bankruptcy Code.      3 Each of the undersigned hereto acknowledges that the Company and each Other Backstop Party (namely (i) Monarch Master Funding Ltd, (ii) Mutual Quest Fund, (iii) Goldman Sachs Lending Partners and (iv) Blackwell Partners, LLC) are entering into a separate backstop commitment letter on substantially the same terms as set forth herein.             3   Claims of a Consenting Lender under the Lee Support Agreement (the outstanding principal amount of such pro rata portion of Existing Loans, the “Ratable Conversion Amount”) into a ratable portion of (i) Second Lien Term Loans (the “Ratable SLT Loans”) and (ii) New Shares (the “Ratable New Shares”). To the extent that any Consenting Lenders (other than the Backstop Parties) do not elect to convert their full pro rata portion of Existing Loans into Second Lien Term Loans and New Shares (such unsubscribed loans and shares, the “Remainder Loans and Shares”) in accordance with the terms of the Lee Support Agreement, or the Second Lien Term Loan Facility (such term used herein as defined in the Lee Term Sheet) is otherwise not fully utilized and subscribed for, the Backstop Party shall have the obligation to convert an additional portion of its Existing Loans into and/or pay Backstop Cash to the Company for, its ratable share of the Remainder Loans and Shares (together with the Ratable SLT Loans and Ratable New Shares, all as acquired or to be acquired by the Backstop Party, individually or collectively, the “Backstop Loans and Shares”), so that the Second Lien Term Loan Facility is fully utilized and subscribed for, subject to and in accordance with the Backstop Commitment of the Backstop Party and the respective Other Backstop Commitments (as defined below) of the Other Backstop Parties under the applicable Other Backstop Commitment Letters (as defined below), in each case as listed in Schedule I hereto or thereto. In addition to the conversion of its Existing Loans, in accordance with the terms of the Lee Support Agreement, the Backstop Party may satisfy its obligations hereunder and each Other Backstop Party may satisfy its obligations under the applicable Other Backstop Commitment Letter in respect of the Backstop Loans and Shares by paying up to $10,000,000 in the aggregate (for all Backstop Parties) in cash to the Company (the “Backstop Cash”) in consideration for such Backstop Loans and Shares.  Notwithstanding anything herein to the contrary, without the consent of the Backstop Party, the sum of the Backstop Party’s Ratable Conversion Amount, the outstanding principal amount of the additional portion of its Existing Loans converted by the Backstop Party pursuant to the final sentence of the immediately preceding paragraph and the Backstop Cash, if any, paid by the Backstop Party (such sums, collectively, the “Conversion Amount”) shall not exceed the Backstop Party’s Backstop Commitment. It is understood and agreed that this Backstop Commitment Letter shall not constitute or give rise to any obligation on the part of the Backstop Party or any of its affiliates to provide any financing, except as expressly provided herein.   We agree promptly to prepare and provide to the Backstop Party all information reasonably requested by any of the Backstop Parties with respect to any of the Company Parties.  We hereby represent and covenant that (i) all information contained in the Company’s SEC filings, (ii) all information provided by the Company to the Agent for posting on the “public” lender group Intralinks site and (iii) all information (other than information of a general economic nature) relating to the Restructuring that has been or is hereafter provided to the Backstop Party in writing by us or any of our legal or financial advisors (all “Information”) is or will be, when furnished and taken as a whole, complete and correct in all material respects and does not or will not, when furnished and statements are made.  Substantially contemporaneously with the effectiveness of this Backstop Commitment Letter, the Lee SA Amendment and the Pulitzer Support Agreement, the Company will make public disclosure of the material terms of the Restructuring (including as to any modification thereof since September 8, 2011), and in the event that no agreement has been reached in relation to a restructuring of the Company’s funded debt, the Company will make public disclosure of such fact if and when the Company reaches such a conclusion (but in either event, the Company expects to make a public announcement no later than December 16, 2011).  In connection with the Second Lien Term Loan Facility, the Backstop Party will be entitled to use and rely upon the Information without         4 On the basis of the representations and warranties contained herein, but subject to the conditions set forth herein, on the Closing Date (a) the Company agrees to, and to cause the applicable Company Parties to, enter into the Definitive Documentation described under (and as defined in) the Support Agreements (which Definitive Documentation shall be in the form included as exhibits to the Plan as of the date hereof, with any subsequent modifications to such Definitive Documentation being consistent with the terms of the Support Agreements and reasonably satisfactory to the Company and the Backstop Party) and issue and deliver the Backstop Loans and Shares to the Backstop Party on the Closing Date, (b) the Backstop Party agrees (subject to prior or substantially concurrent receipt of the Backstop Loans and Shares) to convert Existing Loans into, and, to the extent necessary, pay Backstop Cash for, the Backstop Loans and Shares, (c) payment of  Backstop Cash, if any, will be made by the Backstop Party to an account or accounts designated by the Company no later than 11:00 a.m. New York City time (subject to prior or substantially concurrent receipt of the Backstop Loans and Shares), (d) delivery of the Backstop Shares will be made by the Company to the account of the Backstop Party (or to such other accounts as it may designate) no later than 11:00 a.m. New York City time (subject to prior or substantially concurrent receipt of the Backstop Cash, if any, described in preceding clause (c)), (e) the New Shares will be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Company, and (f) the documents to be delivered by or on behalf of the parties hereto will be delivered at the offices of Sidley Austin LLP, One South Dearborn, Chicago, Illinois 60603.   The Company hereby agrees to provide to the Backstop Party, by electronic transmission, no later than three (3) business days in advance of the Closing Date, a notice and certification by an executive officer of the Company (the “Conversion Notice”) of (i) the Conversion Amount and (ii) the amount of Backstop Loans and number of Backstop Shares that the Backstop Party shall receive on the Closing Date.  In the event the Backstop Party intends to pay to the Company any Backstop Cash in respect of the Conversion Amount, it hereby agrees to provide to the Company, within two (2) business days following its receipt of the Conversion Notice, written notice and confirmation of the amount of such Backstop Cash (the “Conversion Payment Notice”).   As consideration for the commitments of the Backstop Party hereunder and in consideration for the Backstop Party’s agreement to extend the maturity of those Existing Loans held by the Backstop Party that are not exchanged for Second Lien Term Loans (and in lieu of any Consent Fee otherwise payable to the Backstop Party under the Lee Support Agreement) and on the basis of the representations and warranties by the Backstop Party herein contained, we agree, jointly and severally, to pay or cause to be paid to the Backstop Party, nonrefundable cash fees of 1.00% of the aggregate principal amount of Existing Loans held by the Backstop Party that are exchanged for Extended Loans, such amount payable on the Closing Date (the “Backstop Fees”).   The obligations of the Backstop Party to convert Existing Loans and, to the extent applicable, pay Backstop Cash, in the Conversion Amount pursuant to this Backstop Commitment Letter are subject to: (a) the Backstop Party not having discovered or otherwise becoming aware of any information not previously disclosed to or known by the Backstop Party (including pursuant to public filings by the Company with the U.S. Securities and Exchange Commission (“SEC”) prior to the date hereof) that it reasonably believes to be adverse and it or its advisors (including pursuant to such public filings) prior to the date hereof, of the business, operations, assets, properties or financial condition of the Company and its direct and indirect subsidiaries, taken as a whole; (b) there not having occurred any event (including, without limitation, newly initiated litigation), development, change or condition not previously disclosed to or known to the Backstop Party (including pursuant to public filings by the Company with the U.S. Securities and Exchange Commission prior to the date hereof) that has had or could be reasonably expected to have a material adverse effect on the business, operations, assets, property, or financial condition of the         5 Company and its direct and indirect subsidiaries, taken as a whole, since June 26, 2011 other than those which customarily occur as a result of events leading up to and following the commencement of a proceeding under chapter 11 of the Bankruptcy Code; (c) the negotiation, execution and delivery of all Definitive Documentation (which shall be in full force and effect on the Closing Date, substantially concurrently with the consummation of the transactions contemplated by this Backstop Commitment Letter, and no Company Party shall be in default thereunder and all conditions therein shall have been satisfied in full or waived in accordance with the terms thereof (it being acknowledged that the Definitive Documentation for the Second Lien Term Loan Facility will require the consent of all of the Backstop Parties in respect of any waiver of any condition thereof prior to the effectiveness thereof)), the terms of which shall be consistent with the Support Agreements and the Plan and otherwise reasonably satisfactory to the Backstop Party (including its counsel), and notwithstanding anything to the contrary in the Lee Support Agreement (including without limitation Section 7.12 thereof), the Pulitzer Support Agreement or otherwise, (I) the Definitive Documentation for the Second Lien Term Loan Facility (including, without limitation, the New Lee Intercreditor Agreement and the New PD LLC Intercreditor Agreement (each term as defined in the Plan)) shall be in either (x) the forms included as exhibits to the Plan as of the date hereof, with only such changes thereto following the date hereof as may be agreed by the Backstop Party in its sole discretion (or, solely with respect to any changes the sole purpose of which is to correct scrivener’s errors discovered after the date hereof that otherwise make the relevant language unintentionally materially inconsistent with the express terms of the Support Agreements, as may be agreed by the Backstop Party in its reasonable discretion) or (y) in the case of any such Definitive Documentation (including, without limitation, any ancillary or security documents) not included as exhibits to the Plan as of the date hereof (or any provisions of the Definitive Documentation described in preceding clause (x) that are expressly noted to be subject to subsequent modifications (including, without limitation, on the basis of disclosure schedules or similar information provided by the Company Parties after the date hereof)), in form and substance reasonably satisfactory to the Company and the Backstop Party and (II) all other Definitive Documentation shall be consistent with the Support Agreements and, to the extent included as exhibits to the Plan as of the date hereof, shall be in the form included in such exhibits to the Plan with only such changes, following the date hereof, as are in form and substance consistent with the Support Agreements and reasonably satisfactory to the Company and the Backstop Party; (d) the Company Parties’ compliance with the terms and conditions of this Backstop Commitment Letter in all material respects; (e) (I) the representations and warranties of the Company Parties in this Backstop Commitment Letter and the Support Agreements shall be true and correct in all delivered to the Backstop Party a certificate to such effect, dated as of the Closing Date, signed on behalf of the Company Parties by an officer of the Company, (II) the Backstop Party shall have received the Conversion Notice certifying as to the (x) Conversion Amount and (y) the amount of Backstop Loans and number of Backstop Shares, (III) the Effective Date of the Lee Support Agreement and the Effective Date of (and as defined in) the Pulitzer Support Agreement shall have occurred and the Backstop Party shall have received, in U.S. Dollars, (x) timely payment of all of the Backstop Fees, and (y) to the extent documentation therefor shall have been provided to the Company at least one Business Day prior to the Closing Date, the Transaction Expenses (as defined below), and (IV) the absence of (x) the payment of any fees (other than any Lender under (and as defined in) the Credit Agreement (other than the Agent) in excess of the amounts disclosed to the Backstop Party on or prior to the date hereof or the amounts expressly set forth in the Support Agreements and (y) any amendment, modification or waiver to the Credit Agreement or Note Agreement after the date hereof that is not acceptable to the Backstop Party; (f) the (x) appointment of an administrative agent and a collateral agent for the Second Lien Lenders under the Second Lien Term Loan Facility, in each case reasonably acceptable to the Backstop Parties, (y) execution and delivery by the Company and such agent(s) of a fee agreement relating to the Second Lien Term Loan Facility, and (z) payment by or on behalf of the Company of all agency or other fees of each such agent(s) (in such capacity) due on or prior to the Closing Date; (g) the Company having delivered to the Backstop Party true and complete copies of all         6 Definitive Documentation (other than any fee letters or engagement letters to the extent such disclosure is expressly prohibited by the confidentiality provisions thereof) and all other information reasonably requested by the Backstop Party which relates, directly or indirectly, to the transactions contemplated by the Support Agreements; (h) the closing date under the Revolving Credit Facility shall have occurred and all conditions precedent to the availability of Revolving Loans thereunder shall have been satisfied and the full amount thereof shall (to the extent not borrowed or utilized for outstanding letters of credit thereunder) be available for credit extensions, and such availability (when aggregated with unrestricted cash on hand of the Company) shall not on the Closing Date be less than $26.0 million, and notwithstanding any provision elsewhere to the contrary, the aggregate commitments under the Revolving Credit Facility shall not be less than $40.0 million; (i) after giving effect to the closing of the Restructuring on the Closing Date, no default or event of default under the First Lien Credit Facility, the Second Lien Term Loan Facility or the New PD LLC Notes or any other material indebtedness of the Company Parties shall have occurred and be continuing; (j) no judgment, injunction, decree or other order issued by a court transactions contemplated by the Restructuring; (k) concurrently with or following the commencement of the Bankruptcy Cases, no order shall have been entered vacating the automatic stay so as to permit a secured party(s) to enforce its liens against a substantial portion of the Company Parties’ assets; (l) after giving effect to the closing of the Restructuring on the Closing Date, there shall be no outstanding indebtedness for borrowed money of the Company or any of its subsidiaries except the First Lien Credit Facility, the Second Lien Term Loan Facility, the New PD LLC Notes and other indebtedness to the extent expressly contemplated and permitted in Annex II to Exhibit A to the Lee Term Sheet; (m) the Restructuring and all other transactions contemplated by the Support Agreements and the Plan shall have been consummated or shall be consummated substantially concurrently with the consummation of the transactions contemplated by this Backstop Commitment Letter; (n) the Company shall have awarded to each of Deutsche Bank Securities Inc. and Goldman Sachs Bank USA Joint Lead Arranger and Joint Book Running Manager titles and roles under the Second Lien Term Loan Facility, and no other titles shall have been awarded in connection with the Second Lien Term Loan Facility without the prior consent of the Backstop Parties; (o) following commencement of the Bankruptcy Cases, (i) the Company shall have filed the Plan and the Disclosure Statement in forms agreed prior to the date hereof (and all references herein to such documents shall be construed as being to such documents in such forms), which forms shall be reasonably consistent in all material respects with the Support Agreements and otherwise reasonably satisfactory to the Backstop Party, and (ii) the Confirmation Order shall have been entered by the Bankruptcy Court and such order shall not have been appealed within fourteen (14) calendar days following and there shall not have been entered by any court of competent jurisdiction any reversal, modification or vacatur, in whole or in part, of the Confirmation Order; (p) no amendments, consents, waivers or modifications to the Lee Support Agreement or the Pulitzer Support Agreement shall have been made following the date hereof without the prior written consent of the Backstop Party; (r) no amendments, consents, waivers or modifications shall have been made to the Plan following the date hereof without the prior written consent of the Backstop Party, except for any non-material modifications that may be approved by the Bankruptcy Court pursuant to Rule 3019(a) of the Federal Rules of Bankruptcy Procedure that (i) are consistent with the Support Agreements, (ii) do not affect in any way the treatment or terms of the Second Lien Term Loans or the New Shares, and (iii) have no economic impact on the Company Parties and the reorganized Company Parties; and (s) each of the Conditions to Effectiveness (as defined below) shall have been satisfied on or prior to the date hereof (all of the foregoing conditions (a) through (s), collectively, the “Backstop Party Conditions”).   Notwithstanding anything to the contrary herein, the obligations of the Backstop Party under this Backstop Commitment Letter shall only become effective upon the satisfaction of each of the following conditions: (a) each of the Company Parties and the Backstop Party executing and delivering signature         7 pages to this Backstop Commitment Letter;  (b) each of the Pulitzer Support Agreement and the Lee SA Amendment, each in form and substance reasonably satisfactory to the Backstop Party, having become effective in accordance with their respective terms and their, together with the Lee Support Agreement as amended pursuant to the Lee SA Amendment, being in full force and effect; (c) an amendment to the Credit Agreement in the form attached as Appendix 4 to the Lee SA Amendment having become effective in accordance with its terms; (d) the Plan and all Definitive Documentation included as exhibits to the Plan (including, without limitation, the New First Lien Credit Agreement, the New Second Lien Term Loan Agreement, the New PD LLC Notes Agreement, the New Pulitzer Guaranty Agreement, the New Lee Intercreditor Agreement, the New PD LLC Intercreditor Agreement (each as defined in the Plan), and all collateral and ancillary documents related thereto) being in form and substance reasonably satisfactory to the Backstop Party; (e) the Other Backstop Parties having executed the Other Backstop Commitment Letters and all of the Other Backstop Commitment Letters being in full force and effect; (f) the Revolver Commitment Letter having been executed and delivered and being in full force and effect and, notwithstanding anything to the contrary contained in the Support Agreements or the Lee Term Sheet, providing for commitments in the aggregate amount of $40,000,000; and (g) the Backstop Party’s counsel receiving the payment of all reasonable fees and expenses incurred by such counsel through the date hereof (all of the foregoing conditions (a) through (g), collectively, the “Conditions to Effectiveness”).   We agree, jointly and severally, (a) to indemnify and hold harmless the Backstop Party and its officers, directors, employees, affiliates, advisors, agents and controlling persons (the “Indemnified Parties”) from and against any and all losses, claims, damages and liabilities to which any such Indemnified Party may become subject to arising out of or in connection with this Backstop Commitment Letter, the Support Agreements, the Second Lien Term Loan Facility, the use of any proceeds of Second Lien Term Loans, or any claim, litigation, investigation or proceeding relating to any of the foregoing (any of the foregoing, a “Proceeding”), regardless of whether any of such Indemnified Parties is a party thereto or whether a Proceeding is initiated by or on behalf of a third party or us or any of our equity holders, affiliates, creditors or any similar person, and to reimburse each Indemnified Party for any reasonable and documented legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnification will not, as to any as the case may be, from time to time all reasonable out-of-pocket expenses incurred by the Backstop Party or its affiliates in connection with the transactions contemplated by this Backstop Commitment Letter and any related documentation (collectively, “Transaction Expenses”), including all reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, counsel to certain Backstop Parties, and up to one local counsel in any relevant jurisdiction).  No Backstop Party employs the same standard of care to protect the confidentiality of the Company’s information as it employs to protect its own information.  Neither the Company nor the Backstop Party shall be liable for any special, indirect, punitive or consequential damages in connection with its activities related to this Backstop Commitment Letter or the Second Lien Term Loan Facility except to the extent such damages would otherwise be subject to indemnity hereunder.   between any of the Company Parties, on the one hand, and the Backstop Party, on the other hand, is intended to be or has been created in respect of the Second Lien Term Loan Facility or any of the transactions contemplated by this Backstop Commitment Letter, irrespective of whether the Backstop Party has advised or is advising any of the Company Parties on other matters, (b) the Backstop Party, on the one hand, and the Company Parties, on the other hand, have an arms-length business relationship that does not directly or indirectly         8 duty on the part of the Backstop Party, (c) each of the Company Parties is terms, risks and conditions of the Second Lien Term Loan Facility and the other transactions contemplated by this Backstop Commitment Letter, and have sought independent legal advice from counsel of the Company Parties’ choice with respect to the foregoing, (d) the Company Parties have been advised that the Backstop Party is engaged in a broad range of transactions that may involve interests that differ from the Company Parties’ interests and that the Backstop Party has no obligation to disclose such interests and transactions to the Company Parties by virtue of any fiduciary, advisory or agency relationship and (e) the Company Parties waive, to the fullest extent permitted by law, any claims any of them may have against the Backstop Party for breach of fiduciary duty, alleged breach of fiduciary duty or other implied duty and agree that the Backstop Party shall have no liability (whether direct or indirect) to any of the Company Parties in respect of such a fiduciary or other implied duty claim or to any person asserting a fiduciary or other implied duty claim on behalf of or in right of any of the Company Parties, including their respective stockholders, employees or creditors.  Additionally, we acknowledge and agree that the Backstop Party is not advising any of the Company Parties as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  The Company Parties shall consult with their own advisors independent investigation and appraisal of the Second Lien Term Loan Facility and the transactions contemplated hereby, and the Backstop Party shall have no responsibility or liability to any Company Party with respect thereto.   We acknowledge that the Backstop Party and its affiliates may be providing debt conflicting interests regarding the Second Lien Term Loan Facility or the transactions described herein and otherwise.  None of the Backstop Party or any of its affiliates will use confidential information obtained from the Company Parties by virtue of the transactions contemplated by this Backstop Commitment the performance by the Backstop Party or any of its affiliates of services for other companies, and the Backstop Party or any of its affiliates will not neither the Backstop Party nor any of its affiliates has any obligation to use in connection with the Second Lien Term Loan Facility or the transactions contemplated by this Backstop Commitment Letter, or to furnish to the Company or its subsidiaries or representatives, confidential information obtained by the Backstop Party or any of its affiliates from any other company or person.   The obligations of the Company to (i) enter into the Definitive Documentation, including the Second Lien Term Loan Facility, and to issue the New Shares and (ii) deliver the Backstop Shares to the Backstop Party are subject to the satisfaction of the following conditions precedent:  (a) no judgment, injunction, decree or other order issued by a court of competent jurisdiction or other competent governmental or regulatory authority shall prohibit the substantial consummation of the material transactions contemplated by the Restructuring, (b) no action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued in each case by any federal, state or foreign governmental or regulatory authority that, as of the Closing Date, prohibits the Company from issuing the New Shares, and no issued that, as of the Closing Date, prohibits the delivery of the New Shares, (c) the Effective Date of the Lee Support Agreement and the Effective Date of (and as defined in) the Pulitzer Support Agreement shall have occurred and no Termination Date under (and as defined in) either Support Agreement with respect to the Company Parties shall have occurred which shall have caused the termination of either Support Agreement in its entirety, (d) the Backstop Party shall not have breached its express obligation hereunder in respect of its commitment to convert its Existing Loans (subject to the terms and conditions of such commitment set forth in this Backstop Commitment Letter) in any material respect, (e) if applicable, the         9 Company shall have received the Conversion Payment Notice certifying as to the amount of Backstop Cash the Backstop Party will pay to the Company in respect of the Conversion Amount, (f) each Other Backstop Party shall have fulfilled (or shall substantially concurrently fulfill) its obligation in respect of its commitment to convert its Existing Loans (each, an “Other Backstop Commitment”) expressly set forth in (and subject to the terms and conditions of such commitment set forth in) the separate backstop commitment letter between such Other Backstop Party and the Company of even date herewith on substantially the same terms as set forth herein and reasonably acceptable to the Backstop Party (each, an “Other Backstop Commitment Letter”), (g) the Backstop Party shall have paid the Backstop Cash, if any, to an account or accounts designated to Backstop Party by the Company prior to the Closing Date, and (h) following commencement of the Bankruptcy Cases, the Confirmation Order shall have been entered by the Bankruptcy Court and such order shall not have been appealed within fourteen (14) calendar days following entry or, if such order is appealed, shall not have been stayed pending appeal, and there shall not have been entered by any court of competent jurisdiction any reversal, modification or vacatur, in whole or in part, of the Confirmation Order (such conditions set forth in clauses (a), (b), (c), (f), (g) and (h) of this sentence, the “Specified Lee Conditions”).   The Company represents and warrants to the Backstop Party as set forth below, in expressly limited to a specified date below):  (a) the Company and each of its in good standing under the laws of their respective jurisdictions of incorporation, with the requisite power and authority to own its properties and conduct its business as currently conducted, (b) the Company Parties have the Backstop Commitment Letter and to perform their obligations hereunder, and have taken, or (in the case of performance only), prior to the Closing Date, will have taken, all necessary corporate action required for the due authorization, execution, delivery and performance by them of this Backstop Commitment Letter, including entry into the Definitive Documentation and issuance of the New Shares, (c) this Backstop Commitment Letter has been duly and validly executed and delivered by the Company Parties and constitutes the valid and binding obligation of the Company Parties, enforceable against the Company Parties in accordance with its terms, (d) on the Closing Date, the issuance of the New Shares, including the Backstop Shares, will be duly and validly authorized and, when the Backstop Shares are issued and delivered against conversion of the Backstop Parties’ Existing Loans and, if necessary, payment of Backstop Cash in the Conversion Amount hereunder, will be duly and validly issued, fully paid and non-assessable.   hereto, all representations and warranties made in this Backstop Commitment Letter will survive the execution and delivery of this Backstop Commitment Letter and the closing of the transactions contemplated by this Backstop Commitment Letter.   Neither this Backstop Commitment Letter nor any of the rights, interests or obligations under this Backstop Commitment Letter will be assigned by either of consent of the other party.  Notwithstanding the previous sentence, this Backstop Commitment Letter, or any of the Backstop Party’s rights, interests or obligations hereunder, may be assigned, delegated or transferred, in whole or in part, by the Backstop Party to (i) any Affiliate (as defined in Rule 12b-2 under the Exchange Act) of the Backstop Party over which the Backstop Party or any of or (ii) any Consenting Lender approved by the Company (such approval not to be unreasonably withheld or delayed); provided that any such assignee assumes all such assigned, delegated and transferred rights, interests and obligations of that Backstop Party hereunder and agrees in writing to be bound by the terms of this Backstop Commitment Letter in the same manner as the Backstop Party to the extent of its rights, interests and obligations so         10 assignment to an Affiliate will relieve the Backstop Party of its obligations hereunder if such Affiliate assignee fails to perform such obligations but the Backstop Party shall have no such obligations in respect of permitted assignees which are not Affiliates.   This Backstop Commitment Letter (including the documents and instruments referred to in this Backstop Commitment Letter) is not intended to and does not confer upon any person, other than the parties hereto (and Indemnified Parties) and their successors and permitted assigns, any rights or remedies under this Backstop Commitment Letter. This Backstop Commitment Letter may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the parties and delivered to the other party (including via facsimile or sign the same counterpart.  THIS BACKSTOP COMMITMENT LETTER WILL BE GOVERNED BY, REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF EXCEPT IN RELATION TO MATTERS CONCERNING THE ISSUANCE OF COMPANY STOCK, IN WHICH CASE THE LAWS OF THE STATE OF DELAWARE SHALL APPLY.   RELATED TO OR ARISING OUT OF THIS BACKSTOP COMMITMENT LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER.   City, and any appellate court from any thereof (or, in the event the Bankruptcy Cases are commenced, the Bankruptcy Court, or any other court having jurisdiction over the Bankruptcy Cases from time to time), in any action or proceeding arising out of or relating to this Backstop Commitment Letter or the may be heard and determined in New York State or (x) to the extent permitted by law, in such federal court or (y) if the Bankruptcy Cases are commenced, in the Bankruptcy Court or any other court having jurisdiction over the Bankruptcy Cases from time to time), (b) waives, to the fullest extent it may legally and this Backstop Commitment Letter or the transactions contemplated hereby in any New York State or federal court and (c) waives, to the fullest extent permitted   This Backstop Commitment Letter and its terms and substance and any other information and work product provided by the Backstop Party or any of its affiliates, employees, officers, attorneys or other professional advisors in connection herewith or therewith shall be for the Company Parties’ confidential use only and shall not be disclosed, directly or indirectly, by any Company Party to any other person other than to the Company Parties’ controlling persons, directors, employees, officers, accountants, attorneys and professional advisors directly involved in the consideration of this matter, provided that nothing herein shall prevent the Company Parties from disclosing such demand of any regulatory agency or authority, (c) in the Company’s SEC filings, to the extent the Company concludes that it is appropriate to make such disclosure (subject to redaction (to the extent permitted under applicable law) of all information in Schedule I hereto), (d) to the United States Trustee either prior to or following the commencement of the Bankruptcy Cases, or (e) otherwise as required by law. The restrictions contained in the preceding sentence shall apply both before and after this Backstop Commitment Letter has been executed by the         11 Backstop Party.  The Backstop Party agrees, and agrees to cause its respective affiliates, employees, officers, attorneys and other professional advisors, to maintain all non-public information regarding the Company Parties as confidential in accordance with the confidentiality provisions set forth in the Credit Agreement.   jurisdiction and waiver of jury trial provisions contained herein shall remain in full force and effect regardless of whether the Closing Date occurs and the Definitive Documentation is executed and delivered and notwithstanding the termination of this Backstop Commitment Letter, provided that this Backstop Commitment Letter shall in all other respects be superseded by the Definitive Documentation in respect of the Second Lien Term Loan Facility upon the effectiveness thereof.   All notices and other communications in connection with this Backstop Commitment Letter will be in writing and will be deemed given (and will be deemed to have be specified by like notice): (a) if to the Backstop Party to:  Mudrick Distressed Opportunity Fund Global, LP, c/o Mudrick Capital Management, LP, 477 Madison Avenue, 12th Floor, New York, NY  10022, Attention: Jason Mudrick, Fax: (646) 747-9540, with a copy to: Katten Muchin Rosenman LLP, 575 Madison Avenue /, New York, NY 10022-2585, Attention: Noah S. Heller, Fax: (212) 940-6400; (b) if to the Company, to: Lee Enterprises, Incorporated, 201 N. Harrison Street, Suite 600 Davenport, Iowa 52801, Attention: General Counsel, Fax: 563-327-2600, with copies to: Sidley Austin LLP, One South Dearborn Chicago, Illinois 60603, Attention: Larry J. Nyhan and Michael L. Gold, Fax: 312-853-7036. This Backstop Commitment Letter (including the agreements attached as exhibits to and the documents and instruments referred to in this Backstop Commitment Letter) constitutes the entire agreement of the parties and supersedes all prior parties with respect to the subject matter of this Backstop Commitment Letter, heretofore executed among the parties will continue in full force and effect in accordance with their terms.  Furthermore, this Backstop Commitment Letter may and conditions of this Backstop Commitment Letter may be waived, only by a any right, power or privilege pursuant to this Backstop Commitment Letter will right, power or privilege pursuant to this Backstop Commitment Letter, nor will Backstop Commitment Letter, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Backstop Commitment Letter.  The rights and remedies provided pursuant to this Backstop Commitment Letter are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.   It is acknowledged and agreed by the parties hereto that, any (i) breach by any Company Party of the terms of this Backstop Commitment Letter, or (ii) breach of the Backstop Party’s express obligation to exchange its Existing Loans in accordance with the terms of, and subject to the satisfaction in full of all the conditions referred to in, this Backstop Commitment Letter may give rise to irreparable harm for which money damages may not be an adequate remedy, and, accordingly, in addition to any other remedies, it may be appropriate for the non-breaching party in such circumstances (but in the case of such breach by the Backstop Party, only to the extent all other conditions to the Restructuring have been satisfied in full and it is solely the Backstop Party’s breach that is preventing or materially delaying the         12 occurrence of the Closing Date) to enforce the terms of this Backstop Commitment Letter by a decree of specific performance.   The Backstop Party hereby notifies the Company Parties that pursuant to the law October 26, 2001)) (the “Patriot Act”), it may be required to obtain, verify and record information that identifies the Company Parties, which information may include the name and address of the Company Parties, and other information that will allow the Backstop Party to identify the Company Parties in accordance of the Patriot Act.   acceptance of the terms of this Backstop Commitment Letter by executing and returning this Backstop Commitment Letter to us not later than 5:00 p.m., New York City time, on December 2, 2011.  Unless the Backstop Party, in its sole discretion, agrees to an extension, the commitment of and all other agreements of the Backstop Party hereunder shall automatically terminate:  (a) in the event that the Closing Date does not occur on or before March 11, 2012; or (b) upon (i) automatic termination of either Support Agreement, (ii) termination of the (x) Lee Support Agreement by the Required Consenting Lenders or the (y) Pulitzer Support Agreement by the Required Consenting Noteholders (as defined therein), (iii) the termination by the Company of the Backstop Party as a party to the Lee Support Agreement pursuant to the final sentence of Section 7.12 thereof, or (iv) the occurrence of (x) a Termination Date under (and as defined in) the Lee Support Agreement) or (y) a Termination Date under (and as defined in) the Pulitzer Support Agreement; or (c) immediately following the Closing Date.  In addition, the Backstop Party may by written notice to the Company terminate this Backstop Commitment Letter at any time (i) upon the occurrence and continuance of a Termination Event (x) under the Lee Support Agreement other than under subsections 2.1(c)(ii), 2.1(c)(v), 2.1(c)(xi) or 2.1(c)(xii) thereof or (y) under (and as defined in) the Pulitzer Support Agreement other than under subsections 2.1(vii), 2.1(x), 2.1(xvi) or 2.1(xvii) thereof, (ii) upon any Company Party seeking to terminate this Backstop Commitment Letter in reliance upon the non-satisfaction of any of the Specified Lee Conditions for any purpose hereunder, (iii) upon the failure, inability or refusal of the Company to satisfy any of the Backstop Party Conditions, (iv) upon the effectiveness of any amendment, supplement or other modification of, or waiver or forbearance under, either Support Agreement (including, without limitation, the Lee Term Sheet or the Pulitzer Term Sheet) relating to the terms or conditions of the Second Lien Term Loan Facility (including the New Lee Intercreditor Agreement and the New PD LLC Intercreditor Agreement (each term as defined in the Plan)), in each case (a) prior to the effectiveness of the Second Lien Term Loan Facility and (b) without the prior consent of the Backstop Party, (v) upon any person other than the Backstop Parties receiving an allocation of Second Lien Term Loans in excess of such other person’s pro rata portion of the Second Lien Term Loans as described in the Lee Support Agreement, whether pursuant to any agreement by or with the Company, pursuant to any court order or otherwise unless such excess allocation has first been offered to, and declined by, the Backstop Party, (vi) upon the Backstop Party being advised by the Company that the aggregate allocation of Second Lien Term Loans to such Backstop Party will be (or otherwise receiving such an allocation which is) less than such Backstop Party’s Minimum Allocation set forth on Schedule I hereto, or (vii) upon the failure of the Company to (i) seek approval by the Bankruptcy Court of this Backstop Commitment Letter within fifteen calendar days following the Petition Date or (ii) obtain the Bankruptcy Court’s approval of this Backstop Commitment Letter on or prior to the effective date of the Plan.  The Company may terminate this Backstop Commitment Letter if the board of directors of the Company determines in good faith based on the advice of outside counsel that proceeding with the transactions contemplated hereby will, or is reasonably likely to, result in a breach of such board’s fiduciary obligations; provided, that if within 180 days subsequent to such a decision the board of directors authorizes the Company to proceed with an alternative transaction that is substantially similar to the Restructuring but which alternative transaction utilizes institutions other than each of the Backstop Parties for the junior capital in such Restructuring, then the Company shall be obligated to pay to each       13 Backstop Party that does not provide junior capital in such alternative transaction a nonrefundable cash fee in an amount equal to 1.50% of such Backstop Party’s Backstop Commitment hereunder, which nonrefundable cash fee shall be payable upon closing of the alternative transaction in full and complete satisfaction of any claim the Backstop Party may have hereunder. Signature Pages Follow             Very truly yours,           LEE ENTERPRISES, INCORPORATED       [cschmidt.jpg]       By:   Name: Carl G. Schmidt   Title: Chief Financial Officer           15 written above by:       [murdrick.jpg] Backstop Commitment Letter       15 EXHIBIT A  (Lee Support Agreement)       Exhibit 10.2 hereto for Exhibit A (Lee Support Agreement).           EXHIBIT B (Pulitzer Support Agreement)     See Exhibit 10.1 hereto for Exhibit B (Pulitzer Support Agreement).

  Exhibit 10.1 FOURTH AMENDMENT TO LEASE (CALABASAS TECH CENTER)      THIS FOURTH AMENDMENT TO LEASE (“Fourth Amendment”) is made and entered into as of the 24th day of May, 2005, by and between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership (“Landlord”) and TEKELEC, a      A. State Street Bank and Trust Company of California, N.A., not individually but solely as an Ancillary Trustee for State Street Bank and Trust Company, a Massachusetts banking corporation, not individually but solely as trustee for the AT&T Master Pension Trust (“Original Landlord”) and Tenant entered into that certain Lease and Addendum dated as of February 18, 1988 (collectively, the “Original Lease”) as amended by that certain First Amendment to Lease dated as of November 29, 1991, by and between Original Landlord and Tenant (“First Amendment”), by that certain Second Amendment to Industrial Lease dated as of November 18, 1994, by and between Calabasas Tech Center, Inc., a Delaware corporation (“CTC, Inc.”), as successor to Original Landlord, and Tenant (“Second Amendment”), and by that certain Third Amendment to Lease dated as of August 1, 2000, by and between Landlord, as successor to CTC, Inc., and Tenant (“Third Amendment”), whereby Tenant leased certain space (the “Existing Premises”) located in those certain buildings located and addressed at 26580, 26586, 26600 and 26604 Agoura Road, Calabasas, California (collectively, “Calabasas Tech Center”). The Original Lease, as amended by the First Amendment, the Second Amendment and the Third Amendment, may be referred to herein as the “Lease.”      B. By this Fourth Amendment, Landlord and Tenant desire to reduce the Existing Premises and to otherwise modify the Lease as provided herein.      1. Reduction of the Existing Premises. That certain space outlined on the floor plan attached hereto as Exhibit “A” and made a part hereof and located on the second (2nd) floor in the building located and addressed at 26580 Agoura Road, Calabasas, California (the “Building”), may be referred to herein as the “Extension Space.” Landlord and Tenant hereby stipulate that the Extension Space contains a total of 14,879 rentable square feet. The “Extension Term” (as     that term is defined in Section 2 below) shall commence as of June 1, 2005 (“Extension Commencement Date”), and Tenant shall pay its first installment of “Fixed Minimum Monthly Rent” (as that term is defined in Section 2 below) for the Extension Term on or before the Extension Commencement Date. Notwithstanding the foregoing, Tenant shall not be obligated to surrender and deliver exclusive possession of all portions of the Existing Premises other than the Extension Space (the “Reduction Space”) to Landlord in accordance with Section 6.2(C) of the Original Lease until June 15, 2005, and during the entire “Extension Term” (as that term is defined in Section 2 below), Tenant shall be entitled to: (i) use the internal staircase between the first and second floors of the Building without cost or charge for ingress and egress to the Extension Space; (ii) use the mailroom on the first floor and maintain a receptionist at the current receptionist’s desk location in the first floor common lobby (provided that such right to use the mailroom and maintain such receptionist shall terminate within thirty (30) days of Landlord’s written notice to Tenant that Landlord has leased all or a portion of the ground floor of the Building); and (iii) continue the operation of its existing electronic security and surveillance system until Landlord notifies Tenant that Landlord has leased all or a portion of the first floor of the Building and within thirty (30) days after Tenant’s receipt of such notice, Tenant may relocate and modify such security system in accordance with plans and specifications reasonably approved by Landlord so as not to interfere with such new tenant’s construction or occupancy of its premises. Accordingly, effective upon the Extension Commencement Date, the Existing Premises shall be decreased so that the only space then leased by Tenant from Landlord at Calabasas Tech Center shall be the Extension Space. Tenant represents and warrants to Landlord that (a) Tenant has interest in the Reduction Space; and (c) Tenant has the full right, legal power and actual authority to enter into this Fourth Amendment without the consent of any person, firm or entity. Tenant further represents and warrants to Landlord that as of the date hereof there are no, and as of the Extension Commencement Date, there shall not be any, mechanics’ liens or other liens encumbering all or any portion of the Reduction Space by virtue of any act or omission on the part of Tenant, its contractors, agents, employees, successors or assigns.      2. Term and Fixed Minimum Monthly Rent for the Extension Space. The Term for Tenant’s lease of the Extension Space (“Extension Term”) shall commence on the Extension Commencement Date and shall expire on December 31, 2005. During the Extension Term, Tenant shall pay in accordance with the provisions of this Section 2, Fixed Minimum Monthly Rent for the Extension Space as follows:       Period   Fixed Minimum Monthly Rent       Extension Term   $25,000.00      Notwithstanding anything to the contrary contained in the Lease, Tenant shall have no option to further extend the Extension Term, except that Tenant shall be entitled to hold over in the original Extension Space (but not the “Relocation Space,” as that term is defined in Section 8 below), on a month-to-month basis terminable by either party upon thirty (30) days’ prior written notice, with Fixed Minimum Monthly Rent in the amount set forth in this Section 2 above, together with Tenant’s prorata share of “Operating Expenses” (as that term is defined in Section 3 below), calculated as set forth in Section 3 below. The parties acknowledge that pursuant to the -2-   immediately preceding sentence, Landlord may notify Tenant on or before December 1, 2005 that Landlord elects to terminate Tenant’s lease of the Extension Space as of December 31, 2005, in which case Tenant shall have no right to so hold over. Landlord and Tenant acknowledge that the Fixed Minimum Monthly Rent specified in this Section 2 above shall apply only during the Extension Term and shall have no impact upon amounts which have been paid, or which are required to be paid, by Tenant to Landlord prior to the Extension Term.      3. Full Service Gross Rate. Landlord and Tenant acknowledge and agree that the rental rate specified in Section 2 above for the Extension Term shall be inclusive of taxes, insurance, common area maintenance costs and utilities to the Extension Space; provided, however, that (i) if Tenant shall require any utility in excess of one hundred ten percent (110%) of the amount of such utility utilized by Tenant (on a prorata square foot basis) for the Existing Premises as of the date of this Fourth Amendment, as reasonably determined by Landlord, Landlord may cause a meter or submeter to be installed for the Extension Space to measure the amount of any such excess usage or Landlord may otherwise reasonably estimate the cost of any such excess usage, and the cost of such meter or submeter and the cost of any such excess utility usage by Tenant shall be paid Tenant to Landlord within ten (10) days after invoice from time to time, and (ii) should Tenant hold over in the Extension Space beyond the Extension Term, during the period of any such holdover, Landlord shall be entitled to institute a 2005 “Base Year” concept for taxes, insurance, common area maintenance costs and utilities (collectively, “Operating Expenses”) and to charge Tenant for any costs allocated to the Extension Space over and above such 2005 Base Year baseline amount.      4. Condition of Extension Space. The Extension Space shall be leased in its “as is” condition and Tenant acknowledges that neither Landlord nor any agent nor any employee of Landlord has made any representations or warranties with respect to the Extension Space or with respect to the suitability of such space for the conduct of Tenant’s business. However, Landlord reserves the right, at Landlord’s option, to construct demising wall(s) and to otherwise separate the Extension Space from any contiguous space at Landlord’s cost, and Tenant acknowledges that any such construction by Landlord shall not be deemed to constitute a constructive eviction of Tenant from the Extension Space nor shall any such construction entitle Tenant to any abatement of rent. Under no circumstances may Tenant occupy any portion of the space contiguous to the Extension Space for storage or other purposes.      5. Parking. Effective as of the Extension Commencement Date and continuing throughout the Extension Term, Tenant shall be entitled to use a total of fifty-six (56) unreserved parking passes in the Building’s parking facility. Tenant’s rental and use of such parking passes shall be in accordance with, and subject to, all provisions of the Lease.      6. Permitted Use. Notwithstanding anything to the contrary contained in the Lease, the Extension Space may be used only for general office use consistent with the character of a first-class office building and for no other purposes.      7. Signage. Tenant shall promptly remove Tenant’s Signage (as that term is defined in Section 10 of the Third Amendment) and all other exterior signs at Calabasas Tech Center identifying Tenant in accordance with the standard specified in the last sentence of Section 10 of the Third Amendment. -3-        8. Relocation. Landlord shall have the right, at any time after September 30, 2005, upon giving Tenant not less than thirty (30) days prior notice (the “Relocation Notice”), to provide and furnish Tenant with space (“Relocation Space”) elsewhere in the Calabasas Tech Center of approximately the same size as the Extension Space, with Landlord to pay all verified and previously approved costs and expenses incurred by Tenant as a result of such move to such new Relocation Space including, without limitation, the cost of moving furniture and equipment and recabling and repainting the Relocation Space for Tenant’s use. Notwithstanding the foregoing, if Tenant notifies Landlord within ten (10) days after Tenant’s receipt of the Relocation Notice that Tenant desires space of a lesser size, Landlord may instead substitute space elsewhere in the Calabasas Tech Center of approximately the size so designated by Tenant if such space is then available. Furthermore, if Landlord delivers a Relocation Notice to Tenant, Tenant shall (i) have three (3) separate and consecutive one-month options to renew the term of the Lease (as amended) for the Relocation Space, which options must be exercised, if at all, by written notice to Landlord at least thirty (30) days prior to the first day of such renewal term and which options may only be exercised if Tenant is not then in default under the Lease (as amended), and (ii) have the option to terminate the Lease (as amended) by written notice to Landlord within ten (10) days after Tenant’s receipt of the Relocation Notice. Any such termination shall be effective as of a date so specified by Tenant in such termination notice to Landlord, but no later than the effective date of such relocation specified in Landlord’s Relocation Notice. If the Relocation Space is a lesser size than 14,879 rentable square feet, the Fixed Minimum Monthly Rent shall be adjusted by multiplying $25,000.00 by a fraction, the numerator of which is the number of rentable square feet of the Relocation Space and the denominator of which is 14,879. If Landlord moves Tenant to such Relocation Space, the Lease (as amended) and each and all of its terms, covenants and conditions shall remain in full force and effect and shall be deemed applicable to such Relocation Space and such Relocation Space shall thereafter be deemed to be the “Extension Space” as though Landlord and Tenant had entered into an express written amendment to the Lease with respect thereto and, upon request from Landlord, Tenant shall execute a new amendment to the Lease documenting such relocation upon such terms. this Fourth Amendment other than The Staubach Company. Each party further agrees claim for commission or finder’s fee by any other person or entity who claims or alleges that they were retained or engaged by the first party or at the request of such party in connection with this Fourth Amendment.      10. Defaults. Tenant hereby represents and warrants to Landlord that, as of the date of this Fourth Amendment, Tenant is in full compliance with all terms,      11. Signing Authority. Concurrently with Tenant’s execution of this Fourth of the individuals executing this Fourth Amendment on behalf of Tenant. -4-        12. No Further Modification. Except as set forth in this Fourth Amendment,           “LANDLORD” ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership       By:   ARDEN REALTY, INC.,         a Maryland corporation        Its: Sole General Partner                By:   /s/ Robert C. Peddicord           Executive Vice President - Leasing              Its:  and Property Operations         “TENANT” TEKELEC, a California corporation       By:              /s/ Ronald W. Buckly       Print Name: Ronald W. Buckly               Affairs and General Counsel     -5-   EXHIBIT “A” OUTLINE OF EXTENSION SPACE (FLOOR PLAN) [v09681v0968100.gif] EXHIBIT “A” -1-

EXHIBIT 10.13   AMENDMENT TO THE CREDIT SUPPORT FEE AGREEMENT   This Amendment is made by and between TOYOTA FINANCIAL SERVICES CORPORATION, a Japanese corporation (“TFS”) and TOYOTA MOTOR CREDIT CORPORATION, a U.S. corporation (“TMCC”),   WITNESSETH:   Whereas, TFS and TMCC have entered into the Credit Support Fee Agreement dated as of March 30, 2001 in respect of the Credit Support Agreement dated October 1, 2000 made by and between TFS and TMCC;   NOW, THEREFORE, TFS and TMCC hereby agree as follows:   1. The rate of the Credit Support Fee stated in Section 2 of the Credit Support Fee Agreement hereby is changed from 0.05% to 0.06%.   2. Section 1 (e) hereby is amended in its entirety to read as follows: “Reference Period” means a six month period commencing on April 1 or October 1 of each calendar year and ending on September 30 of that year or March 31 of the following calendar year, respectively.   3. Section 2 (b) hereby is amended in its entirety to read as follows: In calculating the number of days elapsed in a Reference Period, the first day and the last day shall be included.   4. The above amendments have been valid on and applied from and after April 1, 2005.   and delivered by their duly authorized representatives as of this 17 th day of June, 2005.     TOYOTA FINANCIAL SERVICES CORPORAION   TOYOTA MOTOR CREDIT CORPORATION           By: /s/ Hideto Ozaki   Hideto Ozaki Representative Director             By: /s/ George Borst   George Borst Representative Director                

Exhibit 10.3 AMENDMENT NO. 2 This AMENDMENT NO. 2, dated as of February 6, 2009 (this “Amendment”), among WORLDSPACE, INC., a Delaware corporation, as a debtor and a debtor in possession, (“WorldSpace”), AFRISPACE, INC., a Maryland corporation, as a debtor and a debtor in possession (“AfriSpace”), WORLDSPACE SYSTEMS CORPORATION, a Delaware corporation, as a debtor and a debtor in possession (“Systems,” and together with WorldSpace and AfriSpace, the “Borrowers”), CITADEL ENERGY HOLDINGS LLC, a Cayman Islands limited liability company (“Citadel”), HIGHBRIGE INTERNATIONAL LLC, a Cayman Islands limited liability company (“Highbridge”), OZ MASTER FUND, LTD., a Cayman Islands limited liability company (“OZ”), and SILVER OAK CAPITAL LLC, a Delaware limited liability company (“Silver Oak”), amends that certain SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AGREEMENT dated as of November 5, 2008 (as amended, modified, supplemented or restated and in effect from time to time, the “DIP Credit Agreement”), among the Borrowers and Citadel, Highbridge, OZ and Silver Oak (collectively, the WITNESSETH WHEREAS, the Borrowers have requested that the Lenders agree to amend certain of the terms and provisions of the DIP Credit Agreement, as specifically set forth in this Amendment; WHEREAS, the Lenders have agreed to modify certain provisions of the DIP Credit NOW THEREFORE, in consideration of the mutual agreements contained in the DIP AGREEMENTS DIP Credit Agreement shall have the same respective meanings herein as therein. §2. Amendments to the DIP Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 3 of this Amendment, the DIP Credit Agreement is (a) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit Agreement is hereby amended by inserting the following in the definition of “Budget” before the period at the end of the definition: “, as further amended by the Budget attached as Exhibit A to that certain Amendment No. 1 to this Credit Agreement, dated as of February 6, 2009”. (b) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit “Credit Agreement” before the period at the end of the definition: “, as amended, modified, supplemented or restated and in effect from time to time”. (c) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit contained therein and substituting in lieu thereof the following new definition: “Maturity Date. That date which is the earliest of (a) February 27, 2009, (b) the effective date of the Borrowers’ Reorganization Plan that has been confirmed by an order of the Bankruptcy Court; and (c) the date on which the Borrowers have consummated, pursuant to Section 363 of the Bankruptcy Code and a final order of the Bankruptcy Court, a sale or sales of all or substantially all of the Borrowers’ assets. (d) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit Agreement is hereby amended by inserting the following new definition of “Supplemental Date” in alphabetical order: “Supplemental Date. See §2.1 hereof. (e) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit “Supplemental Order” in alphabetical order: “Supplemental Order. An order of the Bankruptcy Court in the Case authorizing and approving that certain Amendment No. 2 to this Credit Agreement, dated as of February 6,2009, in form and substance satisfactory to the Lenders, the Lenders’ Special Counsel and the Borrowers and their counsel.” (f) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit Agreement is hereby amended by deleting clause (b) in the definition of “Interest Period” and substituting in lieu thereof the following new clause (b): “, and (b) with respect to each Term Loan made on the Closing Date, the Final Funding Date or the Supplemental Date, (i) initially, the period commencing on the date on which such Term Loan is made and ending 30 days thereafter, and Interest Period applicable to such Term Loan and ending 30 days thereafter;”. (g) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit Agreement is hereby amended by deleting clause (b) in the definition of “Term Loan Commitment” and substituting in lieu thereof the following new clause (b): (h) Amendment to Section 1.01 (Defined Terms). Section 1.01 of the DIP Credit Agreement is hereby amended by deleting the definition of “Total Term Loan Commitment” contained therein and substituting in lieu thereof the following new definition: “Total Term Loan Commitment. The sum of the Term Loan Commitments. On the Closing Date, the Total Term Loan Commitment shall be $6,500,000, on the date on which the Final Order is entered, the Total Term Loan Commitment shall be $13,000,000, and on the date the Supplemental Order is entered, the Total Term Loan Commitment shall be $14,300,000, in each case, as set forth on Schedule I-A. (i) Amendment to Section 2.1. Section 2.1 of the DIP Credit Agreement is hereby deleted and replaced with the following new Section 2.1: “2.1 Term Loans. Subject to and upon the terms and conditions herein set forth, each Lender severally and not jointly agrees to make a loan or loans (each, a “Term Loan” and collectively, the “Term Loans”) to the Administrative Borrower, for the benefit of the Borrowers, which Term Loans (i) shall not exceed, for any such Lender, the Term Loan Commitment of such Lender, (ii) shall not exceed, in the aggregate, the lesser of (A), the Total Term Loan Commitment and (B) the amount approved to be borrowed by way of Term Loans in the Interim Order, the Final Order, or, as the case may be, the Supplemental Order, (iii) shall include the Term Loans made pursuant to the Emergency Order and outstanding on the Closing Date, (iv) shall be made on the Closing Date, the date on which the Final Order is entered (the “Final Funding Date”), or the date on which the Supplemental Order is entered (the “Supplemental Date”) and (v) may be repaid or prepaid in reborrowed.” (j) Amendment to Section 2.2. Section 2.2 of the DIP Credit Agreement is hereby amended by deleting the first sentence thereof and substituting in lieu thereof the following: “Each Term Loan, at the request of the applicable Lender shall be evidenced by a Term Loan Note, dated as of the Closing Date, the date on which the Final Order is entered, or, as the case may be, the date on which the Supplemental Order is entered, and completed with appropriate insertions.” (k) Amendment to Section 2.4.2 Section 2.4.2 of the DIP Credit Agreement is hereby amended by deleting the first sentence thereof and substituting in lieu thereof the following: “2.4.2 Funding Procedures. Each Lender shall make available all amounts it is to fund to the Administrative Borrower, for the benefit of the Borrowers in respect of any Term Loan, on the Closing Date, the Final Funding Date and the Supplemental Date, in immediately available funds to the Administrative Borrower, by depositing such amounts in the Controlled Account at Bank of America being Account No. 00191-842-8058 or such other account as the Lenders may agree to be the Controlled Account.” (1) Amendment to Section 13.1(n). Section 13.1(n) of the DIP Credit Agreement is hereby amended by replacing the phrase “by February 6, 2009” with the phrase “by February 27, 2009”. (m) Amendment to Schedule 1-A. Schedule 1-A to the DIP Credit Agreement is hereby deleted and replaced with the new Schedule 1-A attached as Exhibit A to this Amendment. (n) Amendment to Exhibit A. The Budget attached as Exhibit B to this Amendment is the amended Budget as agreed by the Borrowers and the Lenders to replace the Budget attached to that certain Amendment No. 1 to the DIP Credit Agreement, dated as of January 6, 2009. §3. Conditions to Effectiveness. This Amendment shall become effective upon the Lenders’ receipt (i) of a fully-executed counterpart hereof signed by the Borrowers and each Lender, (ii) of a fully-executed counterpart of a Ratification of Guaranty signed by each Guarantor, (iii) entry of the Supplemental Order of the Bankruptcy Court approving this Amendment in form and substance satisfactory to the Lenders, (iv) delivery by the Borrowers to each Lender of original replacement promissory notes evidencing the increased principal amount of the Term Loan Notes of each Lender resulting from this Amendment, and (v) delivery by each Lender to the Borrowers of the original Term Loan Notes previously delivered to such Lender by the Borrowers, marked cancelled. §4. Representations and Warranties. The Borrowers hereby represent and warrant (a) Ratification, Etc. Except as expressly amended or waived hereby, the DIP Credit Agreement, the other Loan Documents and all documents, instruments and and shall continue in full force and effect. The DIP Credit Agreement, together references in the Loan Documents to the DIP Credit Agreement or any other Loan Document shall hereafter refer to the DIP Credit Agreement or any other Loan (b) Authority, Etc. The execution and delivery by the Borrowers of this Amendment and the performance by the Borrowers of all of its agreements and obligations under the DIP Credit Agreement and the other Loan Documents as amended hereby are within the corporate authority of the Borrowers and have been duly authorized by all necessary corporate action on the part of the Borrowers. (c) Enforceability of Obligations. This Amendment, the DIP Credit Agreement, as binding obligation of each of the Borrowers, enforceable against each of them in (d) No Default. Other than with respect to any Default or Event of Default as to which the Debtors have informed the Lenders in writing prior to the date hereof, (e) Event of Default. By its signature below, the Borrowers agree that it shall constitute an Event of Default if any representation or warranty made herein should be false or misleading in any material respect when made. the terms and conditions of the DIP Credit Agreement and the other Loan shall in any way prejudice, impair or affect any rights or remedies of any Lender or the Borrowers under the DIP Credit Agreement or the other Loan Documents. This Amendment shall constitute a Loan Document. §7. Expenses. Pursuant to Section 16 of the DIP Credit Agreement, all reasonable, out of pocket fees, costs and expenses incurred or sustained by the Lenders in connection with this Amendment, including the reasonable fees and disbursements of legal counsel for the Lenders in producing, reproducing and not this Amendment is consummated.   §8. Miscellaneous. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. The captions in   THE BORROWERS: WORLDSPACE, INC., as a Debtor and Debtor in Possession By:   /s/ Sridhar Ganesan Name:   Sridhar Ganesan Title:   CFO AFRISPACE, INC., as a Debtor and Debtor in Possession By:   WORLDSPACE SYSTEMS CORPORATION, as a Debtor and Debtor in Possession By:   /s/ Donald J. Frickel Name:   Donald J. Frickel Title:   Secretary THE LENDERS: CITADEL ENERGY HOLDINGS LLC BY: CITADEL LIMITED PARTNERSHIP, ITS MANAGER By:   /s/ Christopher Ramsay Name:   Christopher Ramsay Title:   Authorized Signatory HIGHBRIDGE INTERNATIONAL LLC BY: HIGHBRIDGE CAPITAL MANAGEMENT, LLC, ITS TRADING MANAGER By:   Name:   Adam J. Chill Title:   Managing Director OZ MASTER FUND, LTD., OZ MANAGEMENT LP, ITS INVESTMENT MANAGER BY: OCH-ZIFF HOLDING CORPORATION, ITS GENERAL PARTNER By:   Name:   Joel Frank Title:   Chief Financial Officer SILVER OAK CAPITAL LLC By:   /s/ Michael L. Gordon Name:   Michael L. Gordon Title:   Authorized Signatory RATIFICATION OF GUARANTY which it is a part and ratifies and confirms that such obligations and DIP Credit Agreement; (c) acknowledges and confirms that the liens and security interests granted pursuant to the Loan Documents are and continue to be valid and perfected first priority liens and security interests (subject only to hereof; (d) acknowledges and agrees that such Guarantor does not have any claim or cause of action against any Lender (or any of its respective directors, officers, employees, attorneys or agents); and (e) acknowledges, affirms and their respective obligations, indebtedness or liabilities to any Lender. Terms not otherwise defined herein which are defined in the DIP Credit Agreement shall   ASIASPACE LIMITED By:   Name:   Donald J. Frickel Title:   Attorney - in - Fact WORLDSPACE SATELLITE COMPANY LTD. By:   Name:   Donald J. Frickel Title:   Asst. Secretary EXHIBIT A     Extended 15-Wk Period   Extended 4-Wk Period           Thru 1/23(A)   1/30(P)   Total(P)   2/6/2009   2/13/2009     2/20/2009   2/27/2009   Total     Total 19 Wk Period Global Satellite Operations                   AfriSpace ROC                   Satellite Insurance ASI ROC Employees         —     24,710     —     24,710   49,421     Contract Employees         7,600   14,000     7,600   —     29,200     Astrium in Orbit Support         17,967   —       —     —     17,987     Antrix         26,000   —       —     26,000   52,000     Mauritius Telecom         12,500   —       —     —     12,500     Opex/Audit         —     —       —     5,643   5,643     US E&O Employees         —     8,083     —     8,083   16,166                                           AfriSpace ROC         64,067   46,793     7,600   64,436   182,896     AsiaSpace ROC                   Satellite Insurance Mauritius Telecom ASI ROC Employees         103,008   —       —     —     103,008     Rent         55,396   —       —     —     55,396     Opex         —     20,000     —     —     20,000                                           AfriSpace ROC         170,904   20,000     —     —     190,904     Ground and Broadcast Systems Support         —     13,400     —     —     13,400     F3 & F4 Satellite Storage                   Astrium Satellite Storage         222,688   —       —     —     222,668     F-3 & F-4 Insurance         57,600   —       —     —     57,600     Thales Satellite Storage         112,000   —       —     —     112,000                                           F3/F4 Subtotal         392,288   —       —     —     392,268     Singapore BOC Employees         —     24,286     —     —     24,286     Statutory Audit/Tax Return         13,000   —       —     —     13,000     Opex         —     —       5,000   —     5,000     Rent         42,400   —       21,200   —     63,600                                           Singapore BOC         55,400   24,286     26,200   —     105,886     Johannesburg BOC Employees         —     23,325     —     —     23,325     Opex Rent         18,960   —       —     —     18,960                                           Johannesburg BOC         31,960   23,325     5,000   —     60,285     Total Satellite Operations and BOC’s         714,599   127,804     38,800   64,436   945,638     W/S Europe                   W/S Italia         —     100,000     —     10,000   110,000     W/S France – Operating Cost         —     28,393     —     —     28,393     W/S France – Quarterly Tax and Remedy Cost W/S France Statutory Audit US E&O Support         —     18,013     —     18,013   36,026     US Sales Employees         —     11,547     —     11,547   23,094     Less Graham Bayley Included in Section 3         —     (13,400 )   —     —     (13,400 )                                         W/S Europe         —     144,553     —     39,560   184,113     Silver Spring Office                   Facilities         58,738   —       —     —     58,738     CRO         —     100,000     —     50,000   150,000     G&A Employees         —     38,829     —     38,829   77,657     IT Employees         —     26,386     —     26,386   52,773     Content Employees         —     6,004     —     6,004   12,009     E&O Employees Finance Employees         —     23,325     —     23,325   46,650     Legal & Regulatory Employees         —     28,867     —     28,867   57,734     Health Ins         —     —       —     72,000   72,000     Taxes Insurance         23,000   —       —     —     23,000     Former Employee Settlement (Singapore/SA)               50,000   50,000     Microsoft Net Magic         —     —       —     22,769   22,769     Misc Corporate Expenses         7,500   7,500     7,500   7,500   30,000                                           Silver Spring Office         89,238   230,911     7,500   325,681   653,330                                             Total Operating Cost   8,221,201   653,897   8,875,098   803,836   503,268     46,300   429,677   1,783,081     10,658,179                   Professional Fees (Paid)                   Debtor Legal Counsel       939,565       800,000       800,000     1,739,565 Debtor Financial Advisors       204,473       80,000       80,000     284,473 Unsecured Creditor Counsel/FA       173,000       100,000       100,000     273,000 Claims Agent/Court Costs       67,500       20,000       20,000     87,500                                           Total Professional Fees (Paid)       1,384,538   —       —     1,000,000     —     1,000,000     2,384,538                                           Total Cash Disbursements   9,605,739   653,897   10,259,636   803,836     503,268   1,046,300     429,677   2,783,081     13,042,717                                           Professional Fees (Accrued)                   Debtor Legal Counsel       810,436   43,750     43,750   (756,250 )   43,750   (625,000 )   185,435 Debtor Financial Advisors       245,527   12,500     12,500   (67,500 )   12,500   (30,000 )   215,527       752,000   12,500     12,500   (87,500 )   12,500   (50,000 )   702,000       134,000   6,250     6,250   (13,750 )   6,250   5,000     139,000                                                 1,941,962   75,000     75,000   (925,000 )   75,000   (700,000 )   1,241,962 DIP Size       13,000,000   13,000,000     14,300,000   14,300,000     14,300,000   14,300,000     14,300,000 DIP Availability       798,402   (80,434 )   641,298   519,998     15,321   15,321     15,321 Cash       185,000   185,000     185,000   185,000     185,000   185,000     185,000                                           Total Liquidity       983,402   104,566     826,298   704,998     200,321   200,321     200,321 Total Professional Fees (Accrued /Paid)                   Debtor Legal Counsel       1,750,000   43,750     43,750   43,750     43,750   175,000     1,925,000 Debtor Financial Advisors       450,000   12,500     12,500   12,500     12,500   50,000     500,000       925,000   12,500     12,500   12,500     12,500   50,000     975,000       201,500   6,250     6,250   6,250     6,250   25,000     226,500                                                 3,326,500   75,000     75,000   75,000     75,000   300,000     3,626,500

Name: Commission Regulation (EC) No 1029/2000 of 16 May 2000 fixing the export refunds on poultrymeat Type: Regulation Date Published: nan nan

Filed with the Securities and Exchange Commission on June 29, 2007 1933 Act Registration File No. 333-78275 1940 Act File No. 811-09303 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x Pre-Effective Amendment No. ¨ Post-Effective Amendment No. 27 x and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x Amendment No. 28 x (Check appropriate box or boxes) KINETICS MUTUAL FUNDS, INC. (Exact Name of Registrant as Specified in Charter) 16 New Broadway, Sleepy Hollow, New York10591 (Address and Zip Code of Principal Executive Offices) (800) 930-3828 Registrant's Telephone Number, including Area Code Leonid Polyakov 16 New Broadway, Sleepy Hollow, New York10591 (Name and Address of Agent for Service) With a copy to: Mary Jo Reilly, Esq. Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 As soon as practical after the effective date of this Registration Statement Approximate Date of Proposed Public Offering Shares of Common Stock (Title of Securities Being Registered) It is proposed that this filing will become effective [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) 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. Advisor Class June 29, 2007 Prospectus www.kineticsfunds.com The Water Infrastructure Fund A series of Kinetics Mutual Funds, Inc. Kinetics Logo The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of the Prospectus. Any representation to the contrary is a criminal offense. Advisor Class Table of Contents OVERVIEW 2 THE WATER INFRASTRUCTURE FUND 3 MAIN RISKS OF INVESTING IN THE FUND 6 PORTFOLIO HOLDINGS INFORMATION 9 MANAGEMENT OF THE FUND AND THE PORTFOLIO 9 VALUATION OF FUND SHARES 11 HOW TO PURCHASE SHARES 12 HOW TO REDEEM SHARES 13 EXCHANGE PRIVILEGE 17 DISTRIBUTIONS AND TAXES 17 DISTRIBUTION OF SHARES 19 DESCRIPTION OF ADVISOR CLASSES 20 UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 22 COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 23 Advisor Class Kinetics Mutual Funds, Inc. This Prospectus discusses theAdvisor Classes of The Water Infrastructure Fund (the “Fund”) of Kinetics Mutual Funds, Inc. (the “Company”). Unlike many other investment companies which directly acquire and manage their own portfolios of securities, the Fund seeks its investment objective by investing all of its investable assets in a corresponding portfolio series, the Water Infrastructure Portfolio (the “Portfolio”), of Kinetics Portfolios Trust (the “Trust”), a Delaware statutory trust. The Portfolio is an open-end, non-diversified investment company with investment objectives and strategies identical to those of the Fund. Investors should carefully consider this investment approach. For additional information regarding this investment structure, see “Unique Characteristics of Master/Feeder Fund Structure.” Prospectus This Prospectus provides vital information about the Fund. For your own benefit and protection, please read it before you invest, and keep it on hand for future reference. Investment Adviser Kinetics Asset Management, Inc. Sub- Adviser Aqua Terra Asset Management LLC Minimum Initial Investment $2,500 June 29, 2007 OVERVIEW The Water Infrastructure Fund (the “Fund”) is a non-diversified fund that seeks to provide investors with long-term capital growth and secondarily with current income by investing all of its investable assets in the Portfolio.The Portfolio invests primarily in securities issued by U.S. and foreign companies involved in water infrastructure and natural resources with a specific water theme and related activities. The Statement of Additional Information (the “SAI”) contains more information about the Fund and the types of securities in which it may invest. Who May Want to Invest The Fund may be appropriate for investors who: » wish to invest for the long-term » want to diversify their portfolios » want to allocate some portion of their long-term investments to value equity investing » are willing to accept the volatility associated with equity investing » appreciate the risks associated with investing in foreign companies 2 THE WATER INFRASTRUCTURE FUND Investment Objective, Principal Investment Strategies and Principal Risks Investment Objective The investment objective of the Fund is long-term growth of capital.The Fund seeks to obtain current income as a secondary objective. Principal Investment Strategies The Fund seeks to achieve its investment objective by investing all of its investable assets in the Portfolio.Under normal circumstances, the Portfolio invests at least 80% of its net assets plus any borrowings for investment purposes in common stocks, convertible securities, fixed-income securities such as bonds and debentures, and warrants, derivatives, and other equity securities having the characteristics of common stocks (such as American Depositary Receipts (“ADRs”) and International Depositary Receipts (“IDRs”), of U.S. and foreign companies engaged in water infrastructure and natural resources with a specific water theme and related activities.For purposes of this 80% policy, a company will be considered in the water infrastructure or natural resource industry if at least 50% of its revenues come from water-related activities or activities related to natural resources.The Portfolio may also write and sell options on securities in which it invests for hedging purposes and/or direct investment. Under normal circumstances, the Portfolio will invest no more than 20% of its net assets in fixed income securities.There are no limitations as to the maturities or credit ratings of the fixed income securities in which the Portfolio may invest; provided, however, that the Portfolio will invest no more than 10% of its total assets in convertible and non-convertible debt securities rated below investment grade, also known as junk bonds, or unrated securities which the Investment Adviser has determined to be of comparable quality. The Portfolio aims to invest in securities issued by companies operating in the water infrastructure and natural resource sector globally.The companies targeted in the water sector will include, but are not limited to, water production companies, water conditioning and desalination companies, water suppliers, water transport and distribution companies, companies specializing in the treatment of waste water, sewage and solid, liquid and chemical waste, companies operating sewage treatment plants and companies providing equipment, consulting and engineering services in connection with the above-described activities.Companies targeted in the natural resource sector are those that are dependent on water usage in industries such as agriculture, timber, oil and gas service, hydroelectricity and alternative renewable energy. There are no limitations on the amount that the Portfolio may invest or hold in any single issuer; however, the Portfolio currently intends to limit its investments at the time of purchase to 10% of the Portfolio’s assets in any single position.The companies in which the Portfolio may invest may be large, medium or small in size if, in the Sub-Adviser’s opinion, they meet the Portfolio’s investment criteria. The Sub-Adviser uses a value-based strategy in managing the Fund, which means that both equity and fixed income security purchase selections will be based primarily upon current relative valuation of company fundamentals, although the growth prospects of respective companies within the global water industry will also be considered.When determining the intrinsic value of each potential company for the Portfolio, the Sub-Adviser will primarily focus on traditional valuation metrics including, but not limited to, price to earnings, price to cash flow, book value, price to sales, return on equity, and return on invested capital.In addition, the Sub-Adviser will evaluate the estimated growth prospect for each company by evaluating such metrics as forward price to earnings, and will also use merger and acquisition metrics and sum of the parts valuation (break-up value or private market value) to better ascertain market and intrinsic valuation. 3 The Portfolio may invest up to 20% of its assets in high quality, U.S. short-term debt securities and money market instruments to maintain liquidity.Some of these short-term instruments include commercial paper, certificates of deposit, demand and time deposits and banker’s acceptances, U.S. Government securities (i.e. U.S. Treasury obligations) and repurchase agreements. Temporary Investments To respond to adverse market, economic, political or other conditions, the Portfolio may invest up to 100% of its assets in high quality, U.S. short-term debt securities and money market instruments. To the extent that the Portfolio engages in a temporary defensive strategy, the Portfolio and therefore, the Fund, may not achieve its investment objective. Fund Structure The Portfolio has an investment objective identical to that of the Fund.The Fund may withdraw its investment from the Portfolio at any time if the Board of Directors of the Company determines that it is in the best interests of the Fund to do so.Upon any such withdrawal, the Directors will consider what action might be taken, including investing all of the Fund’s investable assets in another pooled investment entity having substantially the same objective and strategies as the Fund or retaining an investment adviser, including the current Investment Adviser or Sub-Adviser(s), to manage the Fund’s assets directly. Principal Risks of Investment Investing in common stocks has inherent risks that could cause you to lose money.The principal risks of investing in the Fund and indirectly the Portfolio are listed below and could adversely affect the net asset value (“NAV”), total return and the value of the Fund, Portfolio and your investment. » Stock Market Risks: Stock mutual funds are subject to stock market risks and significant fluctuations in value.If the stock market declines in value, the Portfolio is likely to decline in value and you could lose money on your investment. » Stock Selection Risks: The portfolio securities selected by the Investment Adviser or Sub-Adviser(s) may decline in value or not increase in value when the stock market in general is rising and may fail to meet the Portfolio’s and therefore, the Fund’s, investment objective. » Liquidity Risks: The Portfolio’s investments in the securities of small and medium capitalization companies and in non-investment grade fixed income securities makes the Portfolio especially susceptible to the risk that during certain periods the liquidity of certain issuers or industries, or all securities within particular investment categories, will decrease or disappear suddenly and without warning as a result of adverse market or political events, or adverse investor perceptions. » Industry Concentration Risks: Mutual funds that invest a substantial portion of their assets in a particular industry carry a risk that a group of industry-related stocks will decline in price due to industry specific developments.Companies in the same or similar industries may share common characteristics and are more likely to react comparably to industry specific market or economic developments. » Small and Medium-Size Company Risks: The Portfolio may invest in the equity securities of small and medium size companies.Small and medium-size companies often have narrower markets and more limited managerial and financial resources than do larger, more established companies.As a result, their performance can be more volatile and they face a greater risk of business failure, which could increase the volatility of the Portfolio’s assets. » Foreign Securities Risks: The Portfolio may invest in foreign securities directly or through ADRs and IDRs.Foreign securities can carry higher returns but involve more risks than those associated with U.S. investments.Additional risks associated with investment in foreign securities include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. 4 » Non-Diversification Risks: As a non-diversified investment company, more of the Portfolio’s assets may be concentrated in the securities of any single issuer, which makes the Portfolio more susceptible to financial, economic or market events impacting such issuer. » Interest Rate Risk– The risk that when interest rates increase, fixed-income securities held by the Portfolio will decline in value.Long-term fixed-income securities will normally have more price volatility because of this risk than short-term fixed-income securities. » Credit/Default risk – The risk that an issuer or guarantor of fixed-income securities held by the Portfolio (which may have low credit ratings), or the counterparty in a derivative investment, may default on its obligation to pay interest and repay principal. » Below-Investment Grade Debt Securities Risks:Generally, non-investment grade debt securities, i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities. » New Fund Risks:There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Directors or the Investment Adviser or Sub-Adviser(s) may recommend that the Fund be liquidated. » Water Infrastructure Industry Specific Risks:Adverse developments in the water industry may significantly affect the value of the shares of the Fund.Companies involved in the water industry are subject to environmental considerations, changes in taxation and government regulation, price and supply fluctuations, changes in technology, competition and water conservation.There can be no assurances that the regulatory environment will remain the same.Unfavorable regulatory rulings, including structural changes to pricing and the competitive playing field, may affect the underlying companies’ ability to produce favorable returns. » Value Style Risks:Over time, a value-based investment style may go in and out of favor, causing the Portfolio to sometimes underperform other funds that use different investment styles, such as a growth-based investment style. » Derivatives Risks:The Portfolio’s investments in options and other derivative instruments may result in loss.Derivative instruments may be illiquid, difficult to price and leveraged so that small changes may produce disproportionate losses to the Portfolio. » Natural Resources Investment Risks:Investments in companies in natural resources industries can be significantly affected by (often rapid) changes in the supply of, or demand for, various natural resources.These companies also may be affected by changes in energy prices, international political and economic developments, energy conservation, the success of exploration projects, changes in commodity prices, and tax and other government regulations. Performance of the Fund Because the Fund has not yet commenced operations, there is no performance information for the Fund. Fees and Expenses of theFund As an investor, you pay certain fees and expenses if you buy and hold shares of the Fund.These fees and expenses are described in the table below and are further explained in the example that follows. Fee Table(1) Shareholder Transaction Expenses(2) (fees paid directly from your investment) Advisor Class A Advisor Class C Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.75% None 5 Maximum Deferred Sales Charge (Load) (as a percentage of offering price) None None Maximum Sales Charge (Load) on Reinvested Dividends None None Redemption Fee (as a percentage of amount redeemed, if applicable) (3) 2.00% 2.00% Exchange Fee(4) None None Maximum Account Fee(5) None None Annual Operating Expenses (expenses deducted from Fund assets) Advisor Class A Advisor Class C Management Fees(6) 1.25% 1.25% Distribution (Rule 12b-1) Fees(7) 0.50% 0.75% Other Expenses(8) 1.25% 1.25% Total Annual Fund Operating Expenses(8)(9) 3.00% 3.25% (1) This fee table and the example below reflect the aggregate expenses of the Fund and the Portfolio. (2) You will be assessed fees for outgoing wire transfers ($15.00 per wire), returned checks and exchanges executed by telephone between the Fund and any other series of the Company. (3) You will be charged a redemption fee equal to 2.00% of the net amount of the redemption if you redeem or exchange your Advisor Class A or Advisor Class C shares less than 30 days after you purchase them.If this fee is imposed it would raise the expenses of your shares.Such fees, when imposed, are credited directly to the assets of the Fund to help defray any potential expenses to the Fund from short-term trading activities.These fees are not used to pay distribution or sales fees or expenses.The redemption fee will not be assessed on certain types of accounts or under certain conditions.Please see “Redemption Fees” below for a list of the types of accounts and conditions under which this fee will not be assessed. (4) The Fund’s transfer agent charges a $5 transaction fee to shareholder accounts for telephone exchanges between any two series of the Company.The Fund’s transfer agent does not charge a transaction fee for written exchange requests. (5) IRA accounts are assessed a $15.00 annual fee. (6) The management fees paid by the Fund reflect the proportionate share of fees allocated to the Fund from the Portfolio for investment advisory services. (7) Under the Distribution Plan adopted for the Advisor Class A shares, the Advisor Class A shares may pay as compensation up to an annual rate of 0.50% of the average daily net asset value of Advisor Class A shares to the distributor or other qualified recipient under the Plan.Under the Distribution Plan for the Advisor Class C shares, the Advisor Class C shares may pay as compensation up to an annual rate of 0.75% of the average daily net asset value of Advisor Class C shares to the distributor. (8)Because the Fund is new, these expenses, which include custodian, transfer agency, and other customary Fund expenses, are based on estimated amounts for the Fund’s current fiscal year. (9) The Investment Adviser to the Water Infrastructure Portfolio has voluntarily agreed to waive fees and reimburse expenses so that Total Annual Fund Operating Expenses do not exceed 1.99% and 2.49% for Advisor Class A shares and Advisor Class C shares, respectively. These waivers and reimbursements may be discontinued at any time. Example This Example is intended to help you compare the cost of investing in the Advisor Class A and Advisor Class C shares of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Advisor Class A and Advisor Class C shares of the Fund for the time periods indicated and then redeem all of your shares at the end of these periods.The Example also assumes that your investment has a 5% rate of 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 cost for the Fund would be: 1 Year 3 Years Advisor Class A $861 $1449 Advisor Class C $328 $1001 Main Risks of Investing in the Fund The principal risks of investing in the Fund are described previously in this Prospectus.This section provides more detail about some of those risks, along with information on additional types of risks that may apply to the Fund. 6 Investing in Mutual Funds All mutual funds carry risks that may cause you to lose money on your investment in the Fund.In general, the risks associated with the use of the Master/Feeder Fund Structure and the risks associated with your investment in the Fund are substantially identical to the risks associated with the Fund’s investment in the Portfolio.The following describes the primary risks to the Fund from investing in the Portfolio due to the Portfolio’s specific investment objective and strategies.As all investment securities are subject to inherent market risks and fluctuations in value due to earnings, economic and political conditions and other factors, neither the Fund nor the Portfolio can give any assurance that its investment objective will be achieved. Market Risk The NAV of the Portfolio will fluctuate based on changes in the value of its underlying portfolio.The stock market is generally susceptible to volatile fluctuations in market price.Market prices of securities in which the Portfolio invests may be adversely affected by an issuer’s having experienced losses orlack of earnings, or by the issuer’s failure to meet the market’s expectations with respect to new products or services, or even by factors wholly unrelated to the value or condition of the issuer.The value of the securities held by the Portfolio is also subject to the risk that a specific segment of the stock market may not perform as well as the overall market.Under any of these circumstances, the value of the Portfolio’s shares and total return will fluctuate, and your investment in the Fund may be worth more or less than your original cost when you redeem your shares. Portfolio Turnover Risk Under certain circumstances the Portfolio may take advantage of short-term trading opportunities without regard to the length of time its securities have been held.This strategy often calls for frequent trading of the Portfolio’s securities in order to take advantage of anticipated changes in market conditions.Frequent trading by the Portfolio could increase the rate of its portfolio turnover, which would involve correspondingly greater expenses.Such expenses may include brokerage commissions or dealer mark-ups/mark-downs, as well as other transaction costs on the sale of securities and reinvestments in other securities.Such sales also may result in adverse tax consequences to shareholders.If the Portfolio realizes capital gains when it sells its portfolio investments, it must generally pay those gains out to shareholders, increasing their taxable distributions.The trading costs and tax effects associated with such portfolio turnover may adversely affect Portfolio performance under these circumstances, and large movements of assets into and out of the Portfolio may negatively impact the Portfolio’s ability to achieve its investment objective or maintain its current level of operating expenses. Industry Specific Risks To the extent that the Portfolio focuses its investments in one or more sectors or industries, it may be subject to the risks affecting that sector or industry more than would a fund that invests in a wide variety of market sectors or industries.For instance, companies involved in the water industry may be located in societies (i.e. countries or geographic areas) that are suffering from water stress or scarcity and which do not possess healthy financial markets for business.These societies may not provide a stable environment for companies to operate.As such, companies located in these societies must manage both business risk and reputational risk.Additional risks of concentrating in the water industry include environmental considerations, taxes, government regulation, price and supply fluctuations, competition and water conservation. Securities Lending The Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements, amounting to no more than 33 1/3 % of the total assets of the Portfolio (including any collateral posted) or 50% of the total assets of the Portfolio (excluding any collateral posted).Repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations.These transactions involve some risk to the Portfolio if the other party should default on its obligation and the Portfolio is delayed or prevented from recovering the collateral.In the event that the original seller defaults on its obligation to repurchase, the Portfolio will seek to sell the collateral, which could involve costs or delays.To the extent proceeds from the sale of collateral are less than the repurchase price, the Portfolio would suffer a loss if forced to sell such collateral in this manner. 7 Non-Diversification The Portfolio is a non-diversified fund and therefore may be more susceptible to adverse financial, economic or other developments affecting any single issuer, and more susceptible to greater losses because of these developments. Investment in Small and Medium-Size Companies The Portfolio may invest in small or medium-size companies.Accordingly, the Portfolio may be subject to the additional risks associated with investment in companies with small or medium-size capital structures (generally a market capitalization of $5 billion or less).The market prices of the securities of such companies tend to be more volatile than those of larger companies.Further, these securities tend to trade at a lower volume than those of larger, more established companies.If the Portfolio is heavily invested in these securities and the value of these securities suddenly declines, the NAV of that Portfolio and your investment in the corresponding Fund will be more susceptible to significant losses. Foreign Securities Investing in foreign securities can carry higher returns than those generally associated with U.S. investments.However, foreign securities may be substantially riskier than U.S. investments.The economies of foreign countries may differ from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, capital reinvestment, resource self-sufficiency, and balance of payments position.Furthermore, the economies of developing countries generally are heavily dependent on international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protective measures imposed or negotiated by the countries with which they trade.These economies also have been, and may continue to be, adversely affected by economic conditions in the countries with which they trade.The Portfolio may be required to obtain prior governmental approval for foreign investments in some countries under certain circumstances.Governments may require approval to invest in certain issuers or industries deemed sensitive to national interests, and the extent of foreign investment in certain debt securities and companies may be subject to limitation.Individual companies may also limit foreign ownership to prevent, among other things, violation of foreign investment limitations. Some foreign investments may risk being subject to repatriation controls that could render such securities illiquid.Other countries might undergo nationalization, expropriation, political changes, governmental regulation, social instability or diplomatic developments (including war) that could adversely affect the economies of such countries or the value of the investments in those countries.Additional risks include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. Portfolio Borrowing The Portfolio may leverage up to 5% of its assets to fund investment activities or to achieve higher returns.The Portfolio may borrow money from banks for temporary or emergency purposes in order to meet redemption requests.To reduce its indebtedness, the Portfolio may have to sell a portion of its investments at a time when it may be disadvantageous to do so.In addition, interest paid by the Portfolio on borrowed funds would decrease the net earnings of both the Portfolio and your investment in the Fund. Derivatives Risk The Portfolio may invest in derivatives such as options.The successful use of these investment practices depends on the Investment Adviser’s or Sub-Adviser’s ability to forecast stock price movements correctly.Should stock prices move unexpectedly, the Portfolio may not achieve the anticipated benefits of the transactions, or may realize losses, and thus be in a worse position than if such strategies had not been used.Unlike many exchange-traded options, there are no daily price fluctuation limits for certain options, and adverse market movements could therefore continue for an unlimited extent over a period of time.In addition, the correlation between movements in the prices of options and movements in the prices of the securities hedged or used for cover will not be perfect and could produce unanticipated losses. 8 The Portfolio’s ability to dispose of its positions in options, depends on the availability of liquid markets in such instruments.Markets in options with respect to a number of types of securities are relatively new and still developing.It is impossible to predict the amount of trading interest that may exist in various types of options.If a secondary market does not exist for an option purchased or written by the Portfolio, it might not be possible to effect a closing transaction in the option (i.e., dispose of the option), with the result that (1) an option purchased by the Portfolio would have to be exercised in order for the Portfolio to realize any profit and (2) the Portfolio may not be able to sell portfolio securities covering an option written by the Portfolio until the option expires or it delivers the underlying security, upon exercise.Therefore, no assurance can be given that the Portfolio will be able to utilize these instruments effectively.In addition, the Portfolio’s ability to engage in options transactions may be limited by tax considerations and the use of certain hedging techniques may adversely impact the characterization of income to the Portfolio for U.S. federal income tax purposes. Investing in Investment Grade Debt Securities and Below Investment Grade Debt Securities Investments in debt securities pose different risks.The value of fixed income securities generally will fall if interest rates rise.The value of these securities may also fall as a result of other factors such as the performance of the issuer, the market perception of the issuer or general economic conditions.These investments also involve a risk that the issuer may not be able to meet its principal and interest payment obligations.Fixed income securities having longer maturities involve greater risk of fluctuations in value. Investments in debt securities rated below investment grade, i.e., junk bonds, and unrated securities of comparable quality are subject to the increased risk of an issuer’s inability to meet principal and interest payment obligations.These securities may be subject to greater price volatility due to such factors as specific corporate or municipal developments, interest rate sensitivity, negative perceptions of the junk bond markets generally and less secondary market liquidity. Portfolio Holdings Information A description of the Portfolio’s policiesand procedures with respect to the disclosure of its portfolio securities is available in the Fund’s SAI.Currently, disclosure of the Portfolio’s holdings is required to be made quarterly within 60 days of the end of each fiscal quarter in the Annual Report and Semi-Annual Report to Fund shareholders and in the quarterly holdings report on Form N-Q (first and third quarters).The Annual and Semi-AnnualReports will be available by contacting Kinetics Mutual Funds, Inc., c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or calling (800) 930-3828.In addition, the Company publishes on its webpage (www.kineticsfunds.com) month-end(a) top fifteen portfolio holdings of the Portfolio and their percentage of the portfolio holdings, and (b) the top five performing and bottom five performing portfolio holdings of the Portfolio, in each case no earlier than twenty calendar days after the end of each calendar month.This information will be available on the website until the date on which the Fund files its next quarterly portfolio holdings report on Form N-CSR or Form N-Q with the SEC or until the next month in which portfolio holdings are posted in accordance with the above policy. Management of the Fund and the Portfolio Investment Adviser 9 The Portfolio’s investment adviser is Kinetics Asset Management, Inc. (“Investment Adviser”), 16 New Broadway, Sleepy Hollow, New York 10591.Founded in 1996, the Investment Adviser provides investment advisory services to a family of eight mutual funds with discretionary management authority over approximately $10.2 billion in assets at December 31, 2006.The Investment Adviser has selected, and the Company’s Board of Directors has approved, Aqua Terra Asset Management LLC (“Sub-Adviser” or “Aqua Terra”) as sub-adviser for the Portfolio.Aqua Terra, 4 Tower Bridge, 200 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428, is a majority owned subsidiary of Boenning & Scattergood Holdings, Inc.Founded in 1913, Boenning & Scattergood is a full service investment and brokerage firm.Aqua Terra provides investment advisory services in the water and water infrastructure sector. The Investment Adviser will review, monitor and report to the Board of Trustees of the Trust on the performance and investment procedures of Aqua Terra and assist and consult with Aqua Terra in connection with the Portfolio’s investment program.The Investment Adviser will also be responsible for the selection of broker-dealers and the negotiation of commission rates for transactions of the Portfolio.Aqua Terra, under the supervision of the Investment Adviser, is responsible for decisions to buy and sell securities for the Portfolio.Payments to the Sub-Adviser for its services are made by the Investment Adviser, not by the Portfolio.The Investment Adviser is entitled to receive an annual fee from the Portfolio for its services of 1.25% of the Portfolio’s average daily net assets.For its services, Aqua Terra receives sub-advisory fees from the Investment Adviser at the annual rate of .35% of daily net assets of the Portfolio. A discussion regarding the basis of the Board’s approval of the investment advisory and investment sub-advisory agreements for the Portfolio will be available in the Company’s semi-annual report to shareholders for the period ending June 30, 2007. Kinetics as the Investment Adviser to the Portfolio, and Aqua Terra as Sub-Adviser, are each engaged in a broad range of portfolio management, portfolio advisory and other business activities.Their services are not exclusive to the Portfolio and nothing prevents them, or any affiliates, from providing similar services to other investment funds and other clients (whether or not their investment objectives, strategies, or criteria are similar to those of the Portfolio) or from engaging in other activities. Investment Professionals for the Sub-Adviser William S. Brennan serves as the portfolio manager and is responsible for the day-to-day management of the Portfolio.Gerard Sweeney serves as a research analyst. Mr. Brennan has been President & Managing Partner of Aqua Terra, a subsidiary of Boenning & Scattergood since its inception on November 14, 2006, and will serve as the portfolio manager of the Portfolio.He joined Boenning & Scattergood in 2004 as managing director, Director of Equities, after working at Avondale Partners beginning in 2002, where he was Director, Institutional Sales.Prior to Avondale Partners, he was senior analyst and vice president at Pitcairn Investment Management from 2001 to 2002 and the executive vice president of Sequoia Software, a public software company from 2000 to 2001.He is also an Adjunct Professor in the Graduate MBA program at Villanova University School of Business and an Adjunct Finance Professor at Cabrini College.From 1999 through 2006, He served as a strategy and portfolio advisor to a private hedge fund that invests in the domestic and international water sectors. Mr. Sweeney has been a Senior Analyst and Portfolio Administrator for Aqua Terra since its inception on November 14, 2006. Prior to his involvement with Aqua Terra, he was a vice president at Boenning & Scattergood where he served as Equity Syndicate Manager and a senior institutional equity salesperson from 2004 to 2006.From 2000 through 2004, he was a member of Janney Montgomery Scott’s Syndicate Desk specializing in water related equity financings.Prior to his employment with Janney, Montgomery Scott, he was a trader with International Raw Materials which brokered transactions in agricultural chemicals domestically and internationally. 10 The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of securities in the Fund. Valuation of Fund Shares Shares of the Fund’s Advisor Class A and Advisor Class C shares are sold at NAV per share plus any applicable sales charge (see “Description of Advisor Classes”).The NAV is determined by the Fund as of the close of regular trading (generally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange (the “Exchange”) is open for unrestricted business.Purchase and redemption requests are priced at the next NAV calculated after receipt and acceptance of a completed purchase or redemption request.The NAV for each Class of shares of the Fund is determined by dividing the value of the Fund’s securities, cash and other assets attributable to that Class, minus all expenses and liabilities attributable to that Class, by the number of shares outstanding of that Class.The NAV for a Class of shares of the Fund takes into account the expenses and fees of that Class, including management, administration, distribution and shareholder servicing fees, which are accrued daily.The NAV of the Portfolio is calculated at the same time and in generally the same manner (i.e. assets-liabilities/ # of shares NAV) as those of the Fund’s Classes. The Portfolio’s securities are valued each day at the last quoted market price on the securities’ principal exchange.If market quotations are not readily available or if events occur that may significantly affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the Exchange, securities will be valued at their fair market value as determined in good faith in accordance with procedures approved by the Board of Trustees.Situations involving significant events include, but are not limited to, those where: a security’s trading has been halted or suspended; the security has been de-listed from a national exchange; or the security has not been traded for an extended period of time.In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Portfolio prices its shares.See “Trading in Foreign Securities.”The Portfolio may use independent pricing services to assist in calculating the NAV of the Portfolio’s shares. Fair valuation of securities introduces an element of subjectivity to the pricing of securities.As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes.If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Investment Adviser compares the new market quotation to the fair value price to evaluate the effectiveness of the Portfolio’s fair valuation procedures. Trading in Foreign Securities Trading in foreign securities may be completed at times when the Exchange is closed.In computing the NAV of the Fund and the Portfolio, the value of a foreign security is determined as of the close of trading on the foreign exchange on which it is principally traded or as of the scheduled close of trading on the Exchange, whichever is earlier, at the closing sales prices provided by approved pricing services or other alternate sources.In the absence of sales, the last available mean price between the closing bid and asked prices will be used.Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees.Values of foreign securities are translated from the local currency into U.S. dollars on the bases of the foreign currency exchange rates, as provided by an independent pricing service or reporting agency, generally prior to the close of the Exchange.Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the Exchange, which events would not be reflected in the computation of the Portfolio’s NAV.If events materially affecting the value of such securities or currency exchange rates occur during such time period, the securities will be valued at their fair value as determined in good faith by or under the direction of the Board of Trustees. 11 How to Purchase Shares In General Advisor Class A and Advisor Class C shares of the Fund are sold at NAV, subject to the applicable sales charge, and will be credited to a shareholder’s account at the NAV next computed after an order is received.The minimum initial investment for both regular accounts and individual retirement accounts is $2,500 ($2,000 for Coverdell Education Savings Accounts).The minimum subsequent investment for all types of accounts (including Coverdell Education Savings Accounts) is $100.The Company reserves the right to vary or waive any minimum investment requirement.The Fund reserves the right to reject any purchase order if, in its opinion, it is in the Fund's best interest to do so.A service fee of $25.00 will be deducted from a shareholder’s Fund account for any purchases that do not clear.Your order will not be accepted until the completed New Account Application Form is received by the Fund or its transfer agent. Investing by Telephone If you have completed the Telephone Purchase Authorization section of the New Account Application Form, you may purchase additional shares by telephoning the Fund toll free at (800) 930-3828.This option allows investors to move money from their bank account to their Fund account upon request.Only bank accounts held at domestic institutions that are Automated Clearing House (“ACH”) members may be used for telephone transactions.Your purchase will take place at the NAV determined on the day your order is placed, provided that your order is received prior to 4:00 p.m. Eastern time. The minimum telephone purchase is $100.You may not make your initial purchase of the Fund’s shares by telephone. Automatic Investment Plan Once an account has been established, you may purchase shares of the Fund through an Automatic Investment Plan (“AIP”).You can have money automatically transferred from your checking, savings or bank money market account on a weekly, bi-weekly, monthly, bi-monthly or quarterly basis.In order to participate in the AIP each purchase must be in an amount of $100 or more. To be eligible for the AIP, your bank must be a domestic institution that is an ACH member.If your bank rejects your payment, the Fund’s transfer agent will charge a $25 fee to your account.To begin participating in the AIP, please complete the AIP section on the New Account Application Form or call the Fund’s transfer agent at (800) 930-3828.The first AIP purchase will take place no earlier than 15 days after the Fund’s transfer agent has received your request. Any request to change or terminate your AIP should be submitted to the transfer agent 5 days prior to the desired effective date of such change or termination.The Fund may modify or terminate the AIP at any time. Purchase By Mail To purchase the Fund’s shares by mail, simply complete and sign the enclosed New Account Application Form and mail it, along with a check made payable to the Water Infrastructure Fund,c/o Kinetics Mutual Funds, Inc., to: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S. Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 12 All purchases by check must be in U.S. dollars drawn on a bank located within the United States.The Fund will not accept payment in cash or money orders.The Fund also does not accept cashier’s checks in amounts of less than $10,000.To prevent check fraud, the Fund will not accept third party checks, Treasury checks, credit card checks, traveler’s checks or starter checks for the purchase of shares.The Fund is unable to accept post-dated checks, post-dated on-line bill pay checks, or any conditional order or payment. Purchase By Wire To open an account by wire, a completed New Account Application Form is required before your wire can be accepted.You can mail or overnight deliver your New Account Application Form to the transfer agent at the above address.Upon receipt of your completed New Account Application Form, an account will be established for you.You will need to provide the assigned account number to your bank when instructing it to wire the funds. Your bank must include along with the wire the name of the Fund, the account number and your name so that monies can be correctly applied.To ensure proper application of wired funds, please call (800) 930-3828 to notify the Fund that the wire is coming.The Fund is not responsible for delays resulting from the banking or Federal Reserve wire system.Please use the following wiring instructions: Wire to: U.S. Bank, N.A. ● ABA Number: 075000022 ● Credit: U.S. Bancorp Fund Services, LLC ● Account: 112-952-137 ● Further Credit: Kinetics Mutual Funds, Inc. The Water Infrastructure Fund (Shareholder Name/Account Registration) (Shareholder Account Number) Subsequent Investments You may add to your account at any time by purchasing shares by mail, by telephone, or by wire (minimum $100).To purchase by mail, submit your check with the remittance form attached to your individual account statement.To purchase by telephone, call (800) 930-3828 prior to 4:00 p.m. Eastern time to place your order.To ensure proper application of wired funds, please call (800) 930-3828to notify the Fund that the wire is coming.All purchase requests must include your shareholder account number. Individual Retirement Accounts You may invest in the Fund by establishing a tax-sheltered IRA.The Fund offers Traditional IRA, Roth IRA, and Coverdell Education Savings Accounts.For additional information on IRA options, please call (800) 930-3828. Investing Through Brokers or Agents You may invest in each Fund through brokers or agents who have entered into selling agreements with the Fund’s distributor.The broker or agent may set their own initial and subsequent investment minimums.You may be charged a fee if you use a broker or agent to buy or redeem shares of the Fund. How to Redeem Shares In General You may redeem part or all of your shares of the Fund on any business day that the Fund calculates its NAV.To redeem shares, you must contact the Fund either by mail or by phone to place a redemption order.You should request your redemption prior to market close to obtain that day’s closing NAV.Redemption requests received after the close of the Exchange will be treated as though received on the next business day. 13 The Fund will generally send redemption proceeds the next business day and, in any event, no later than seven days after the receipt of a redemption request in “good order” (see below).Please note, however, that when a purchase order has been made by check, the Fund will not be able to send your redemption proceeds until the purchase check has cleared.This may take up to 12 days. Redemption proceeds may be sent to the address of record, wired to a shareholder’s bank account of record, or sent via electronic funds transfer through the ACH network to the shareholder’s bank account of record.Wires are subject to a $15 fee paid by the investor, but the investor does not incur any charge when proceeds are sent via the ACH system. If the redemption proceeds are requested to be sent to an address other than the address of record, or if the address of record has been changed within 15 days of the redemption request, the request must be in writing with your signature guaranteed.Signature guarantees can be obtained from banks and securities dealers, but not from a notary public.The Fund will not be responsible for interest lost on redemption amounts due to lost or misdirected mail. A signature guarantee of each owner is required in the following situations: » If ownership has changed on your account » When redemption proceeds are sent to any person, address or bank account not on record » Written requests to wire redemption proceeds (if not previously authorized on the account) » When establishing or modifying certain services on an account » If a change of address request was received by the Transfer Agent within the last 15 days In addition to the situations described above, the Fund and/or Transfer Agent reserve the right at their discretion to require a signature guarantee in other circumstances. Written Redemption You can execute most redemptions by furnishing an unconditional written request to the Fund to redeem your shares at the current NAV.Redemption requests in writing should be sent to the Fund’s transfer agent at: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 Requests for redemption in "good order" must: » indicate the name of the Fund, » be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required), » specify the number of shares or dollar amount to be redeemed, and » indicate your account registration number Telephone Redemption If you are authorized to perform telephone transactions (either through your New Account Application Form or by subsequent arrangement in writing with the Fund) you may redeem shares in any amount, but not less than $100, by instructing the Fund by phone at (800) 930-3828.A signature guarantee may be required of all shareholders in order to add or change telephone redemption privileges on an existing account. 14 Note: Neither the Fund nor any of its service providers will be liable for any loss or expense in acting upon instructions that are reasonably believed to be genuine.To confirm that all telephone instructions are genuine, the Fund will use reasonable procedures, such as requesting: » your Fund account number » the name in which your account is registered » the social security or tax identification number under which the account is registered » the address of the account holder, as stated in the New Account Application Form Once a telephone transaction has been placed, it cannot be cancelled or modified. Wire Redemption Wire transfers may be arranged to redeem shares.However, the Fund’s transfer agent charges a $15 fee per wire redemption against your account for this service.The minimum wire redemption amount is $100. Systematic Withdrawal Plan If you own shares with a value of $10,000 or more, you may participate in the Systematic Withdrawal Plan.The Systematic Withdrawal Plan allows you to make automatic withdrawals from your account at regular intervals (monthly, quarterly, semi-annually or annually).Proceeds can be mailed via check to the address of record, or sent via electronic funds transfer through the ACH system to your bank account if your bank is an ACH system member.If the date you select to have the withdrawal made is a weekend or holiday, the redemption will be made on the next business day.Money will be transferred from your Fund account to the account you chose at the interval you select on the New Account Application Form.If you expect to purchase additional shares of the Fund, it may not be to your advantage to participate in the Systematic Withdrawal Plan because of the possible adverse tax consequences of making contemporaneous purchases and redemptions.The minimum systematic withdrawal amount is $100. The Fund’s Right to Redeem an Account The Fund reserves the right to redeem the shares of any shareholder, other than a shareholder who is an active participant in the AIP, whose account balance is less than $1,000, other than as a result of a decline in the NAV of the Fund.The Fund will provide shareholders with written notice 30 days prior to redeeming the shareholder’s account. IRA Redemption If you are an IRA shareholder, you must indicate on your redemption request whether or not to withhold federal income tax.Requests that do not indicate a preference will be subject to withholding. Householding In an effort to decrease costs, the Fund will start reducing the number of duplicate prospectuses and annual and semi-annual reports you receive by sending only one copy of each to those addresses shared by two or more accounts.Call toll-free at (800) 930-3828 to request individual copies of these documents.The Fund will begin sending individual copies 30 days after receiving your request.This policy does not apply to account statements. Redemption Fees The Fund is designed for long-term investors willing to accept the risks associated with a long-term investment.In accordance with policies and procedures adopted by the Board of Directors of the Company, frequent purchases and redemptions of Fund shares are not encouraged but are generally permitted by the Fund.Such purchases and redemptions may have an adverse effect on other Fund shareholders, including, without limitation, the possibility of disrupting portfolio management strategies, increasing brokerage and administrative costs, harming Fund performance and possible dilution in the value of Fund shares held by long-term shareholders.The Company may, in its sole discretion, reject purchase orders when, in the judgment of management, such rejection is in the best interest of the Fund and its shareholders.Advisor Class A and Advisor Class C shares of the Fund assess a 2.00% fee on the redemption or exchange of shares held for less than 30 days.These fees will be paid to the Fund to help offset any potential transaction costs. 15 The Fund will use the first-in, first-out method to determine the 30 day holding period.Under this method, the date of the redemption or exchange will be compared to the earliest purchase date of shares held in the account.If this holding period is less than 30 days, the redemption fee will be assessed.The redemption fee will be applied on redemptions and exchanges of each investment made by a shareholder that does not remain in the Fund for a 30 day period from the date of purchase. The redemption fee will not apply to any shares purchased through reinvested distributions (dividends and capital gains), or to redemptions made under the Fund’s systematic programs, as these transactions are typically de minimis.This fee will also not be assessed to the participants in employer-sponsored retirement plans that are held at the Fund in an omnibus account (such as 401(k), 403(b), 457, Keogh, Profit Sharing Plans, and Money Purchase Pension Plans) or to accounts held under trust agreements at a trust institution held at the Fund in an omnibus account.The redemption fee will also not be assessed to accounts of the Investment Adviser or Sub-Adviser(s) or their affiliates used to capitalize the Fund as such accounts will be used specifically to control the volatility of shareholder subscriptions and redemptions to avoid adverse effects to the Fund. The Fund reserves the right to modify or eliminate the redemption fees or waivers at any time and will give shareholders 60 days’ prior written notice of any material changes, unless otherwise provided by law.The redemption fee policy may be modified or amended in the future to reflect, among other factors, regulatory requirements mandated by the SEC. Currently, the Fund is limited in its ability to assess or collect the redemption fee on all shares redeemed by financial intermediaries on behalf of their customers.For example, where a financial intermediary is not able to determine if the redemption fee applies and/or is not able to assess or collect the fee, or does not collect the fee at the time of a redemption, the Fund will not receive the redemption fee.If Fund shares are redeemed by a financial intermediary at the direction of its customers, the Fund may not know whether a redemption fee is applicable or the identity of the customer who should be assessed the redemption fee.Due to operational differences, a financial intermediary’s methods for tracking and calculating the redemption fee may differ in some respects from that of the Fund.If necessary, the Fund may prohibit additional purchases of Fund shares by a financial intermediary or by certain of the intermediaries’ customers. Notice of Customer Verification In compliance with the USA PATRIOT Act of 2001, please note that the Fund’s transfer agent will verify certain information on your New Account Application Form as part of the Fund’s Anti-Money Laundering Program.As requested on the New Account Application Form, you should supply your full name, date of birth, social security number and permanent street address.Mailing addresses containing only a P.O. Box will not be accepted.Please contact the Fund’s transfer agent at (800) 930-3828 if you need additional assistance when completing yourNew Account Application Form. If we do not have a reasonable belief as to the identity of a shareholder, the account will be rejected or you will not be allowed to perform a transaction on the account until such information is received.The Fund also reserves the right to close the account within 5 business days if clarifying information/documentation is not received. 16 Exchange Privilege You can exchange your shares in the Fund for shares of the same class of any other Fund offered by the Company, including shares of the Kinetics Government Money Market Fund, (e.g., Advisor Class A shares for Advisor Class A shares).If the exchange is requested via telephone, a $5 per exchange transaction cost will be assessed.You should carefully read the prospectus of a fund before exchanging shares into that fund.Be advised that exercising the exchange privilege consists of two transactions: a sale of shares in one fund and the purchase of shares in another. Therefore, an exchange of Fund shares held for less than 30 days may be subject to a 2.00% redemption fee.See “Redemption Fees” above.Further, exchanges may have certain tax consequences and you could realize short- or long-term capital gains or losses.Exchanges are generally made only between identically registered accounts unless you send written instructions with a signature guarantee requesting otherwise.You should request your exchange prior to market close to obtain that day’s closing NAV. Exchange requests received after the close of the Exchange will be treated as though received on the next business day.In all cases, shareholders will be required to pay a sales charge only once. Call (800)930-3828 to learn more about the other funds or classes offered by the Company and about exercising your exchange privilege. Distributions and Taxes Distributions Distributions (whether treated for tax purposes as ordinary income or long-term capital gains) to shareholders of the Fund are generally paid in additional shares of the same Class of the Fund in which shareholders are already invested, with no sales charge, based on the NAV of that Class as of the close of business on the record date for such distributions.However, you may elect on the New Account Application Form to receive distributions as follows: Option 1: To receive income dividends and capital gain distributions in additional Fund shares, or Option 2: To receive all income dividends and capital gain distributions in cash. The Fund intends to pay any dividends from investment company taxable income and distributions representing capital gain at least annually, usually in December.The Fund will advise each shareholder annually of the amounts of dividends from investment company taxable income and of net capital gain distributions reinvested or paid in cash to the shareholder during the calendar year. If you select Option 2 and the U.S. Postal Service cannot deliver your distribution checks, or if your distribution checks remain uncashed for six months, your distribution checks will be reinvested in your account at the then current NAV of the Fund and your election will be converted to the purchase of additional shares. Taxes The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future.Except where noted, the summary assumes you are a U.S. citizen or resident or otherwise subject to U.S. federal income tax.You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. Fund Distributions The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss).Except as discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional shares.Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below. 17 Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, regardless of how long you have held your shares.The maximum long-term capital gain rate applicable to individuals, estates and trusts is currently 15%. Distributions of “qualifying dividends” will also generally be taxable to you at long-term capital gain rates, as long as certain requirements are met.In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or “qualified” foreign corporations (“qualifying dividends”), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates.But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund.For the lower rates to apply, noncorporate shareholders must have owned their Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Fund’s ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend).The amount of the Fund’s distributions that are otherwise qualifying dividends may be reduced as a result of the Fund’s securities lending activities. Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception.Distributions declared by a Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31. It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The Portfolio may make an election to treat a proportionate amount of those taxes as constituting a distribution to each shareholder, which will allow you either (1) to credit that proportionate amount of taxes against U.S. Federal income tax liability as a foreign tax credit or (2) to take that amount as an itemized deduction. A portion of distributions attributable to investments in U.S. corporations, if any, paid by the Fund to shareholders who are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.The amount of such dividends qualifying for this deduction may, however, be reduced as a result of the Fund’s securities lending activities as described above.You will be notified annually of the tax status of distributions to you. You should note that if you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital.This is known as “buying into a dividend.” Sales or Exchanges You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange or redemption of your shares in the Fund, including an exchange of shares pursuant to the Fund’s exchange privilege, based on the difference between your tax basis in the shares and the amount you receive for them.Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you sell or exchange them.(To aid in computing your tax basis, you generally should retain your account statements for the periods during which you held shares.) Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.Additionally, any loss realized on a sale or redemption of shares of the Fund may be disallowed under “wash sale” rules to the extent the shares disposed of are replaced with other shares of the same Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Fund.If disallowed, the loss will be reflected in an adjustment to the basis of the shares acquired. 18 IRAs and Other Tax-Qualified Plans One major exception to thepreceding tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Backup Withholding On the New Account Application Form, you will be asked to certify that your social security number or taxpayer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS.If you are subject to backup withholding or you did not certify your taxpayer identification number, the IRS requires the Fund to withhold a percentage of any dividend and redemption or exchange proceeds.The Fund reserves the right to reject any application that does not include a certified social security or taxpayer identification number.The current withholding rate is 28%. U.S. Tax Treatment of Foreign Shareholders Nonresident aliens, foreign corporations and other foreign investors in the Fund will generally be exempt from U.S. federal income tax on Fund distributions attributable to net capital gains, and, for distributions attributable to Fund taxable years beginning before January 1, 2008, net short-term capital gains, of the Fund.Tax may apply to such capital gain distributions, however, if the recipient’s investment in the Fund is connected to a trade or business of the recipient in the United States or if the recipient is present in the United States for 183 days or more in a year and certain other conditions are met. Fund distributions attributable to other categories of Fund income, such as dividends from portfolio companies, will generally be subject to a 30% withholding tax when paid to foreign shareholders.The withholding tax may, however, be reduced (and, in some cases, eliminated) under an applicable tax treaty between the United States and a shareholder’s country of residence or incorporation, provided that the shareholder furnishes the Fund with a properly completed Form W-8BEN to establish entitlement for these treaty benefits.Also, for Fund taxable years beginning before January 1, 2008, Fund distributions attributable to U.S.-source interest income of the Fund will be exempt from U.S. federal income tax. All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in the Fund. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions.State income taxes may not apply, however, to any portions of the Fund’s distributions, if any, that are attributable to interest on U.S. government securities or interest on securities of the particular state or localities within the state. You should consult your tax adviser regarding the tax status of distributions in your state and locality. Sunset of Tax Provisions Some of the tax provisions described above are subject to sunset provisions.Specifically, a sunset provision provides that the 15% long-term capital gain rate and the taxation of dividends at the long-term capital gain rate will change for taxable years after 2010. More tax information relating to the Fund is provided in the Statement of Additional Information. Distribution of Shares Rule 12b-1 Plans The Fund has adopted a Retail Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, which allows the Fund to pay distribution fees for the sale and distribution of its Advisor Class A shares and Advisor Class C shares, respectively.Under the Plan for Advisor Class A shares, the Fund may pay as compensation up to an annual rate of 0.50% of the average daily NAV of Advisor Class A shares to the distributor or other qualified recipient under the Plan.Under the Plan for Advisor Class C shares, the Fund may pay as compensation up to an annual rate of 0.75% of the average daily NAV of Advisor Class C shares to the distributor.As these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. 19 Distributor Kinetics Funds Distributor, Inc. (“KFD”), an affiliate of the Investment Adviser, 16 New Broadway, Sleepy Hollow, New York, 10591 is the distributor for the shares of the Fund.KFD is a registered broker-dealer and member of the National Association of Securities Dealers, Inc.Shares of the Fund are offered on a continuous basis. Shareholder Servicing Agents The Investment Adviser is responsible for paying various shareholder servicing agents for performing shareholder servicing functions and maintaining shareholder accounts.These agents have written shareholder servicing agreements with the Investment Adviser and perform these functions on behalf of their clients who own shares of the Fund.For this service, the Investment Adviser receives an annual shareholder-servicing fee from each Class equal to 0.25% of the Fund’s average daily net assets attributable to that Class. Arrangements with Certain Financial Institutions The Investment Adviser and/or its affiliates may make payments to selected affiliated or unaffiliated broker-dealers and other financial institutions (“Financial Institutions”) from time to time in connection with the sale, distribution, retention and/or servicing of shares of the Fund and other funds managed by the Investment Adviser or its affiliates.These payments are made out of the Investment Adviser’s and/or its affiliates’ own assets and are not an additional charge to the Fund.The payments are in addition to the shareholder service fees described in this Prospectus.The amount of such payments may be significant in amount and the prospect of receiving any such payments may provide Financial Institutions or their employees with an incentive to favor sales of shares of the Fund over other investment options.You should contact your Financial Institution for more information about the payments it may receive and potential conflicts of interest. Fund Administrator U.S. Bancorp Fund Services, LLC (“USBFS”) serves as Administrator to the Fund and Portfolio. Custodian, Transfer Agent, Dividend Disbursing Agent and Fund Accountant U.S. Bank, N.A. serves as Custodian for the Fund’s cash and securities.The Custodian does not assist in, and is not responsible for, investment decisions involving assets of the Fund.USBFS acts as the Fund’s Transfer Agent, Dividend Disbursing Agent and Fund Accountant. Description of Advisor Classes This Prospectus offers shares of the Advisor Class A and Advisor Class C shares of the Fund.The Fund’s Advisor Classes of shares are sold through broker-dealers and other financial intermediaries that provide investment services to the Fund’s shareholders.You should always discuss with your broker-dealer or financial advisor the suitability of your investment. The Fund also offers a No Load Class and an Institutional Class of shares through separate prospectuses.The No Load Class and Institutional Class of shares may be purchased without the imposition of any sales charges or 12b-1 fees. 20 Advisor Class A Shares Advisor Class A shares are retail shares that may be purchased by individuals or IRAs.With Advisor Class A shares, you will pay a sales charge when you invest unless you qualify for a reduction or waiver of the sales charge.Advisor Class A shares may impose a Rule 12b-1 fee of up to 0.50% (currently limited to 0.25%) of average daily net assets which is assessed against the Advisor Class A shares of the Fund. If you purchase Advisor Class A shares of the Fund you will pay the NAV next determined after your order is received plus a sales charge (shown in percentages below) depending on the amount of your investment.The sales charge is calculated as follows: Amount of Transaction Sales Charge as a % Of Offering Price Sales Charge as a % of Net Asset Value Dealers Reallowance as a % of Offering Price At Least But Less than $0 $50,000 5.75% 6.10% 5.25% $50,000 $100,000 4.75% 4.99% 4.25% $100,000 $250,000 3.75% 3.90% 3.25% $250,000 $500,000 2.75% 2.83% 2.25% $500,000 $1,000,000 2.25% 2.30% 1.75% $1,000,000 and above 0.75% 0.76% 0.65% The Offering Price includes the sales charge paid at the time of investment. Waivers – Advisor Class A Shares You will not have to pay a sales charge on purchases of Advisor Class A shares if: » You are an employee of a broker-dealer or agent that has a selling agreement with the distributor; » You buy Advisor Class A shares under a wrap program or other all inclusive fee program offered by your broker-dealer or agent; or » The sales charge is voluntarily waived under certain circumstances by your broker-dealer or agent at their discretion. Please consult your broker-dealer or agent to determine whether you may be eligible for these waivers. Reducing Your Sales Charge – Advisor Class A Shares You can reduce the sales charge on purchases of Advisor Class A shares by: » purchasing larger quantities of shares or putting a number of purchases together to obtain the quantity discounts indicated above; » signing a letter of intent that you intend to purchase more than $50,000 worth of shares over the next 13 months; (see “Letter of Intent – Advisor Class A Shares” below) » using the reinvestment privilege which allows you to redeem shares and then immediately reinvest them without a sales charge within 60 days; » combining concurrent purchases of Advisor Class A shares from different Funds to obtain the quantity discounts indicated above; and » through rights of accumulation as discussed below. Please note that certain broker-dealers may reduce your sales charges under certain circumstances.Consult your broker-dealer. 21 Rights of Accumulation– Advisor Class A Shares You may combine your new purchase of Advisor Class A shares with other Advisor Class A shares currently owned by you, your spouse, and/or your children under age 21 for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases.The applicable sales charge for the new purchase is based on the total of your current purchase and the current NAV of all other shares you, your spouse and/or your children under age 21 own.You will need to notify the Fund or your financial intermediary at the time of purchase of any other accounts that exist. Letter of Intent– Advisor Class A Shares By signing a Letter of Intent (“LOI”) you can reduce your Advisor Class A sales charge.Your individual purchases will be made at the applicable sales charge based on the amount you intend to invest over a 13-month period.The LOI will apply to all purchases of Advisor Class A shares (excluding the Kinetics Government Money Market Fund).Any shares purchased within 90 days of the date you sign the letter of intent may be used as credit toward completion, but the reduced sales charge will only apply to new purchases made on or after that date.Purchases resulting from the reinvestment of dividends and capital gains do not apply toward fulfillment of the LOI.Shares equal to 5.75% of the amount of the LOI will be held in escrow during the 13-month period.If, at the end of that time the total amount of purchases made is less than the amount intended, you will be required to pay the difference between the reduced sales charge and the sales charge applicable to the individual purchases had the LOI not been in effect.This amount will be obtained from redemption of the escrow shares.Any remaining escrow shares will be released to you. If you establish an LOI with the Fund you can aggregate your accounts as well as the accounts of your immediate family members under age 21.You will need to provide written instruction with respect to the other accounts whose purchases should be considered in fulfillment of the LOI.You will need to notify the Fund or your financial intermediary at the time of purchase of any other accounts that exist. Advisor Class C Shares Advisor Class C shares are retail shares and may be purchased by individuals or IRAs.Advisor Class C shares impose a Rule12b-1 fee of 0.75% of average daily net assets. If you purchase Advisor Class C shares of the Fund, you will pay the NAV next determined after your order is received.There is no initial sales charge on this Class at the time you purchase your shares. Additional information regarding sales load breakpoints is available in the Fund’s SAI.The Fund also provides information regarding the purchase of shares, sales charges and breakpoint eligibility free of charge on their website, www.kineticsfunds.com. Unique Characteristics of Master/Feeder Fund Structure Unlike other mutual funds which directly acquire and manage their own portfolio securities, the Fund invests all of its investable assets in the Portfolio, a separately registered investment company.The Portfolio, in turn, invests in securities, using the strategies described in this Prospectus. In addition to selling a beneficial interest to the Fund, the Portfolio could also sell beneficial interests to other mutual funds or institutional investors.Such investors would invest in the Portfolio on the same terms and conditions and would pay a proportionate share of the Portfolio's expenses.However, other investors in the Portfolio are not required to sell their shares at the same public offering price as the Fund, and might bear different levels of ongoing expenses than the Fund.Shareholders of the Fund should be aware that these differences would result in differences in returns experienced in the different funds that invest in the Portfolio. Such differences in return are also present in other mutual fund structures. Smaller funds investing in the Portfolio could be materially affected by the actions of larger funds investing in the Portfolio.For example, if a large feeder fund were to withdraw from the Portfolio, the remaining funds might experience higher pro rata operating expenses, thereby producing lower returns.Additionally, the Portfolio could become less diverse, resulting in increased portfolio risk.However, that possibility also exists for traditionally structured funds that have large or institutional investors.Funds with a greater pro rata ownership in the Portfolio could have effective voting control of the Portfolio. 22 Certain changes in the Portfolio’s objective, policies or restrictions might require the Company to withdraw the Fund's interest in the Portfolio.Any such withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution from the Portfolio).The Fund could incur brokerage fees or other transaction costs in converting such securities to cash.In addition, a distribution in kind could result in a less diversified portfolio of investments or adversely affect the liquidity of the Fund. The Company’s Board of Directors retains its right to withdraw the Fund’s investments from the Portfolio at any time if the Board of Directors determines that such withdrawal would be in the best interest of the Fund’s shareholders.The Fund would then resume investing directly in individual securities of other issuers or invest in another portfolio of the Trust. The SAI contains more information about the Fund and the Portfolio, the Master/Feeder Fund Structure and the types of securities in which the Portfolio may invest. Counsel and Independent Registered Public Accounting Firm Legal matters in connection with the issuance of shares of common stock of the Fund are passed upon by Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996.Tait, Weller & Baker LLP, 1818 Market Street, Suite 2400, Philadelphia,Pennsylvania 19103, is the independent registered public accounting firm for the Fund. 23 Kinetics Mutual Funds, Inc. The Water Infrastructure Fund Investment Adviser Kinetics Asset Management, Inc and Shareholder Servicing Agent 16 New Broadway Sleepy Hollow, New York, 10591 Sub-Adviser Aqua Terra Asset Management, LLC 4 Tower Bridge 200 Barr Harbor Drive, Suite 300 West Conshohocken, PA 19428-2979 Legal Counsel Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 Independent Registered Public Tait, Weller & Baker LLP Accounting Firm 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Distributor Kinetics Funds Distributor, Inc. 16 New Broadway Sleepy Hollow, NY 10591 Transfer Agent, Fund Accountant, U.S. Bancorp Fund Services, LLC and Administrator 615 East Michigan Street Milwaukee, WI 53202 Custodian U.S. Bank, N.A. 1555 N. River Center Drive, Suite 302 Milwaukee, WI 53212 You may obtain the following and other information on the Fund free of charge: Statement of Additional Information (SAI) dated June 29, 2007 The SAI of the Fund provides more details about the Fund’s policies and management.The Fund’s SAI is incorporated by reference into this Prospectus. Annual and Semi-Annual Report The annual and semi-annual reports for the Fund provide the most recent financial reports and portfolio listings.The annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during the last fiscal year. To receive any of these documents or theFund’s Prospectus, free of charge, to request additional information aboutthe Companyor to make shareholder inquires, please contact us at: By Telephone: By Internet: (800) 930-3828 http://www.kineticsfunds.com By Mail: Kinetics Mutual Funds, Inc. c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 Additionally, the foregoing Fund documents are available on the Fund’s website listed above. SEC: Information about the Fund (including the SAI) can be reviewed and copied at the SEC Public Reference Room in Washington, D.C.Please call 1-202-551-8090 for information relating to the operation of the Public Reference Room.Reports and other information about the Fund are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov.Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing thePublic Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-0102. 1940 Act File No. 811-09303 24 No LoadClass June 29, 2007 Prospectus www.kineticsfunds.com The Water Infrastructure Fund A series of Kinetics Mutual Funds, Inc. Kinetics Logo The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of the Prospectus. Any representation to the contrary is a criminal offense. No LoadClass Table of Contents OVERVIEW 2 THE WATER INFRASTRUCTURE FUND 3 MAIN RISKS OF INVESTING IN THE FUND 6 PORTFOLIO HOLDINGS INFORMATION 9 MANAGEMENT OF THE FUND AND THE PORTFOLIO 9 VALUATION OF FUND SHARES 11 HOW TO PURCHASE SHARES 11 HOW TO REDEEM SHARES 13 EXCHANGE PRIVILEGE 16 DISTRIBUTIONS AND TAXES 17 DISTRIBUTION OF SHARES 19 UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 20 COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 20 No LoadClass Kinetics Mutual Funds, Inc. This Prospectus discusses the No Load Class of The Water Infrastructure Fund (the “Fund”) of Kinetics Mutual Funds, Inc. (the “Company”). Unlike many other investment companies which directly acquire and manage their own portfolios of securities, the Fund seeks its investment objective by investing all of its investable assets in a corresponding portfolio series, the Water Infrastructure Portfolio (the “Portfolio”), of Kinetics Portfolios Trust (the “Trust”), a Delaware statutory trust. The Portfolio is an open-end, non-diversified investment company with investment objectives and strategies identical to those of the Fund. Investors should carefully consider this investment approach. For additional information regarding this investment structure, see “Unique Characteristics of Master/Feeder Fund Structure.” Prospectus This Prospectus provides vital information about the Fund. For your own benefit and protection, please read it before you invest, and keep it on hand for future reference. Investment Adviser Kinetics Asset Management, Inc. Sub- Adviser Aqua Terra Asset Management LLC Minimum Initial Investment $2,500 June 29, 2007 OVERVIEW The Water Infrastructure Fund(the “Fund”) is a non-diversified fund that seeks to provide investors with long-term capital growth and secondarily with current income by investing all of its investable assets in the Portfolio.The Portfolio invests primarily in securities issued by U.S. and foreign companies involved inwater infrastructure and natural resources with a specific water theme and related activities. The Statement of Additional Information (the “SAI”) contains more information about the Fund and the types of securities in which it may invest. Who May Want to Invest The Fund may be appropriate for investors who: » wish to invest for the long-term » want to diversify their portfolios » want to allocate some portion of their long-term investments to value equity investing » are willing to accept the volatility associated with equity investing » appreciate the risks associated with investing in foreign companies 2 THE WATER INFRASTRUCTURE FUND Investment Objective, Principal Investment Strategies and Principal Risks Investment Objective The investment objective of the Fund is long-term growth of capital.The Fund seeks to obtain current income as a secondary objective. Principal Investment Strategies The Fund seeks to achieve its investment objective by investing all of its investable assets in the Portfolio.Under normal circumstances, the Portfolio invests at least 80% of its net assets plus any borrowings for investment purposes in common stocks, convertible securities, fixed-income securities such as bonds and debentures, and warrants, derivatives, and other equity securities having the characteristics of common stocks (such as American Depository Receipts (“ADRs”) and International Depository Receipts (“IDRs”)), of U.S. and foreign companies engaged in water infrastructure and natural resources with a specific water theme and related activities.For purposes of this 80% policy, a company will be considered in the water infrastructure or natural resource industry if at least 50% of its revenues come from water-related activities or activities related to natural resources.The Portfolio may also write and sell options on securities in which it invests for hedging purposes and/or direct investment. Under normal circumstances, the Portfolio will invest no more than 20% of its net assets in fixed income securities.There are no limitations as to the maturities or credit ratings of the fixed income securities in which the Portfolio may invest; provided, however, that the Portfolio will invest no more than 10% of its total assets in convertible and non-convertible debt securities rated below investment grade, also known as junk bonds, or unrated securities which the Investment Adviser has determined to be of comparable quality. The Portfolio aims to invest in securities issued by companies operating in the water infrastructure and natural resource sector globally.The companies targeted in the water sector will include, but are not limited to, water production companies, water conditioning and desalination companies, water suppliers, water transport and distribution companies, companies specializing in the treatment of waste water, sewage and solid, liquid and chemical waste, companies operating sewage treatment plants and companies providing equipment, consulting and engineering services in connection with the above-described activities.Companies targeted in the natural resource sector are those that are dependent on water usage in industries such as agriculture, timber, oil and gas service, hydroelectricity and alternative renewable energy. There are no limitations on the amount that the Portfolio may invest or hold in any single issuer; however, the Portfolio currently intends to limit its investments at the time of purchase to 10% of the Portfolio’s assets in any single position.The companies in which the Portfolio may invest may be large, medium or small in size if, in the Sub-Adviser’s opinion, they meet the Portfolio’s investment criteria. The Sub-Adviser uses a value-based strategy in managing the Fund, which means that both equity and fixed income security purchase selections will be based primarily upon current relative valuation of company fundamentals, although the growth prospects of respective companies within the global water industry will also be considered.When determining the intrinsic value of each potential company for the Portfolio, the Sub-Adviser will primarily focus on traditional valuation metrics including, but not limited to, price to earnings, price to cash flow, book value, price to sales, return on equity, and return on invested capital.In addition, the Sub-Adviser will evaluate the estimated growth prospect for each company by evaluating such metrics as forward price to earnings, and will also use merger and acquisition metrics and sum of the parts valuation (break-up value or private market value) to better ascertain market and intrinsic valuation. 3 The Portfolio may invest up to 20% of its assets in high quality, U.S. short-term debt securities and money market instruments to maintain liquidity.Some of these short-term instruments include commercial paper, certificates of deposit, demand and time deposits and banker’s acceptances, U.S. Government securities (i.e. U.S. Treasury obligations) and repurchase agreements. Temporary Investments To respond to adverse market, economic, political or other conditions, the Portfolio may invest up to 100% of its assets in high quality, U.S. short-term debt securities and money market instruments. To the extent that the Portfolio engages in a temporary defensive strategy, the Portfolio and therefore, the Fund, may not achieve its investment objective. Fund Structure The Portfolio has an investment objective identical to that of the Fund.The Fund may withdraw its investment from the Portfolio at any time if the Board of Directors of the Company determines that it is in the best interests of the Fund to do so.Upon any such withdrawal, the Directors will consider what action might be taken, including investing all of the Fund’s investable assets in another pooled investment entity having substantially the same objective and strategies as the Fund or retaining an investment adviser, including the current Investment Adviser or Sub-Adviser(s), to manage the Fund’s assets directly. Principal Risks of Investment Investing in common stocks has inherent risks that could cause you to lose money.The principal risks of investing in the Fund and indirectly the Portfolio are listed below and could adversely affect the net asset value (“NAV”), total return and the value of the Fund, Portfolio and your investment. » Stock Market Risks: Stock mutual funds are subject to stock market risks and significant fluctuations in value.If the stock market declines in value, the Portfolio is likely to decline in value and you could lose money on your investment. » Stock Selection Risks: The portfolio securities selected by the Investment Adviser or Sub-Adviser(s) may decline in value or not increase in value when the stock market in general is rising and may fail to meet the Portfolio’s and therefore, the Fund’s, investment objective. » Liquidity Risks: The Portfolio’s investments in the securities of small and medium capitalization companies and in non-investment grade fixed income securities makes the Portfolio especially susceptible to the risk that during certain periods the liquidity of certain issuers or industries, or all securities within particular investment categories, will decrease or disappear suddenly and without warning as a result of adverse market or political events, or adverse investor perceptions. » Industry Concentration Risks: Mutual funds that invest a substantial portion of their assets in a particular industry carry a risk that a group of industry-related stocks will decline in price due to industry specific developments.Companies in the same or similar industries may share common characteristics and are more likely to react comparably to industry specific market or economic developments. » Small and Medium-Size Company Risks: The Portfolio may invest in the equity securities of small and medium size companies.Small and medium-size companies often have narrower markets and more limited managerial and financial resources than do larger, more established companies.As a result, their performance can be more volatile and they face a greater risk of business failure, which could increase the volatility of the Portfolio’s assets. » Foreign Securities Risks: The Portfolio may invest in foreign securities directly or through ADRs and IDRs.Foreign securities can carry higher returns but involve more risks than those associated with U.S. investments.Additional risks associated with investment in foreign securities include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. 4 » Non-Diversification Risks: As a non-diversified investment company, more of the Portfolio’s assets may be concentrated in the securities of any single issuer, which makes the Portfolio more susceptible to financial, economic or market events impacting such issuer. » Interest Rate Risk– The risk that when interest rates increase, fixed-income securities held by the Portfolio will decline in value.Long-term fixed-income securities will normally have more price volatility because of this risk than short-term fixed-income securities. » Credit/Default risk – The risk that an issuer or guarantor of fixed-income securities held by the Portfolio (which may have low credit ratings), or the counterparty in a derivative investment, may default on its obligation to pay interest and repay principal. » Below-Investment Grade Debt Securities Risks:Generally, non-investment grade debt securities, i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities. » New Fund Risks:There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Directors or the Investment Adviser or Sub-Adviser(s) may recommend that the Fund be liquidated. » Water Infrastructure Industry Specific Risks:Adverse developments in the water industry may significantly affect the value of the shares of the Fund.Companies involved in the water industry are subject to environmental considerations, changes in taxation and government regulation, price and supply fluctuations, changes in technology, competition and water conservation.There can be no assurances that the regulatory environment will remain the same.Unfavorable regulatory rulings, including structural changes to pricing and the competitive playing field, may affect the underlying companies’ ability to produce favorable returns. » Value Style Risks:Over time, a value-based investment style may go in and out of favor, causing the Portfolio to sometimes underperform other funds that use different investment styles, such as a growth-based investment style. » Derivatives Risks:The Portfolio’s investments in options and other derivative instruments may result in loss.Derivative instruments may be illiquid, difficult to price and leveraged so that small changes may produce disproportionate losses to the Portfolio. » Natural Resources Investment Risks:Investments in companies in natural resources industries can be significantly affected by (often rapid) changes in the supply of, or demand for, various natural resources.These companies also may be affected by changes in energy prices, international political and economic developments, energy conservation, the success of exploration projects, changes in commodity prices, and tax and other government regulations. Performance of the Fund Because the Fund has not yet commenced operations, there is no performance information for the Fund. Fees and Expenses of theFund As an investor, you pay certain fees and expenses if you buy and hold shares of the Fund.These fees and expenses are described in the table below and are further explained in the example that follows. Fee Table(1) Shareholder Transaction Expenses(2) (fees paid directly from your investment) No Load Class Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5 Maximum Deferred Sales Charge (Load) (as a percentage of offering price) None Maximum Sales Charge (Load) on Reinvested Dividends None Redemption Fee (as a percentage of amount redeemed, if applicable) (3) 2.00% Exchange Fee(4) None Maximum Account Fee(5) None Annual Operating Expenses (expenses deducted from Fund assets) No Load Class Management Fees(6) 1.25% Distribution (Rule 12b-1) Fees None Other Expenses(7) 1.25% Total Annual Fund Operating Expenses(7)(8) 2.50% (1) This fee table and the example below reflect the aggregate expenses of the Fund and the Portfolio. (2) You will be assessed fees for outgoing wire transfers ($15.00 per wire), returned checks and exchanges executed by telephone between the Fund and any other series of the Company. (3) You will be charged a redemption fee equal to 2.00% of the net amount of the redemption if you redeem or exchange your No Load Class shares less than 30 days after you purchase them.If this fee is imposed it would raise the expenses of your shares.Such fees, when imposed, are credited directly to the assets of the Fund to help defray any potential expenses to the Fund from short-term trading activities.These fees are not used to pay distribution or sales fees or expenses.The redemption fee will not be assessed on certain types of accounts or under certain conditions.Please see “Redemption Fees” below for a list of the types of accounts and conditions under which this fee will not be assessed. (4) The Fund’s transfer agent charges a $5 transaction fee to shareholder accounts for telephone exchanges between any two series of the Company.The Fund’s transfer agent does not charge a transaction fee for written exchange requests. (5) IRA accounts are assessed a $15.00 annual fee. (6) The management fees paid by the Fund reflect the proportionate share of fees allocated to the Fund from the Portfolio for investment advisory services. (7) Because the Fund is new, these expenses, which include custodian, transfer agency, and other customary Fund expenses, are based on estimated amounts for the Fund’s current fiscal year. (8) The Investment Adviser to the Water Infrastructure Portfolio has voluntarily agreed to waive fees and reimburse expenses so that Total Annual Fund Operating Expenses do not exceed 1.74%. These waivers and reimbursements may be discontinued at any time. Example This Example is intended to help you compare the cost of investing in the No Load Class of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the No Load Class of the Fund for the time periods indicated and then redeem all of your shares at the end of these periods.The Example also assumes that your investment has a 5% rate of 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 cost for the Fund would be: 1 Year 3 Years No Load Class $253 $779 Main Risks of Investing in the Fund The principal risks of investing in the Fund are described previously in this Prospectus.This section provides more detail about some of those risks, along with information on additional types of risks that may apply to the Fund. Investing in Mutual Funds All mutual funds carry risks that may cause you to lose money on your investment in the Fund.In general, the risks associated with the use of the Master/Feeder Fund Structure and the risks associated with your investment in the Fund are substantially identical to the risks associated with the Fund’s investment in the Portfolio.The following describes the primary risks to the Fund from investing in the Portfolio due to the Portfolio’s specific investment objective and strategies.As all investment securities are subject to inherent market risks and fluctuations in value due to earnings, economic and political conditions and other factors, neither the Fund nor the Portfolio can give any assurance that its investment objective will be achieved. 6 Market Risk The NAV of the Portfolio will fluctuate based on changes in the value of its underlying portfolio.The stock market is generally susceptible to volatile fluctuations in market price.Market prices of securities in which the Portfolio invests may be adversely affected by an issuer’s having experienced losses orlack of earnings, or by the issuer’s failure to meet the market’s expectations with respect to new products or services, or even by factors wholly unrelated to the value or condition of the issuer.The value of the securities held by the Portfolio is also subject to the risk that a specific segment of the stock market may not perform as well as the overall market.Under any of these circumstances, the value of the Portfolio’s shares and total return will fluctuate, and your investment in the Fund may be worth more or less than your original cost when you redeem your shares. Portfolio Turnover Risk Under certain circumstances the Portfolio may take advantage of short-term trading opportunities without regard to the length of time its securities have been held.This strategy often calls for frequent trading of the Portfolio’s securities in order to take advantage of anticipated changes in market conditions.Frequent trading by the Portfolio could increase the rate of its portfolio turnover, which would involve correspondingly greater expenses.Such expenses may include brokerage commissions or dealer mark-ups/mark-downs, as well as other transaction costs on the sale of securities and reinvestments in other securities.Such sales also may result in adverse tax consequences to shareholders.If the Portfolio realizes capital gains when it sells its portfolio investments, it must generally pay those gains out to shareholders, increasing their taxable distributions.The trading costs and tax effects associated with such portfolio turnover may adversely affect Portfolio performance under these circumstances, and large movements of assets into and out of the Portfolio may negatively impact the Portfolio’s ability to achieve its investment objective or maintain its current level of operating expenses. Industry Specific Risks To the extent that the Portfolio focuses its investments in one or more sectors or industries, it may be subject to the risks affecting that sector or industry more than would a fund that invests in a wide variety of market sectors or industries.For instance, companies involved in the water industry may be located in societies (i.e. countries or geographic areas) that are suffering from water stress or scarcity and which do not possess healthy financial markets for business.These societies may not provide a stable environment for companies to operate.As such, companies located in these societies must manage both business risk and reputational risk.Additional risks of concentrating in the water industry include environmental considerations, taxes, government regulation, price and supply fluctuations, competition and water conservation. Securities Lending The Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements, amounting to no more than 33 1/3 % of the total assets of the Portfolio (including any collateral posted) or 50% of the total assets of the Portfolio (excluding any collateral posted).Repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations.These transactions involve some risk to the Portfolio if the other party should default on its obligation and the Portfolio is delayed or prevented from recovering the collateral.In the event that the original seller defaults on its obligation to repurchase, the Portfolio will seek to sell the collateral, which could involve costs or delays.To the extent proceeds from the sale of collateral are less than the repurchase price, the Portfolio would suffer a loss if forced to sell such collateral in this manner. 7 Non-Diversification The Portfolio is a non-diversified fund and therefore may be more susceptible to adverse financial, economic or other developments affecting any single issuer, and more susceptible to greater losses because of these developments. Investment in Small and Medium-Size Companies The Portfolio may invest in small or medium-size companies.Accordingly, the Portfolio may be subject to the additional risks associated with investment in companies with small or medium-size capital structures (generally a market capitalization of $5 billion or less).The market prices of the securities of such companies tend to be more volatile than those of larger companies.Further, these securities tend to trade at a lower volume than those of larger, more established companies.If the Portfolio is heavily invested in these securities and the value of these securities suddenly declines, theNAV of that Portfolio and your investment in the corresponding Fund will be more susceptible to significant losses. Foreign Securities Investing in foreign securities can carry higher returns than those generally associated with U.S. investments.However, foreign securities may be substantially riskier than U.S. investments.The economies of foreign countries may differ from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, capital reinvestment, resource self-sufficiency, and balance of payments position.Furthermore, the economies of developing countries generally are heavily dependent on international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protective measures imposed or negotiated by the countries with which they trade.These economies also have been, and may continue to be, adversely affected by economic conditions in the countries with which they trade.The Portfolio may be required to obtain prior governmental approval for foreign investments in some countries under certain circumstances.Governments may require approval to invest in certain issuers or industries deemed sensitive to national interests, and the extent of foreign investment in certain debt securities and companies may be subject to limitation.Individual companies may also limit foreign ownership to prevent, among other things, violation of foreign investment limitations. Some foreign investments may risk being subject to repatriation controls that could render such securities illiquid.Other countries might undergo nationalization, expropriation, political changes, governmental regulation, social instability or diplomatic developments (including war) that could adversely affect the economies of such countries or the value of the investments in those countries.Additional risks include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. Portfolio Borrowing The Portfolio may leverage up to 5% of its assets to fund investment activities or to achieve higher returns.The Portfolio may borrow money from banks for temporary or emergency purposes in order to meet redemption requests.To reduce its indebtedness, the Portfolio may have to sell a portion of its investments at a time when it may be disadvantageous to do so.In addition, interest paid by the Portfolio on borrowed funds would decrease the net earnings of both the Portfolio and your investment in the Fund. Derivatives Risk The Portfolio may invest in derivatives such as options.The successful use of these investment practices depends on the Investment Adviser’s or Sub-Adviser’s ability to forecast stock price movements correctly.Should stock prices move unexpectedly, the Portfolio may not achieve the anticipated benefits of the transactions, or may realize losses, and thus be in a worse position than if such strategies had not been used.Unlike many exchange-traded options, there are no daily price fluctuation limits for certain options, and adverse market movements could therefore continue for an unlimited extent over a period of time.In addition, the correlation between movements in the prices of options and movements in the prices of the securities hedged or used for cover will not be perfect and could produce unanticipated losses. 8 The Portfolio’s ability to dispose of its positions in options, depends on the availability of liquid markets in such instruments.Markets in options with respect to a number of types of securities are relatively new and still developing.It is impossible to predict the amount of trading interest that may exist in various types of options.If a secondary market does not exist for an option purchased or written by the Portfolio, it might not be possible to effect a closing transaction in the option (i.e., dispose of the option), with the result that (1) an option purchased by the Portfolio would have to be exercised in order for the Portfolio to realize any profit and (2) the Portfolio may not be able to sell portfolio securities covering an option written by the Portfolio until the option expires or it delivers the underlying security, upon exercise.Therefore, no assurance can be given that the Portfolio will be able to utilize these instruments effectively.In addition, the Portfolio’s ability to engage in options transactions may be limited by tax considerations and the use of certain hedging techniques may adversely impact the characterization of income to the Portfolio for U.S. federal income tax purposes. Investing in Investment Grade Debt Securities and Below Investment Grade Debt Securities Investments in debt securities pose different risks.The value of fixed income securities generally will fall if interest rates rise.The value of these securities may also fall as a result of other factors such as the performance of the issuer, the market perception of the issuer or general economic conditions.These investments also involve a risk that the issuer may not be able to meet its principal and interest payment obligations.Fixed income securities having longer maturities involve greater risk of fluctuations in value. Investments in debt securities rated below investment grade, i.e., junk bonds, and unrated securities of comparable quality are subject to the increased risk of an issuer’s inability to meet principal and interest payment obligations.These securities may be subject to greater price volatility due to such factors as specific corporate or municipal developments, interest rate sensitivity, negative perceptions of the junk bond markets generally and less secondary market liquidity. Portfolio Holdings Information A description of the Portfolio’s policiesand procedures with respect to the disclosure of its portfolio securities is available in the Fund’sSAI.Currently, disclosure of the Portfolio’s holdings is required to be made quarterly within 60 days of the end of each fiscal quarter in the Annual Report and Semi-Annual Report to Fund shareholders and in the quarterly holdings report on Form N-Q (first and third quarters).The Annual and Semi-AnnualReports will be available by contacting Kinetics Mutual Funds, Inc., c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or calling (800) 930-3828. In addition, the Company publishes on its webpage (www.kineticsfunds.com) month-end(a) top fifteen portfolio holdings of the Portfolio and their percentage of the portfolio holdings, and (b) the top five performing and bottom five performing portfolio holdings of the Portfolio, in each case no earlier than twenty calendar days after the end of each calendar month.This information will be available on the website until the date on which the Fund files its next quarterly portfolio holdings report on Form N-CSR or Form N-Q with the SEC or until the next month in which portfolio holdings are posted in accordance with the above policy. Management of the Fund and the Portfolio Investment Adviser The Portfolio’s investment adviser is Kinetics Asset Management, Inc. (“Investment Adviser”), 16 New Broadway, Sleepy Hollow, New York 10591.Founded in 1996, the Investment Adviser provides investment advisory services to a family of eight mutual funds with discretionary management authority over approximately $10.2 billion in assets at December 31, 2006.The Investment Adviser has selected, and the Company’s Board of Directors has approved, Aqua Terra Asset Management LLC (“Sub-Adviser” or “Aqua Terra”) as sub-adviser for the Portfolio.Aqua Terra, 4 Tower Bridge, 200 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428, is a majority owned subsidiary of Boenning & Scattergood Holdings, Inc.Founded in 1913, Boenning & Scattergood is a full service investment and brokerage firm.Aqua Terra provides investment advisory services in the water and water infrastructure sector. 9 The Investment Adviser will review, monitor and report to the Board of Trustees of the Trust on the performance and investment procedures of Aqua Terra and assist and consult with Aqua Terra in connection with the Portfolio’s investment program.The Investment Adviser will also be responsible for the selection of broker-dealers and the negotiation of commission rates for transactions of the Portfolio.Aqua Terra, under the supervision of the Investment Adviser, is responsible for decisions to buy and sell securities for the Portfolio. Payments to the Sub-Adviser for its services are made by the Investment Adviser, not by the Portfolio.The Investment Adviser is entitled to receive an annual fee from the Portfolio for its services of 1.25% of the Portfolio’s average daily net assets.For its services, Aqua Terra receives sub-advisory fees from the Investment Adviser at the annual rate of .35% of daily net assets of the Portfolio. A discussion regarding the basis of the Board’s approval of the investment advisory and investment sub-advisory agreements for the Portfolio will be available in the Company’s semi-annual report to shareholders for the period ending June 30, 2007. Kinetics as the Investment Adviser to the Portfolio, and Aqua Terra as Sub-Adviser, are each engaged in a broad range of portfolio management, portfolio advisory and other business activities.Their services are not exclusive to the Portfolio and nothing prevents them, or any affiliates, from providing similar services to other investment funds and other clients (whether or not their investment objectives, strategies, or criteria are similar to those of the Portfolio) or from engaging in other activities. Investment Professionals for the Sub-Adviser William S. Brennan serves as the portfolio manager and is responsible for the day-to-day management of the Portfolio.Gerard Sweeney serves as a research analyst. Mr. Brennan has been President & Managing Partner of Aqua Terra, a subsidiary of Boenning & Scattergood since its inception on November 14, 2006, and will serve as the portfolio manager of the Portfolio.He joined Boenning & Scattergood in 2004 as managing director, Director of Equities, after working at Avondale Partners beginning in 2002, where he was Director, Institutional Sales.Prior to Avondale Partners, he was senior analyst and vice president at Pitcairn Investment Management from 2001 to 2002 and the executive vice president of Sequoia Software, a public software company from 2000 to 2001.He is also an Adjunct Professor in the Graduate MBA program at Villanova University School of Business and an Adjunct Finance Professor at Cabrini College.From 1999 through 2006, He served as a strategy and portfolio advisor to a private hedge fund that invests in the domestic and international water sectors. Mr. Sweeney has been a Senior Analyst and Portfolio Administrator for Aqua Terra since its inception on November 14, 2006. Prior to his involvement with Aqua Terra, he was a vice president at Boenning & Scattergood where he served as Equity Syndicate Manager and a senior institutional equity salesperson from 2004 to 2006.From 2000 through 2004, he was a member of Janney Montgomery Scott’s Syndicate Desk specializing in water related equity financings.Prior to his employment with Janney, Montgomery Scott, he was a trader with International Raw Materials which brokered transactions in agricultural chemicals domestically and internationally. The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of securities in the Fund. 10 Valuation of Fund Shares Shares of the Fund’s No Load Class are sold atNAV per share, which is determined by the Fund as of the close of regular trading (generally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange (the “Exchange”) is open for unrestricted business.Purchase and redemption requests are priced at the next NAV calculated after receipt and acceptance of a completed purchase or redemption request.The NAV for each Class of shares of the Fund is determined by dividing the value of the Fund’s securities, cash and other assets attributable to that Class, minus all expenses and liabilities attributable to that Class, by the number of shares outstanding of that Class.The NAV for a Class of shares of the Fund takes into account the expenses and fees of that Class, including management, administration, distribution and shareholder servicing fees, which are accrued daily.The NAV of the Portfolio is calculated at the same time and in generally the same manner (i.e. assets-liabilities/ # of shares NAV) as those of the Fund’s Classes. The Portfolio’s securities are valued each day at the last quoted market price on the securities’ principal exchange.If market quotations are not readily available or if events occur that may significantly affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the Exchange, securities will be valued at their fair market value as determined in good faith in accordance with procedures approved by the Board of Trustees.Situations involving significant events include, but are not limited to, those where: a security’s trading has been halted or suspended; the security has been de-listed from a national exchange; or the security has not been traded for an extended period of time.In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Portfolio prices its shares.See “Trading in Foreign Securities.”The Portfolio may use independent pricing services to assist in calculating the NAV ofthe Portfolio’s shares. Fair valuation of securities introduces an element of subjectivity to the pricing of securities.As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes.If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Investment Adviser compares the new market quotation to the fair value price to evaluate the effectiveness of the Portfolio’s fair valuation procedures. Trading in Foreign Securities Trading in foreign securities may be completed at times when the Exchange is closed.In computing the NAV of the Fund and the Portfolio, the value of a foreign security is determined as of the close of trading on the foreign exchange on which it is principally traded or as of the scheduled close of trading on the Exchange, whichever is earlier, at the closing sales prices provided by approved pricing services or other alternate sources.In the absence of sales, the last available mean price between the closing bid and asked prices will be used.Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees.Values of foreign securities are translated from the local currency into U.S. dollars on the bases of the foreign currency exchange rates, as provided by an independent pricing service or reporting agency, generally prior to the close of the Exchange.Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the Exchange, which events would not be reflected in the computation of the Portfolio’sNAV.If events materially affecting the value of such securities or currency exchange rates occur during such time period, the securities will be valued at their fair value as determined in good faith by or under the direction of the Board of Trustees. How to Purchase Shares In General No Load Class shares of the Fund are sold at NAV, and will be credited to a shareholder’s account at the NAV next computed after an order is received.The minimum initial investment for both regular accounts and individual retirement accounts is $2,500 ($2,000 for Coverdell Education Savings Accounts).The minimum subsequent investment for all types of accounts (including Coverdell Education Savings Accounts) is $100.The Company reserves the right to vary or waive any minimum investment requirement.The Water Infrastructure Fund reserves the right to reject any purchase order if, in its opinion, it is in the Fund's best interest to do so.A service fee of $25.00 will be deducted from a shareholder’s Fund account for any purchases that do not clear.Your order will not be accepted until the completed New Account Application Form is received by the Fund or its transfer agent. 11 Investing by Telephone If you have completed the Telephone Purchase Authorization section of the New Account Application Form, you may purchase additional shares by telephoning the Fund toll free at (800) 930-3828.This option allows investors to move money from their bank account to their Fund account upon request.Only bank accounts held at domestic institutions that are Automated Clearing House (“ACH”) members may be used for telephone transactions.Your purchase will take place at the NAV determined on the day your order is placed, provided that your order is received prior to 4:00 p.m. Eastern time. The minimum telephone purchase is $100.You may not make your initial purchase of the Fund’s shares by telephone. Automatic Investment Plan Once an account has been established, you may purchase shares of the Fund through an Automatic Investment Plan (“AIP”).You can have money automatically transferred from your checking, savings or bank money market account on a weekly, bi-weekly, monthly, bi-monthly or quarterly basis.In order to participate in the AIP each purchase must be in an amount of $100 or more. To be eligible for the AIP, your bank must be a domestic institution that is an ACH member.If your bank rejects your payment, the Fund’s transfer agent will charge a $25 fee to your account.To begin participating in the AIP, please complete the AIP section on the New Account Application Form or call the Fund’s transfer agent at (800) 930-3828.The first AIP purchase will take place no earlier than 15 days after the Fund’s transfer agent has received your request. Any request to change or terminate your AIP should be submitted to the transfer agent 5 days prior to the desired effective date of such change or termination.The Fund may modify or terminate the AIP at any time. Purchase By Mail To purchase the Fund’s shares by mail, simply complete and sign the enclosed New Account Application Form and mail it, along with a check made payable to the Water Infrastructure Fund,c/o Kinetics Mutual Funds, Inc., to: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S. Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 All purchases by check must be in U.S. dollars drawn on a bank located within the United States.The Fund will not accept payment in cash or money orders.The Fund also does not accept cashier’s checks in amounts of less than $10,000.To prevent check fraud, the Fund will not accept third party checks, Treasury checks, credit card checks, traveler’s checks or starter checks for the purchase of shares.The Fund is unable to accept post-dated checks, post-dated on-line bill pay checks, or any conditional order or payment. Purchase By Wire To open an account by wire, a completed New Account Application Form is required before your wire can be accepted.You can mail or overnight deliver your New Account Application Form to the transfer agent at the above address.Upon receipt of your completed New Account Application Form, an account will be established for you.You will need to provide the assigned account number to your bank when instructing it to wire the funds. 12 Your bank must include along with the wire the name of the Fund, the account number and your name so that monies can be correctly applied.To ensure proper application of wired funds, please call (800) 930-3828 to notify the Fund that the wire is coming.The Fund is not responsible for delays resulting from the banking or Federal Reserve wire system.Please use the following wiring instructions: Wire to: U.S. Bank, N.A. ● ABA Number: 075000022 ● Credit: U.S. Bancorp Fund Services, LLC ● Account: 112-952-137 ● Further Credit: Kinetics Mutual Funds, Inc. The Water Infrastructure Fund (Shareholder Name/Account Registration) (Shareholder Account Number) Subsequent Investments You may add to your account at any time by purchasing shares by mail, by telephone, or by wire (minimum $100).To purchase by mail, submit your check with the remittance form attached to your individual account statement.To purchase by telephone, call (800) 930-3828 prior to 4:00 p.m. Eastern time to place your order.To ensure proper application of wired funds, please call (800) 930-3828to notify the Fund that the wire is coming.All purchase requests must include your shareholder account number. Individual Retirement Accounts You may invest in the Fund by establishing a tax-shelteredIRA.The Fund offers Traditional IRA, Roth IRA, and Coverdell Education Savings Accounts.For additional information on IRA options, please call (800) 930-3828. How to Redeem Shares In General You may redeem part or all of your shares of the Fund on any business day that the Fund calculates its NAV.To redeem shares, you must contact the Fund either by mail or by phone to place a redemption order.You should request your redemption prior to market close to obtain that day’s closing NAV.Redemption requests received after the close of the Exchange will be treated as though received on the next business day. The Fund will generally send redemption proceeds the next business day and, in any event, no later than seven days after the receipt of a redemption request in “good order” (see below).Please note, however, that when a purchase order has been made by check, the Fund will not be able to send your redemption proceeds until the purchase check has cleared.This may take up to 12 days. Redemption proceeds may be sent to the address of record, wired to a shareholder’s bank account of record, or sent via electronic funds transfer through the ACH network to the shareholder’s bank account of record.Wires are subject to a $15 fee paid by the investor, but the investor does not incur any charge when proceeds are sent via the ACH system. If the redemption proceeds are requested to be sent to an address other than the address of record, or if the address of record has been changed within 15 days of the redemption request, the request must be in writing with your signature guaranteed.Signature guarantees can be obtained from banks and securities dealers, but not from a notary public.The Fund will not be responsible for interest lost on redemption amounts due to lost or misdirected mail. 13 A signature guarantee of each owner is required in the following situations: » If ownership has changed on your account » When redemption proceeds are sent to any person, address or bank account not on record » Written requests to wire redemption proceeds (if not previously authorized on the account) » When establishing or modifying certain services on an account » If a change of address request was received by the Transfer Agent within the last 15 days In addition to the situations described above, the Fund and/or the Transfer Agent reserve the right at their discretion to require a signature guarantee in other circumstances. Written Redemption You can execute most redemptions by furnishing an unconditional written request to the Fund to redeem your shares at the current NAV.Redemption requests in writing should be sent to the Fund’s transfer agent at: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 Requests for redemption in "good order" must: » indicate the name of the Fund, » be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required), » specify the number of shares or dollar amount to be redeemed, and » indicate your account registration number Telephone Redemption If you are authorized to perform telephone transactions (either through your New Account Application Form or by subsequent arrangement in writing with the Fund) you may redeem shares in any amount, but not less than $100, by instructing the Fund by phone at (800) 930-3828.A signature guarantee may be required of all shareholders in order to add or change telephone redemption privileges on an existing account. Note: Neither the Fund nor any of its service providers will be liable for any loss or expense in acting upon instructions that are reasonably believed to be genuine.To confirm that all telephone instructions are genuine, the Fund will use reasonable procedures, such as requesting: » your Fund account number » the name in which your account is registered » the social security or tax identification number under which the account is registered » the address of the account holder, as stated in the New Account Application Form Once a telephone transaction has been placed, it cannot be cancelled or modified. 14 Wire Redemption Wire transfers may be arranged to redeem shares.However, the Fund’s transfer agent charges a $15 fee per wire redemption against your account for this service.The minimum wire redemption amount is $100. Systematic Withdrawal Plan If you own shares with a value of $10,000 or more, you may participate in the Systematic Withdrawal Plan.The Systematic Withdrawal Plan allows you to make automatic withdrawals from your account at regular intervals (monthly, quarterly, semi-annually or annually).Proceeds can be mailed via check to the address of record, or sent via electronic funds transfer through the ACH system to your bank account if your bank is an ACH system member.If the date you select to have the withdrawal made is a weekend or holiday, the redemption will be made on the next business day.Money will be transferred from your Fund account to the account you chose at the interval you select on the New Account Application Form.If you expect to purchase additional shares of the Fund, it may not be to your advantage to participate in the Systematic Withdrawal Plan because of the possible adverse tax consequences of making contemporaneous purchases and redemptions.The minimum systematic withdrawal amount is $100. The Fund’s Right to Redeem an Account The Fund reserves the right to redeem the shares of any shareholder, other than a shareholder who is an active participant in the AIP, whose account balance is less than $1,000, other than as a result of a decline in the NAV of the Fund.The Fund will provide shareholders with written notice 30 days prior to redeeming the shareholder’s account. IRA Redemption If you are an IRA shareholder, you must indicate on your redemption request whether or not to withhold federal income tax.Requests that do not indicate a preference will be subject to withholding. Householding In an effort to decrease costs, the Fund will start reducing the number of duplicate prospectuses and annual and semi-annual reports you receive by sending only one copy of each to those addresses shared by two or more accounts.Call toll-free at (800) 930-3828 to request individual copies of these documents.The Fund will begin sending individual copies 30 days after receiving your request.This policy does not apply to account statements. Redemption Fees The Fund is designed for long-term investors willing to accept the risks associated with a long-term investment.In accordance with policies and procedures adopted by the Board of Directors of the Company, frequent purchases and redemptions of Fund shares are not encouraged but are generally permitted by the Fund.Such purchases and redemptions may have an adverse effect on other Fund shareholders, including, without limitation, the possibility of disrupting portfolio management strategies, increasing brokerage and administrative costs, harming Fund performance and possible dilution in the value of Fund shares held by long-term shareholders.The Company may, in its sole discretion, reject purchase orders when, in the judgment of management, such rejection is in the best interest of the Fund and its shareholders.The Fund assesses a 2.00% fee on the redemption or exchange of shares held for less than 30 days.These fees will be paid to the Fund to help offset any potential transaction costs. The Fund will use the first-in, first-out method to determine the 30 day holding period.Under this method, the date of the redemption or exchange will be compared to the earliest purchase date of shares held in the account.If this holding period is less than 30 days, the redemption fee will be assessed.The redemption fee will be applied on redemptions and exchanges of each investment made by a shareholder that does not remain in the Fund for a 30 day period from the date of purchase. The redemption fee will not apply to any shares purchased through reinvested distributions (dividends and capital gains), or to redemptions made under the Fund’s systematic programs, as these transactions are typically de minimis.This fee will also not be assessed to the participants in employer-sponsored retirement plans that are held at the Fund in an omnibus account (such as 401(k), 403(b), 457, Keogh, Profit Sharing Plans, and Money Purchase Pension Plans) or to accounts held under trust agreements at a trust institution held at the Fund in an omnibus account.The redemption fee will also not be assessed to accounts of the Investment Adviser or Sub-Adviser(s) or their affiliates used to capitalize the Fund as such accounts will be used specifically to control the volatility of shareholder subscriptions and redemptions to avoid adverse effects to the Fund. 15 The Fund reserves the right to modify or eliminate the redemption fees or waivers at any time and will give shareholders 60 days’ prior written notice of any material changes, unless otherwise provided by law.The redemption fee policy may be modified or amended in the future to reflect, among other factors, regulatory requirements mandated by the Securities and Exchange Commission. Currently, the Fund is limited in its ability to assess or collect the redemption fee on all shares redeemed by financial intermediaries on behalf of their customers.For example, where a financial intermediary is not able to determine if the redemption fee applies and/or is not able to assess or collect the fee, or does not collect the fee at the time of a redemption, the Fund will not receive the redemption fee.If Fund shares are redeemed by a financial intermediary at the direction of its customers, the Fund may not know whether a redemption fee is applicable or the identity of the customer who should be assessed the redemption fee.Due to operational differences, a financial intermediary’s methods for tracking and calculating the redemption fee may differ in some respects from that of the Fund.If necessary, the Fund may prohibit additional purchases of Fund shares by a financial intermediary or by certain of the intermediaries’ customers. Notice of Customer Verification In compliance with the USA PATRIOT Act of 2001, please note that the Fund’s transfer agent will verify certain information on your New Account Application Form as part of the Fund’s Anti-Money Laundering Program.As requested on the New Account Application Form, you should supply your full name, date of birth, social security number and permanent street address.Mailing addresses containing only a P.O. Box will not be accepted.Please contact the Fund’s transfer agent at (800) 930-3828 if you need additional assistance when completing your New Account Application Form. If we do not have a reasonable belief as to the identity of a shareholder, the account will be rejected or you will not be allowed to perform a transaction on the account until such information is received.The Fund also reserves the right to close the account within 5 business days if clarifying information/documentation is not received. Exchange Privilege You can exchange your shares in the Fund for shares of the same class of any other Fund offered by the Company, including shares of the Kinetics Government Money Market Fund, (e.g., No Load Class shares for No Load Class shares).If the exchange is requested via telephone, a $5 per exchange transaction cost will be assessed.You should carefully read the prospectus of a fund before exchanging shares into that fund.Be advised that exercising the exchange privilege consists of two transactions: a sale of shares in one fund and the purchase of shares in another.Therefore, an exchange of Fund shares held for less than 30 days may be subject to a 2.00% redemption fee.See “Redemption Fees” above.Further, exchanges may have certain tax consequences and you could realize short- or long-term capital gains or losses.Exchanges are generally made only between identically registered accounts unless you send written instructions with a signature guarantee requesting otherwise.You should request your exchange prior to market close to obtain that day’s closing NAV. Exchange requests received after the close of the Exchange will be treated as though received on the next business day. Call (800)930-3828 to learn more about the other funds or classes offered by the Company and about exercising your exchange privilege. 16 Distributions and Taxes Distributions Distributions (whether treated for tax purposes as ordinary income or long-term capital gains) to shareholders of the Fund are generally paid in additional shares of the same Class of the Fund in which shareholders are already invested, with no sales charge, based on the NAV of that Class as of the close of business on the record date for such distributions.However, you may elect on the New Account Application Form to receive distributions as follows: Option 1: To receive income dividends and capital gain distributions in additional Fund shares, or Option 2: To receive all income dividends and capital gain distributions in cash. The Fund intends to pay any dividends from investment company taxable income and distributions representing capital gain at least annually, usually in December.The Fund will advise each shareholder annually of the amounts of dividends from investment company taxable income and of net capital gain distributions reinvested or paid in cash to the shareholder during the calendar year. If you select Option 2 and the U.S. Postal Service cannot deliver your distribution checks, or if your distribution checks remain uncashed for six months, your distribution checks will be reinvested in your account at the then current NAV of the Fund and your election will be converted to the purchase of additional shares. Taxes The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future.Except where noted, the summary assumes you are a U.S. citizen or resident or otherwise subject to U.S. federal income tax.You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. Fund Distributions The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss).Except as discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional shares.Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below. Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, regardless of how long you have held your shares.The maximum long-term capital gain rate applicable to individuals, estates and trusts is currently 15%. Distributions of “qualifying dividends” will also generally be taxable to you at long-term capital gain rates, as long as certain requirements are met.In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or “qualified” foreign corporations (“qualifying dividends”), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates.But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund.For the lower rates to apply, noncorporate shareholders must have owned their Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Fund’s ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend).The amount of the Fund’s distributions that are otherwise qualifying dividends may be reduced as a result of the Fund’s securities lending activities. Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception.Distributions declared by a Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31. 17 It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The Portfolio may make an election to treat a proportionate amount of those taxes as constituting a distribution to each shareholder, which will allow you either (1) to credit that proportionate amount of taxes against U.S. Federal income tax liability as a foreign tax credit or (2) to take that amount as an itemized deduction. A portion of distributions attributable to investments in U.S. corporations, if any, paid by the Fund to shareholders who are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.The amount of such dividends qualifying for this deduction may, however, be reduced as a result of the Fund’s securities lending activities as described above.You will be notified annually of the tax status of distributions to you. You should note that if you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital.This is known as “buying into a dividend.” Sales or Exchanges You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange or redemption of your shares in the Fund, including an exchange of shares pursuant to the Fund’s exchange privilege, based on the difference between your tax basis in the shares and the amount you receive for them.Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you sell or exchange them.(To aid in computing your tax basis, you generally should retain your account statements for the periods during which you held shares.) Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.Additionally, any loss realized on a sale or redemption of shares of the Fund may be disallowed under “wash sale” rules to the extent the shares disposed of are replaced with other shares of the same Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Fund.If disallowed, the loss will be reflected in an adjustment to the basis of the shares acquired. IRAs and Other Tax-Qualified Plans One major exception to thepreceding tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Backup Withholding On the New Account Application Form, you will be asked to certify that your social security number or taxpayer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS.If you are subject to backup withholding or you did not certify your taxpayer identification number, the IRS requires the Fund to withhold a percentage of any dividend and redemption or exchange proceeds.The Fund reserves the right to reject any application that does not include a certified social security or taxpayer identification number.The current withholding rate is 28%. U.S. Tax Treatment of Foreign Shareholders Nonresident aliens, foreign corporations and other foreign investors in the Fund will generally be exempt from U.S. federal income tax on Fund distributions attributable to net capital gains, and, for distributions attributable to Fund taxable years beginning before January 1, 2008, net short-term capital gains, of the Fund.Tax may apply to such capital gain distributions, however, if the recipient’s investment in the Fund is connected to a trade or business of the recipient in the United States or if the recipient is present in the United States for 183 days or more in a year and certain other conditions are met. 18 Fund distributions attributable to other categories of Fund income, such as dividends from portfolio companies, will generally be subject to a 30% withholding tax when paid to foreign shareholders.The withholding tax may, however, be reduced (and, in some cases, eliminated) under an applicable tax treaty between the United States and a shareholder’s country of residence or incorporation, provided that the shareholder furnishes the Fund with a properly completed Form W-8BEN to establish entitlement for these treaty benefits.Also, for Fund taxable years beginning before January 1, 2008, Fund distributions attributable to U.S.-source interest income of the Fund will be exempt from U.S. federal income tax. All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in the Fund. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions.State income taxes may not apply, however, to any portions of the Fund’s distributions, if any, that are attributable to interest on U.S. government securities or interest on securities of the particular state or localities within the state. You should consult your tax adviser regarding the tax status of distributions in your state and locality. Sunset of Tax Provisions Some of the tax provisions described above are subject to sunset provisions.Specifically, a sunset provision provides that the 15% long-term capital gain rate and the taxation of dividends at the long-term capital gain rate will change for taxable years after 2010. More tax information relating to the Fund is provided in the SAI. Distribution of Shares Distributor Kinetics Funds Distributor, Inc. (“KFD”), an affiliate of the Investment Adviser, 16 New Broadway, Sleepy Hollow, New York, 10591 is the distributor for the shares of the Fund.KFD is a registered broker-dealer and member of the National Association of Securities Dealers, Inc.Shares of the Fund are offered on a continuous basis. Shareholder Servicing Agents The Investment Adviser is responsible for paying various shareholder servicing agents for performing shareholder servicing functions and maintaining shareholder accounts.These agents have written shareholder servicing agreements with the Investment Adviser and perform these functions on behalf of their clients who own shares of the Fund.For this service, the Investment Adviser receives an annual shareholder-servicing fee from each Class equal to 0.25% of the Fund’s average daily net assets attributable to that Class. Arrangements with Certain Financial Institutions The Investment Adviser and/or its affiliates may make payments to selected affiliated or unaffiliated broker-dealers and other financial institutions (“Financial Institutions”) from time to time in connection with the sale, distribution, retention and/or servicing of shares of the Fund and other funds managed by the Investment Adviser or its affiliates.These payments are made out of the Investment Adviser’s and/or its affiliates’ own assets and are not an additional charge to the Fund.The payments are in addition to the shareholder servicing fees described in this Prospectus.The amount of such payments may be significant in amount and the prospect of receiving any such payments may provide Financial Institutions or their employees with an incentive to favor sales of shares of the Fund over other investment options.You should contact your Financial Institution for more information about the payments it may receive and potential conflicts of interest. Fund Administrator 19 U.S. Bancorp Fund Services, LLC (“USBFS”) serves as Administrator to the Fund and Portfolio. Custodian, Transfer Agent, Dividend Disbursing Agent and Fund Accountant U.S. Bank, N.A. serves as Custodian for the Fund’s cash and securities.The Custodian does not assist in, and is not responsible for, investment decisions involving assets of the Fund.USBFS acts as the Fund’s Transfer Agent, Dividend Disbursing Agent and Fund Accountant. Unique Characteristics of Master/Feeder Fund Structure Unlike other mutual funds which directly acquire and manage their own portfolio securities, the Fund invests all of its investable assets in the Portfolio, a separately registered investment company.The Portfolio, in turn, invests in securities, using the strategies described in this Prospectus. In addition to selling a beneficial interest to the Fund, the Portfolio could also sell beneficial interests to other mutual funds or institutional investors.Such investors would invest in the Portfolio on the same terms and conditions and would pay a proportionate share of the Portfolio's expenses.However, other investors in the Portfolio are not required to sell their shares at the same public offering price as the Fund, and might bear different levels of ongoing expenses than the Fund.Shareholders of the Fund should be aware that these differences would result in differences in returns experienced in the different funds that invest in the Portfolio. Such differences in return are also present in other mutual fund structures. Smaller funds investing in the Portfolio could be materially affected by the actions of larger funds investing in the Portfolio.For example, if a large feeder fund were to withdraw from the Portfolio, the remaining funds might experience higher pro rata operating expenses, thereby producing lower returns.Additionally, the Portfolio could become less diverse, resulting in increased portfolio risk.However, that possibility also exists for traditionally structured funds that have large or institutional investors.Funds with a greater pro rata ownership in the Portfolio could have effective voting control of the Portfolio. Certain changes in the Portfolio’s objective, policies or restrictions might require the Company to withdraw the Fund's interest in the Portfolio.Any such withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution from the Portfolio).The Fund could incur brokerage fees or other transaction costs in converting such securities to cash.In addition, a distribution in kind could result in a less diversified portfolio of investments or adversely affect the liquidity of the Fund. The Company’s Board of Directors retains its right to withdraw the Fund’s investments from the Portfolio at any time if the Board of Directors determines that such withdrawal would be in the best interest of the Fund’s shareholders.The Fund would then resume investing directly in individual securities of other issuers or invest in another portfolio of the Trust. The SAI contains more information about the Fund and the Portfolio, the Master/Feeder Fund Structure and the types of securities in which the Portfolio may invest. Counsel and Independent Registered Public Accounting Firm Legal matters in connection with the issuance of shares of common stock of the Fund are passed upon by Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996.Tait, Weller & Baker LLP, 1818 Market Street, Suite 2400, Philadelphia,Pennsylvania 19103 is the independent registered public accounting firm for the Fund. 20 Kinetics Mutual Funds, Inc. The Water Infrastructure Fund Investment Adviser Kinetics Asset Management, Inc and Shareholder Servicing Agent 16 New Broadway Sleepy Hollow, New York, 10591 Sub-Adviser Aqua Terra Asset Management, LLC 4 Tower Bridge 200 Barr Harbor Drive, Suite 300 West Conshohocken, PA 19428-2979 Legal Counsel Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 Independent Registered Public Tait, Weller & Baker LLP Accounting Firm 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Distributor Kinetics Funds Distributor, Inc. 16 New Broadway Sleepy Hollow, NY 10591 Transfer Agent, Fund Accountant, U.S. Bancorp Fund Services, LLC and Administrator 615 East Michigan Street Milwaukee, WI 53202 Custodian U.S. Bank, N.A. 1555 N. River Center Drive, Suite 302 Milwaukee, WI 53212 You may obtain the following and other information on the Fund free of charge: Statement of Additional Information (SAI) dated June 29, 2007 The SAI of the Fund provides more details about the Fund’s policies and management.The Fund’s SAI is incorporated by reference into this Prospectus. Annual and Semi-Annual Report The annual and semi-annual reports for the Fund provide the most recent financial reports and portfolio listings.The annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during the last fiscal year. To receive any of these documents or theFund’s Prospectus, free of charge, to request additional information aboutthe Companyor to make shareholder inquires, please contact us at: By Telephone: By Internet: (800) 930-3828 http://www.kineticsfunds.com By Mail: Kinetics Mutual Funds, Inc. c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 Additionally, the foregoing Fund documents are available on the Fund’s website listed above. SEC: Information about the Fund (including the SAI) can be reviewed and copied at the SEC Public Reference Room in Washington, D.C.Please call 1-202-551-8090 for information relating to the operation of the Public Reference Room.Reports and other information about the Fund are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov.Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing thePublic Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-0102. 1940 Act File No. 811-09303 21 Institutional Class June 29, 2007 Prospectus www.kineticsfunds.com The Water Infrastructure Fund A series of Kinetics Mutual Funds, Inc. Kinetics Logo The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of the Prospectus. Any representation to the contrary is a criminal offense. Institutional Class Table of Contents OVERVIEW 2 THE WATER INFRASTRUCTURE FUND 3 MAIN RISKS OF INVESTING IN THE FUND 6 PORTFOLIO HOLDINGS INFORMATION 9 MANAGEMENT OF THE FUND AND THE PORTFOLIO 9 VALUATION OF FUND SHARES 11 HOW TO PURCHASE SHARES 12 HOW TO REDEEM SHARES 13 EXCHANGE PRIVILEGE 16 DISTRIBUTIONS AND TAXES 16 DISTRIBUTION OF SHARES 19 UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 19 COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 20 Institutional Class Kinetics Mutual Funds, Inc. This Prospectus discusses theInstitutional Class of The Water Infrastructure Fund (the “Fund”) of Kinetics Mutual Funds, Inc. (the “Company”). Unlike many other investment companies which directly acquire and manage their own portfolios of securities, the Fund seeks its investment objective by investing all of its investable assets in a corresponding portfolio series, the Water Infrastructure Portfolio (the “Portfolio”), of Kinetics Portfolios Trust (the “Trust”), a Delaware statutory trust. The Portfolio is an open-end, non-diversified investment company with investment objectives and strategies identical to those of the Fund. Investors should carefully consider this investment approach. For additional information regarding this investment structure, see “Unique Characteristics of Master/Feeder Fund Structure.” Prospectus This Prospectus provides vital information about the Fund. For your own benefit and protection, please read it before you invest, and keep it on hand for future reference. Investment Adviser Kinetics Asset Management, Inc. Sub- Adviser Aqua Terra Asset Management LLC Minimum Initial Investment $1,000,000 June 29, 2007 OVERVIEW The Water Infrastructure Fund(the “Fund”) is a non-diversified fund that seeks to provide investors with long-term capital growth and secondarily with current income by investing all of its investable assets in the Portfolio.The Portfolio invests primarily in securities issued by U.S. and foreign companies involved inwater infrastructure and natural resources with a specific water theme and related activities. The Statement of Additional Information (the “SAI”) contains more information about the Fund and the types of securities in which it may invest. Who May Want to Invest The Fund may be appropriate for investors who: » wish to invest for the long-term » want to diversify their portfolios » want to allocate some portion of their long-term investments to value equity investing » are willing to accept the volatility associated with equity investing » appreciate the risks associated with investing in foreign companies 2 THE WATER INFRASTRUCTURE FUND Investment Objective, Principal Investment Strategies and Principal Risks Investment Objective The investment objective of the Fund is long-term growth of capital.The Fund seeks to obtain current income as a secondary objective. Principal Investment Strategies The Fund seeks to achieve its investment objective by investing all of its investable assets in the Portfolio.Under normal circumstances, the Portfolio invests at least 80% of its net assets plus any borrowings for investment purposes in common stocks, convertible securities, fixed-income securities such as bonds and debentures, and warrants, derivatives, and other equity securities having the characteristics of common stocks (such as American Depository Receipts (“ADRs”) and International Depository Receipts (“IDRs”), of U.S. and foreign companies engaged in water infrastructure and natural resources with a specific water theme and related activities.For purposes of this 80% policy, a company will be considered in the water infrastructure or natural resource industry if at least 50% of its revenues come from water-related activities or activities related to natural resources.The Portfolio may also write and sell options on securities in which it invests for hedging purposes and/or direct investment. Under normal circumstances, the Portfolio will invest no more than 20% of its net assets in fixed income securities.There are no limitations as to the maturities or credit ratings of the fixed income securities in which the Portfolio may invest; provided, however, that the Portfolio will invest no more than 10% of its total assets in convertible and non-convertible debt securities rated below investment grade, also known as junk bonds, or unrated securities which the Investment Adviser has determined to be of comparable quality. The Portfolio aims to invest in securities issued by companies operating in the water infrastructure and natural resource sector globally.The companies targeted in the water sector will include, but are not limited to, water production companies, water conditioning and desalination companies, water suppliers, water transport and distribution companies, companies specializing in the treatment of waste water, sewage and solid, liquid and chemical waste, companies operating sewage treatment plants and companies providing equipment, consulting and engineering services in connection with the above-described activities.Companies targeted in the natural resource sector are those that are dependent on water usage in industries such as agriculture, timber, oil and gas service, hydroelectricity and alternative renewable energy. There are no limitations on the amount that the Portfolio may invest or hold in any single issuer; however, the Portfolio currently intends to limit its investments at the time of purchase to 10% of the Portfolio’s assets in any single position.The companies in which the Portfolio may invest may be large, medium or small in size if, in the Sub-Adviser’s opinion, they meet the Portfolio’s investment criteria. The Sub-Adviser uses a value-based strategy in managing the Fund, which means that both equity and fixed income security purchase selections will be based primarily upon current relative valuation of company fundamentals, although the growth prospects of respective companies within the global water industry will also be considered.When determining the intrinsic value of each potential company for the Portfolio, the Sub-Adviser will primarily focus on traditional valuation metrics including, but not limited to, price to earnings, price to cash flow, book value, price to sales, return on equity, and return on invested capital.In addition, the Sub-Adviser will evaluate the estimated growth prospect for each company by evaluating such metrics as forward price to earnings, and will also use merger and acquisition metrics and sum of the parts valuation (break-up value or private market value) to better ascertain market and intrinsic valuation. 3 The Portfolio may invest up to 20% of its assets in high quality, U.S. short-term debt securities and money market instruments to maintain liquidity.Some of these short-term instruments include commercial paper, certificates of deposit, demand and time deposits and banker’s acceptances, U.S. Government securities (i.e. U.S. Treasury obligations) and repurchase agreements. Temporary Investments To respond to adverse market, economic, political or other conditions, the Portfolio may invest up to 100% of its assets in high quality, U.S. short-term debt securities and money market instruments. To the extent that the Portfolio engages in a temporary defensive strategy, the Portfolio and therefore, the Fund, may not achieve its investment objective. Fund Structure The Portfolio has an investment objective identical to that of the Fund.The Fund may withdraw its investment from the Portfolio at any time if the Board of Directors of the Company determines that it is in the best interests of the Fund to do so.Upon any such withdrawal, the Directors will consider what action might be taken, including investing all of the Fund’s investable assets in another pooled investment entity having substantially the same objective and strategies as the Fund or retaining an investment adviser, including the current Investment Adviser or Sub-Adviser(s), to manage the Fund’s assets directly. Principal Risks of Investment Investing in common stocks has inherent risks that could cause you to lose money.The principal risks of investing in the Fund and indirectly the Portfolio are listed below and could adversely affect the net asset value (“NAV”), total return and the value of the Fund, Portfolio and your investment. » Stock Market Risks: Stock mutual funds are subject to stock market risks and significant fluctuations in value.If the stock market declines in value, the Portfolio is likely to decline in value and you could lose money on your investment. » Stock Selection Risks: The portfolio securities selected by the Investment Adviser or Sub-Adviser(s) may decline in value or not increase in value when the stock market in general is rising and may fail to meet the Portfolio’s and therefore, the Fund’s, investment objective. » Liquidity Risks: The Portfolio’s investments in the securities of small and medium capitalization companies and in non-investment grade fixed income securities makes the Portfolio especially susceptible to the risk that during certain periods the liquidity of certain issuers or industries, or all securities within particular investment categories, will decrease or disappear suddenly and without warning as a result of adverse market or political events, or adverse investor perceptions. » Industry Concentration Risks: Mutual funds that invest a substantial portion of their assets in a particular industry carry a risk that a group of industry-related stocks will decline in price due to industry specific developments.Companies in the same or similar industries may share common characteristics and are more likely to react comparably to industry specific market or economic developments. » Small and Medium-Size Company Risks: The Portfolio may invest in the equity securities of small and medium size companies.Small and medium-size companies often have narrower markets and more limited managerial and financial resources than do larger, more established companies.As a result, their performance can be more volatile and they face a greater risk of business failure, which could increase the volatility of the Portfolio’s assets. » Foreign Securities Risks: The Portfolio may invest in foreign securities directly or through ADRs and IDRs.Foreign securities can carry higher returns but involve more risks than those associated with U.S. investments.Additional risks associated with investment in foreign securities include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. 4 » Non-Diversification Risks: As a non-diversified investment company, more of the Portfolio’s assets may be concentrated in the securities of any single issuer, which makes the Portfolio more susceptible to financial, economic or market events impacting such issuer. » Interest Rate Risk– The risk that when interest rates increase, fixed-income securities held by the Fund will decline in value.Long-term fixed-income securities will normally have more price volatility because of this risk than short-term fixed-income securities. » Credit/Default risk – The risk that an issuer or guarantor of fixed-income securities held by the Fund (which may have low credit ratings), or the counterparty in a derivative investment, may default on its obligation to pay interest and repay principal. » Below-Investment Grade Debt Securities Risks:Generally, non-investment grade debt securities, i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities. » New Fund Risks:There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Directors or the Investment Adviser or Sub-Adviser(s) may recommend that the Fund be liquidated. » Water Infrastructure Industry Specific Risks:Adverse developments in the water industry may significantly affect the value of the shares of the Fund.Companies involved in the water industry are subject to environmental considerations, changes in taxation and government regulation, price and supply fluctuations, changes in technology, competition and water conservation.There can be no assurances that the regulatory environment will remain the same.Unfavorable regulatory rulings, including structural changes to pricing and the competitive playing field, may affect the underlying companies’ ability to produce favorable returns. » Value Style Risks:Over time, a value-based investment style may go in and out of favor, causing the Portfolio to sometimes underperform other funds that use different investment styles, such as a growth-based investment style. » Derivatives Risks:The Portfolio’s investments in options and other derivative instruments may result in loss.Derivative instruments may be illiquid, difficult to price and leveraged so that small changes may produce disproportionate losses to the Portfolio. » Natural Resources Investment Risks:Investments in companies in natural resources industries can be significantly affected by (often rapid) changes in the supply of, or demand for, various natural resources.These companies also may be affected by changes in energy prices, international political and economic developments, energy conservation, the success of exploration projects, changes in commodity prices, and tax and other government regulations. Performance of the Fund Because the Fund has not yet commenced operations, there is no performance information for the Fund. Fees and Expenses of theFund As an investor, you pay certain fees and expenses if you buy and hold shares of the Fund.These fees and expenses are described in the table below and are further explained in the example that follows. Fee Table(1) Shareholder Transaction Expenses(2) (fees paid directly from your investment) Institutional Class Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5 Maximum Deferred Sales Charge (Load) (as a percentage of offering price) None Maximum Sales Charge (Load) on Reinvested Dividends None Redemption Fee (as a percentage of amount redeemed, if applicable) (3) 2.00% Exchange Fee(4) None Maximum Account Fee(5) None Annual Operating Expenses (expenses deducted from Fund assets) Institutional Class Management Fees(6) 1.25% Distribution (Rule 12b-1) Fees None Other Expenses(7) 1.25% Total Annual Fund Operating Expenses(7) (8) 2.50% Less Expense Waiver and/or Reimbursement(8) 0.15% Net Annual Fund Operating Expenses (7) (8)(9) 2.35% (1) This fee table and the example below reflect the aggregate expenses of the Fund and the Portfolio. (2) You will be assessed fees for outgoing wire transfers ($15.00 per wire), returned checks and exchanges executed by telephone between the Fund and any other series of the Company. (3) You will be charged a redemption fee equal to 2.00% of the net amount of the redemption if you redeem or exchange your Institutional Class shares less than 30 days after you purchase them.If this fee is imposed it would raise the expenses of your shares.Such fees, when imposed, are credited directly to the assets of the Fund to help defray any potential expenses to the Fund from short-term trading activities.These fees are not used to pay distribution or sales fees or expenses.The redemption fee will not be assessed on certain types of accounts or under certain conditions.Please see “Redemption Fees” below for a list of the types of accounts and conditions under which this fee will not be assessed. (4) The Fund’s transfer agent charges a $5 transaction fee to shareholder accounts for telephone exchanges between any two series of the Company.The Fund’s transfer agent does not charge a transaction fee for written exchange requests. (5) IRA accounts are assessed a $15.00 annual fee. (6) The management fees paid by the Fund reflect the proportionate share of fees allocated to the Fund from the Portfolio for investment advisory services. (7) Because the Fund is new, these expenses, which include custodian, transfer agency, and other customary Fund expenses, are based on estimated amounts for the Fund’s current fiscal year. (8) The Investment Adviser has contractually agreed to waive and/or reimburse the portion of the shareholder servicing fee (which is included in Other Expenses) in excess of 0.05% of average daily net assets until May 1, 2008. (9) The Invesment Adviser to the Water Infrastructure Portfolio has voluntarily agreed to waive fees and reimburse expenses so that Total Annual Fund Operating Expenses do not exceed 1.54%. These waivers and reimbursements may be discontinued at any time. Example This Example is intended to help you compare the cost of investing in the Institutional Class of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Institutional Class of the Fund for the time periods indicated and then redeem all of your shares at the end of these periods.The Example also assumes that your investment has a 5% rate of 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 cost for the Fund would be: 1 Year 3 Years Institutional Class $238 $764 Main Risks of Investing in the Fund The principal risks of investing in the Fund are described previously in this Prospectus.This section provides more detail about some of those risks, along with information on additional types of risks that may apply to the Fund. 6 Investing in Mutual Funds All mutual funds carry risks that may cause you to lose money on your investment in the Fund.In general, the risks associated with the use of the Master/Feeder Fund Structure and the risks associated with your investment in the Fund are substantially identical to the risks associated with the Fund’s investment in the Portfolio.The following describes the primary risks to the Fund from investing in the Portfolio due to the Portfolio’s specific investment objective and strategies.As all investment securities are subject to inherent market risks and fluctuations in value due to earnings, economic and political conditions and other factors, neither the Fund nor the Portfolio can give any assurance that its investment objective will be achieved. Market Risk The NAV of the Portfolio will fluctuate based on changes in the value of its underlying portfolio.The stock market is generally susceptible to volatile fluctuations in market price.Market prices of securities in which the Portfolio invests may be adversely affected by an issuer’s having experienced losses orlack of earnings, or by the issuer’s failure to meet the market’s expectations with respect to new products or services, or even by factors wholly unrelated to the value or condition of the issuer.The value of the securities held by the Portfolio is also subject to the risk that a specific segment of the stock market may not perform as well as the overall market.Under any of these circumstances, the value of the Portfolio’s shares and total return will fluctuate, and your investment in the Fund may be worth more or less than your original cost when you redeem your shares. Portfolio Turnover Risk Under certain circumstances the Portfolio may take advantage of short-term trading opportunities without regard to the length of time its securities have been held.This strategy often calls for frequent trading of the Portfolio’s securities in order to take advantage of anticipated changes in market conditions.Frequent trading by the Portfolio could increase the rate of its portfolio turnover, which would involve correspondingly greater expenses.Such expenses may include brokerage commissions or dealer mark-ups/mark-downs, as well as other transaction costs on the sale of securities and reinvestments in other securities.Such sales also may result in adverse tax consequences to shareholders.If the Portfolio realizes capital gains when it sells its portfolio investments, it must generally pay those gains out to shareholders, increasing their taxable distributions.The trading costs and tax effects associated with such portfolio turnover may adversely affect Portfolio performance under these circumstances, and large movements of assets into and out of the Portfolio may negatively impact the Portfolio’s ability to achieve its investment objective or maintain its current level of operating expenses. Industry Specific Risks To the extent that the Portfolio focuses its investments in one or more sectors or industries, it may be subject to the risks affecting that sector or industry more than would a fund that invests in a wide variety of market sectors or industries.For instance, companies involved in the water industry may be located in societies (i.e. countries or geographic areas) that are suffering from water stress or scarcity and which do not possess healthy financial markets for business.These societies may not provide a stable environment for companies to operate.As such, companies located in these societies must manage both business risk and reputational risk.Additional risks of concentrating in the water industry include environmental considerations, taxes, government regulation, price and supply fluctuations, competition and water conservation. Securities Lending The Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements, amounting to no more than 33 1/3 % of the total assets of the Portfolio (including any collateral posted) or 50% of the total assets of the Portfolio (excluding any collateral posted).Repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations.These transactions involve some risk to the Portfolio if the other party should default on its obligation and the Portfolio is delayed or prevented from recovering the collateral.In the event that the original seller defaults on its obligation to repurchase, the Portfolio will seek to sell the collateral, which could involve costs or delays.To the extent proceeds from the sale of collateral are less than the repurchase price, the Portfolio would suffer a loss if forced to sell such collateral in this manner. 7 Non-Diversification The Portfolio is a non-diversified fund and therefore may be more susceptible to adverse financial, economic or other developments affecting any single issuer, and more susceptible to greater losses because of these developments. Investment in Small and Medium-Size Companies The Portfolio may invest in small or medium-size companies.Accordingly, the Portfolio may be subject to the additional risks associated with investment in companies with small or medium-size capital structures (generally a market capitalization of $5 billion or less).The market prices of the securities of such companies tend to be more volatile than those of larger companies.Further, these securities tend to trade at a lower volume than those of larger, more established companies.If the Portfolio is heavily invested in these securities and the value of these securities suddenly declines, the NAV of that Portfolio and your investment in the corresponding Fund will be more susceptible to significant losses. Foreign Securities Investing in foreign securities can carry higher returns than those generally associated with U.S. investments.However, foreign securities may be substantially riskier than U.S. investments.The economies of foreign countries may differ from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, capital reinvestment, resource self-sufficiency, and balance of payments position.Furthermore, the economies of developing countries generally are heavily dependent on international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protective measures imposed or negotiated by the countries with which they trade.These economies also have been, and may continue to be, adversely affected by economic conditions in the countries with which they trade.The Portfolio may be required to obtain prior governmental approval for foreign investments in some countries under certain circumstances.Governments may require approval to invest in certain issuers or industries deemed sensitive to national interests, and the extent of foreign investment in certain debt securities and companies may be subject to limitation.Individual companies may also limit foreign ownership to prevent, among other things, violation of foreign investment limitations. Some foreign investments may risk being subject to repatriation controls that could render such securities illiquid.Other countries might undergo nationalization, expropriation, political changes, governmental regulation, social instability or diplomatic developments (including war) that could adversely affect the economies of such countries or the value of the investments in those countries.Additional risks include currency fluctuations, political and economic instability, differences in financial reporting standards and less stringent regulation of securities markets. Portfolio Borrowing The Portfolio may leverage up to 5% of its assets to fund investment activities or to achieve higher returns.The Portfolio may borrow money from banks for temporary or emergency purposes in order to meet redemption requests.To reduce its indebtedness, the Portfolio may have to sell a portion of its investments at a time when it may be disadvantageous to do so.In addition, interest paid by the Portfolio on borrowed funds would decrease the net earnings of both the Portfolio and your investment in the Fund. Derivatives Risk The Portfolio may invest in derivatives such as options.The successful use of these investment practices depends on the Investment Adviser’s or Sub-Adviser’s ability to forecast stock price movements correctly.Should stock prices move unexpectedly, the Portfolio may not achieve the anticipated benefits of the transactions, or may realize losses, and thus be in a worse position than if such strategies had not been used.Unlike many exchange-traded options, there are no daily price fluctuation limits for certain options, and adverse market movements could therefore continue for an unlimited extent over a period of time.In addition, the correlation between movements in the prices of options and movements in the prices of the securities hedged or used for cover will not be perfect and could produce unanticipated losses. 8 The Portfolio’s ability to dispose of its positions in options, depends on the availability of liquid markets in such instruments.Markets in options with respect to a number of types of securities are relatively new and still developing.It is impossible to predict the amount of trading interest that may exist in various types of options.If a secondary market does not exist for an option purchased or written by the Portfolio, it might not be possible to effect a closing transaction in the option (i.e., dispose of the option), with the result that (1) an option purchased by the Portfolio would have to be exercised in order for the Portfolio to realize any profit and (2) the Portfolio may not be able to sell portfolio securities covering an option written by the Portfolio until the option expires or it delivers the underlying security, upon exercise.Therefore, no assurance can be given that the Portfolio will be able to utilize these instruments effectively.In addition, the Portfolio’s ability to engage in options transactions may be limited by tax considerations and the use of certain hedging techniques may adversely impact the characterization of income to the Portfolio for U.S. federal income tax purposes. Investing in Investment Grade Debt Securities and Below Investment Grade Debt Securities Investments in debt securities pose different risks.The value of fixed income securities generally will fall if interest rates rise.The value of these securities may also fall as a result of other factors such as the performance of the issuer, the market perception of the issuer or general economic conditions.These investments also involve a risk that the issuer may not be able to meet its principal and interest payment obligations.Fixed income securities having longer maturities involve greater risk of fluctuations in value. Investments in debt securities rated below investment grade, i.e., junk bonds, and unrated securities of comparable quality are subject to the increased risk of an issuer’s inability to meet principal and interest payment obligations.These securities may be subject to greater price volatility due to such factors as specific corporate or municipal developments, interest rate sensitivity, negative perceptions of the junk bond markets generally and less secondary market liquidity. Portfolio Holdings Information A description of the Portfolio’s policiesand procedures with respect to the disclosure of its portfolio securities is available in the Fund’sSAI.Currently, disclosure of the Portfolio’s holdings is required to be made quarterly within 60 days of the end of each fiscal quarter in the Annual Report and Semi-Annual Report to Fund shareholders and in the quarterly holdings report on Form N-Q (first and third quarters).The Annual and Semi-AnnualReports will be available by contacting Kinetics Mutual Funds, Inc., c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or calling (800) 930-3828.In addition, the Company publishes on its webpage (www.kineticsfunds.com) month-end(a) top fifteen portfolio holdings of the Portfolio and their percentage of the portfolio holdings, and (b) the top five performing and bottom five performing portfolio holdings of the Portfolio, in each case no earlier than twenty calendar days after the end of each calendar month.This information will be available on the website until the date on which the Fund files its next quarterly portfolio holdings report on Form N-CSR or Form N-Q with the SEC or until the next month in which portfolio holdings are posted in accordance with the above policy. Management of the Fund and the Portfolio Investment Adviser 9 The Portfolio’s investment adviser is Kinetics Asset Management, Inc. (“Investment Adviser”), 16 New Broadway, Sleepy Hollow, New York 10591.Founded in 1996, the Investment Adviser provides investment advisory services to a family of eight mutual funds with discretionary management authority over approximately $10.2 billion in assets at December 31, 2006.The Investment Adviser has selected, and the Company’s Board of Directors has approved, Aqua Terra Asset Management LLC (“Sub-Adviser” or “Aqua Terra”) as sub-adviser for the Portfolio.Aqua Terra, 4 Tower Bridge, 200 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428, is a majority owned subsidiary of Boenning & Scattergood Holdings, Inc.Founded in 1913, Boenning & Scattergood is a full service investment and brokerage firm.Aqua Terra provides investment advisory services in the water and water infrastructure sector. The Investment Adviser will review, monitor and report to the Board of Trustees of the Trust on the performance and investment procedures of Aqua Terra and assist and consult with Aqua Terra in connection with the Portfolio’s investment program.The Investment Adviser will also be responsible for the selection of broker-dealers and the negotiation of commission rates for transactions of the Portfolio.Aqua Terra, under the supervision of the Investment Adviser, is responsible for decisions to buy and sell securities for the Portfolio.Payments to the Sub-Adviser for its services are made by the Investment Adviser, not by the Portfolio.The Investment Adviser is entitled to receive an annual fee from the Portfolio for its services of 1.25% of the Portfolio’s average daily net assets.For its services, Aqua Terra receives sub-advisory fees from the Investment Adviser at the annual rate of .35% of daily net assets of the Portfolio. A discussion regarding the basis of the Board’s approval of the investment advisory and investment sub-advisory agreements for the Portfolio will be available in the Company’s semi-annual report to shareholders for the period ending June 30, 2007. Kinetics as the Investment Adviser to the Portfolio, and Aqua Terra as Sub-Adviser, are each engaged in a broad range of portfolio management, portfolio advisory and other business activities.Their services are not exclusive to the Portfolio and nothing prevents them, or any affiliates, from providing similar services to other investment funds and other clients (whether or not their investment objectives, strategies, or criteria are similar to those of the Portfolio) or from engaging in other activities. Investment Professionals for the Sub-Adviser William S. Brennan serves as the portfolio manager and is responsible for the day-to-day management of the Portfolio.Gerard Sweeney serves as a research analyst. Mr. Brennan has been President & Managing Partner of Aqua Terra, a subsidiary of Boenning & Scattergood since its inception on November 14, 2006, and will serve as the portfolio manager of the Portfolio.He joined Boenning & Scattergood in 2004 as managing director, Director of Equities, after working at Avondale Partners beginning in 2002, where he was Director, Institutional Sales.Prior to Avondale Partners, he was senior analyst and vice president at Pitcairn Investment Management from 2001 to 2002 and the executive vice president of Sequoia Software, a public software company from 2000 to 2001.He is also an Adjunct Professor in the Graduate MBA program at Villanova University School of Business and an Adjunct Finance Professor at Cabrini College.From 1999 through 2006, He served as a strategy and portfolio advisor to a private hedge fund that invests in the domestic and international water sectors. Mr. Sweeney has been a Senior Analyst and Portfolio Administrator for Aqua Terra since its inception on November 14, 2006. Prior to his involvement with Aqua Terra, he was a vice president at Boenning & Scattergood where he served as Equity Syndicate Manager and a senior institutional equity salesperson from 2004 to 2006.From 2000 through 2004, he was a member of Janney Montgomery Scott’s Syndicate Desk specializing in water related equity financings.Prior to his employment with Janney, Montgomery Scott, he was a trader with International Raw Materials which brokered transactions in agricultural chemicals domestically and internationally. 10 The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of securities in the Fund. Valuation of Fund Shares Shares of the Fund’s Institutional Class are sold at NAV per share, which is determined by the Fund as of the close of regular trading (generally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange (the “Exchange”) is open for unrestricted business.Purchase and redemption requests are priced at the next NAV calculated after receipt and acceptance of a completed purchase or redemption request.The NAV for each Class of shares of the Fund is determined by dividing the value of the Fund’s securities, cash and other assets attributable to that Class, minus all expenses and liabilities attributable to that Class, by the number of shares outstanding of that Class.The NAV for a Class of shares of the Fund takes into account the expenses and fees of that Class, including management, administration, distribution and shareholder servicing fees, which are accrued daily.The NAV of the Portfolio is calculated at the same time and in generally the same manner (i.e. assets-liabilities/ # of shares NAV) as those of the Fund’s Classes. The Portfolio’s securities are valued each day at the last quoted market price on the securities’ principal exchange.If market quotations are not readily available or if events occur that may significantly affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the Exchange, securities will be valued at their fair market value as determined in good faith in accordance with procedures approved by the Board of Trustees.Situations involving significant events include, but are not limited to, those where: a security’s trading has been halted or suspended; the security has been de-listed from a national exchange; or the security has not been traded for an extended period of time.In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Portfolio prices its shares.See “Trading in Foreign Securities.”The Portfolio may use independent pricing services to assist in calculating the NAV ofthe Portfolio’s shares. Fair valuation of securities introduces an element of subjectivity to the pricing of securities.As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes.If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Investment Adviser compares the new market quotation to the fair value price to evaluate the effectiveness of the Portfolio’s fair valuation procedures. Trading in Foreign Securities Trading in foreign securities may be completed at times when the Exchange is closed.In computing the NAV of the Fund and the Portfolio, the value of a foreign security is determined as of the close of trading on the foreign exchange on which it is principally traded or as of the scheduled close of trading on the Exchange, whichever is earlier, at the closing sales prices provided by approved pricing services or other alternate sources.In the absence of sales, the last available mean price between the closing bid and asked prices will be used.Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees.Values of foreign securities are translated from the local currency into U.S. dollars on the bases of the foreign currency exchange rates, as provided by an independent pricing service or reporting agency, generally prior to the close of the Exchange.Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the Exchange, which events would not be reflected in the computation of the Portfolio’sNAV.If events materially affecting the value of such securities or currency exchange rates occur during such time period, the securities will be valued at their fair value as determined in good faith by or under the direction of the Board of Trustees. 11 How to Purchase Shares In General Institutional Class shares of the Fund are sold to institutions, such as banks, trust companies, thrift institutions, corporations and mutual funds, that are purchasing shares on their own behalf or on behalf of discretionary and non-discretionary accounts for which they may receive account level asset-based, management fees.If you are purchasing Institutional Class shares through a financial institution, you must follow the procedures established by your institution.Your financial institution is responsible for sending your purchase order and wiring payment to the Fund’s transfer agent.Your financial institution holds the shares in your name and receives all confirmations of purchases and sales.Financial institutions placing orders for themselves or on behalf of their customers should call the Fund toll free at (800) 930-3828, or follow the instructions below under “Investing by Telephone,” “Purchase by Mail” and “Purchase by Wire.” Institutional Class shares of the Fund are sold at NAV, and will be credited to a shareholder’s account at the NAV next computed after an order and payment is received.The minimum initial investment is $1,000,000.The minimum subsequent investment for all types of accounts is $100,000.The Company reserves the right to vary or waive any minimum investment requirement.The Fund reserves the right to reject any purchase order if, in its opinion, it is in a Fund's best interest to do so.A service fee of $25.00 will be deducted from a shareholder’s Fund account for any purchases that do not clear.Your order will not be accepted until a completed New Account Application Form is received by the Funds or their transfer agent. Investing by Telephone If you have completed the Telephone Purchase Authorization section of the New Account Application Form, you may purchase additional shares by telephoning the Fund toll free at (800) 930-3828.This option allows investors to move money from their bank account to their Fund account upon request.Only bank accounts held at domestic institutions that are Automated Clearing House (“ACH”) members may be used for telephone transactions.Your purchase will take place at the NAV determined on the day your order is placed, provided that your order is received prior to 4:00 p.m. Eastern time. The minimum telephone purchase is $100,000.You may not make your initial purchase of the Fund’s shares by telephone. Purchase By Mail To purchase the Fund’s shares by mail, simply complete and sign the enclosed New Account Application Form and mail it, along with a check made payable to the Water Infrastructure Fund,c/o Kinetics Mutual Funds, Inc., to: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S. Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 All purchases by check must be in U.S. dollars drawn on a bank located within the United States.The Fund will not accept payment in cash or money orders.The Fund also does not accept cashier’s checks in amounts of less than $10,000.To prevent check fraud, the Fund will not accept third party checks, Treasury checks, credit card checks, traveler’s checks or starter checks for the purchase of shares.The Fund is unable to accept post-dated checks, post-dated on-line bill pay checks, or any conditional order or payment. 12 Purchase By Wire To open an account by wire, a completed New Account Application Form is required before your wire can be accepted.You can mail or overnight deliver your New Account Application Form to the transfer agent at the above address.Upon receipt of your completed New Account Application Form, an account will be established for you.You will need to provide the assigned account number to your bank when instructing it to wire the funds.Your bank must include along with the wire the name of the Fund, the account number and your name so that monies can be correctly applied.To ensure proper application of wired funds, please call (800) 930-3828 to notify the Fund that the wire is coming.The Fund is not responsible for delays resulting from the banking or Federal Reserve wire system.Please use the following wiring instructions: Wire to: U.S. Bank, N.A. ● ABA Number: 075000022 ● Credit: U.S. Bancorp Fund Services, LLC ● Account: 112-952-137 ● Further Credit: Kinetics Mutual Funds, Inc. The Water Infrastructure Fund (Shareholder Name/Account Registration) (Shareholder Account Number) Subsequent Investments You may add to your account at any time by purchasing shares by mail, by telephone, or by wire (minimum $100).To purchase by mail, submit your check with the remittance form attached to your individual account statement.To purchase by telephone, call (800) 930-3828 prior to 4:00 p.m. Eastern time to place your order.To ensure proper application of wired funds, please call (800) 930-3828to notify the Fund that the wire is coming.All purchase requests must include your shareholder account number. How to Redeem Shares In General Orders to sell or “redeem” Institutional Class shares should be placed with the same financial institution that placed the original purchase order in accordance with the procedures established by that institution.Your financial institution is responsible for sending your order to the Funds’ transfer agent and for crediting your account with the proceeds. You may redeem part or all of your shares of the Fund on any business day that the Fund calculates its NAV.To redeem shares, you must contact the Fund either by mail or by phone to place a redemption order.You should request your redemption prior to market close to obtain that day’s closing NAV.Redemption requests received after the close of the Exchange will be treated as though received on the next business day. The Fund will generally send redemption proceeds the next business day and, in any event, no later than seven days after the receipt of a redemption request in “good order” (see below).Please note, however, that when a purchase order has been made by check, the Fund will not be able to send your redemption proceeds until the purchase check has cleared.This may take up to 12 days. Redemption proceeds may be sent to the address of record, wired to a shareholder’s bank account of record, or sent via electronic funds transfer through the ACH network to the shareholder’s bank account of record.Wires are subject to a $15 fee paid by the investor, but the investor does not incur any charge when proceeds are sent via the ACH system. If the redemption proceeds are requested to be sent to an address other than the address of record, or if the address of record has been changed within 15 days of the redemption request, the request must be in writing with your signature guaranteed.Signature guarantees can be obtained from banks and securities dealers, but not from a notary public.The Fund will not be responsible for interest lost on redemption amounts due to lost or misdirected mail. 13 A signature guarantee of each owner is required in the following situations: » If ownership has changed on your account » When redemption proceeds are sent to any person, address or bank account not on record » Written requests to wire redemption proceeds (if not previously authorized on the account) » When establishing or modifying certain services on an account » If a change of address request was received by the Transfer Agent within the last 15 days In addition to the situations described above, the Fund and/or the Transfer Agent reserve the right at their discretion to require a signature guarantee in other circumstances. Written Redemption You can execute most redemptions by furnishing an unconditional written request to the Fund to redeem your shares at the current NAV.Redemption requests in writing should be sent to the Fund’s transfer agent at: Regular Mail Overnight or Express Mail Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc. The Water Infrastructure Fund The Water Infrastructure Fund c/o U.S Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 615 East Michigan Street, 3rd Floor Milwaukee, WI 53201-0701 Milwaukee, WI 53202 Requests for redemption in "good order" must: » indicate the name of the Fund, » be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required), » specify the number of shares or dollar amount to be redeemed, and » indicate your account registration number Telephone Redemption If you are authorized to perform telephone transactions (either through your New Account Application Form or by subsequent arrangement in writing with the Fund) you may redeem shares in any amount, but not less than $10,000, by instructing the Fund by phone at (800) 930-3828.A signature guarantee may be required of all shareholders in order to add or change telephone redemption privileges on an existing account. Note: Neither the Fund nor any of its service providers will be liable for any loss or expense in acting upon instructions that are reasonably believed to be genuine.To confirm that all telephone instructions are genuine, the Fund will use reasonable procedures, such as requesting: » your Fund account number » the name in which your account is registered » the social security or tax identification number under which the account is registered » the address of the account holder, as stated in the New Account Application Form Once a telephone transaction has been placed, it cannot be cancelled or modified. 14 Wire Redemption Wire transfers may be arranged to redeem shares.However, the Fund’s transfer agent charges a $15 fee per wire redemption against your account for this service.The minimum wire redemption amount is $10,000. The Fund’s Right to Redeem an Account The Fund reserves the right to redeem the shares of any shareholder, other than a shareholder who is an active participant in the AIP, whose account balance is less than $100,000, other than as a result of a decline in the NAV of the Fund.The Fund will provide shareholders with written notice 30 days prior to redeeming the shareholder’s account. Redemption Fees The Fund is designed for long-term investors willing to accept the risks associated with a long-term investment.In accordance with policies and procedures adopted by the Board of Directors of the Company, frequent purchases and redemptions of Fund shares are not encouraged but are generally permitted by the Fund.Such purchases and redemptions may have an adverse effect on other Fund shareholders, including, without limitation, the possibility of disrupting portfolio management strategies, increasing brokerage and administrative costs, harming Fund performance and possible dilution in the value of Fund shares held by long-term shareholders.The Company may, in its sole discretion, reject purchase orders when, in the judgment of management, such rejection is in the best interest of the Fund and its shareholders.The Fund assesses a 2.00% fee on the redemption or exchange of shares held for less than 30 days.These fees will be paid to the Fund to help offset any potential transaction costs. The Fund will use the first-in, first-out method to determine the30 day holding period.Under this method, the date of the redemption or exchange will be compared to the earliest purchase date of shares held in the account.If this holding period is less than 30 days, the redemption fee will be assessed.The redemption fee will be applied on redemptions and exchanges of each investment made by a shareholder that does not remain in the Fund for a30 day period from the date of purchase. The redemption fee will not apply to any shares purchased through reinvested distributions (dividends and capital gains) as these transactions are typically de minimis.This fee will also not be assessed to the participants in employer-sponsored retirement plans that are held at the Fund in an omnibus account (such as 401(k), 403(b), 457, Keogh, Profit Sharing Plans, and Money Purchase Pension Plans) or to accounts held under trust agreements at a trust institution held at the Fund in an omnibus account.The redemption fee will also not be assessed to accounts of the Investment Adviser or Sub-Adviser(s) or their affiliates used to capitalize the Fund as such accounts will be used specifically to control the volatility of shareholder subscriptions and redemptions to avoid adverse effects to the Fund.The redemption fee will also not be assessed to Institutional Class shares of the Funds held in an omnibus account by a financial intermediary that are redeemed for rebalancing under an asset allocation model. The Fund reserves the right to modify or eliminate the redemption fees or waivers at any time and will give shareholders 60 days’ prior written notice of any material changes, unless otherwise provided by law.The redemption fee policy may be modified or amended in the future to reflect, among other factors, regulatory requirements mandated by the Securities and Exchange Commission. Currently, the Fund is limited in its ability to assess or collect the redemption fee on all shares redeemed by financial intermediaries on behalf of their customers.For example, where a financial intermediary is not able to determine if the redemption fee applies and/or is not able to assess or collect the fee, or does not collect the fee at the time of a redemption, the Fund will not receive the redemption fee.If Fund shares are redeemed by a financial intermediary at the direction of its customers, the Fund may not know whether a redemption fee is applicable or the identity of the customer who should be assessed the redemption fee.Due to operational differences, a financial intermediary’s methods for tracking and calculating the redemption fee may differ in some respects from that of the Fund.If necessary, the Fund may prohibit additional purchases of Fund shares by a financial intermediary or by certain of the intermediaries’ customers. 15 Notice of Customer Verification In compliance with the USA PATRIOT Act of 2001, please note that the Fund’s transfer agent will verify certain information on your New Account Application Form as part of the Fund’s Anti-Money Laundering Program.As requested on the New Account Application Form, you should supply your full name, date of birth, social security number and permanent street address.Mailing addresses containing only a P.O. Box will not be accepted.Please contact the Fund’s transfer agent at (800) 930-3828 if you need additional assistance when completing your New Account Application Form. If we do not have a reasonable belief as to the identity of a shareholder, the account will be rejected or you will not be allowed to perform a transaction on the account until such information is received.The Fund also reserves the right to close the account within 5 business days if clarifying information/documentation is not received. Exchange Privilege You can exchange your Institutional Class shares in the Fund for Institutional Class shares of any other fund offered by the Company and for shares of the Kinetics Government Money Market Fund.If the exchange is requested via telephone, a $5 per exchange transaction cost will be assessed.You should carefully read the prospectus of a fund before exchanging shares into that fund.Be advised that exercising the exchange privilege consists of two transactions: a sale of shares in one fund and the purchase of shares in another.Therefore, an exchange of Fund shares held for less than 30 days may be subject to a 2.00% redemption fee.See “Redemption Fees” above.Further, exchanges may have certain tax consequences and you could realize short- or long-term capital gains or losses.Exchanges are generally made only between identically registered accounts unless you send written instructions with a signature guarantee requesting otherwise.You should request your exchange prior to market close to obtain that day’s closing NAV.Exchange requests received after the close of the Exchange will be treated as though received on the next business day. Call (800)930-3828 to learn more about the other funds or classes offered by the Company and about exercising your exchange privilege. Distributions and Taxes Distributions Distributions (whether treated for tax purposes as ordinary income or long-term capital gains) to shareholders of the Fund are generally paid in additional shares of the same Class of the Fund in which shareholders are already invested, with no sales charge, based on the NAV of that Class as of the close of business on the record date for such distributions.However, you may elect on the New Account Application Form to receive distributions as follows: Option 1: To receive income dividends and capital gain distributions in additional Fund shares, or Option 2: To receive all income dividends and capital gain distributions in cash. The Fund intends to pay any dividends from investment company taxable income and distributions representing capital gain at least annually, usually in December.The Fund will advise each shareholder annually of the amounts of dividends from investment company taxable income and of net capital gain distributions reinvested or paid in cash to the shareholder during the calendar year. If you select Option 2 and the U.S. Postal Service cannot deliver your distribution checks, or if your distribution checks remain uncashed for six months, your distribution checks will be reinvested in your account at the then current NAV of the Fund and your election will be converted to the purchase of additional shares. 16 Taxes The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future.Except where noted, the summary assumes you are a U.S. citizen or resident or otherwise subject to U.S. federal income tax.You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. Fund Distributions The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss).Except as discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional shares.Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below. Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, regardless of how long you have held your shares.The maximum long-term capital gain rate applicable to individuals, estates and trusts is currently 15%. Distributions of “qualifying dividends” will also generally be taxable to you at long-term capital gain rates, as long as certain requirements are met.In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or “qualified” foreign corporations (“qualifying dividends”), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates.But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund.For the lower rates to apply, noncorporate shareholders must have owned their Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Fund’s ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend).The amount of the Fund’s distributions that are otherwise qualifying dividends may be reduced as a result of the Fund’s securities lending activities. Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception.Distributions declared by a Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31. It is expected that the Portfolio will be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. The Portfolio may make an election to treat a proportionate amount of those taxes as constituting a distribution to each shareholder, which will allow you either (1) to credit that proportionate amount of taxes against U.S. Federal income tax liability as a foreign tax credit or (2) to take that amount as an itemized deduction. A portion of distributions attributable to investments in U.S. corporations, if any, paid by the Fund to shareholders who are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.The amount of such dividends qualifying for this deduction may, however, be reduced as a result of the Fund’s securities lending activities as described above.You will be notified annually of the tax status of distributions to you. You should note that if you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital.This is known as “buying into a dividend.” 17 Sales or Exchanges You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange or redemption of your shares in the Fund, including an exchange of shares pursuant to the Fund’s exchange privilege, based on the difference between your tax basis in the shares and the amount you receive for them.Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you sell or exchange them.(To aid in computing your tax basis, you generally should retain your account statements for the periods during which you held shares.) Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.Additionally, any loss realized on a sale or redemption of shares of the Fund may be disallowed under “wash sale” rules to the extent the shares disposed of are replaced with other shares of the same Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Fund.If disallowed, the loss will be reflected in an adjustment to the basis of the shares acquired. IRAs and Other Tax-Qualified Plans One major exception to thepreceding tax principles is that distributions on, and sales, exchanges and redemptions of, shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Backup Withholding On the New Account Application Form, you will be asked to certify that your social security number or taxpayer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS.If you are subject to backup withholding or you did not certify your taxpayer identification number, the IRS requires the Fund to withhold a percentage of any dividend and redemption or exchange proceeds.The Fund reserves the right to reject any application that does not include a certified social security or taxpayer identification number.The current withholding rate is 28%. U.S. Tax Treatment of Foreign Shareholders Nonresident aliens, foreign corporations and other foreign investors in the Fund will generally be exempt from U.S. federal income tax on Fund distributions attributable to net capital gains, and, for distributions attributable to Fund taxable years beginning before January 1, 2008, net short-term capital gains, of the Fund.Tax may apply to such capital gain distributions, however, if the recipient’s investment in the Fund is connected to a trade or business of the recipient in the United States or if the recipient is present in the United States for 183 days or more in a year and certain other conditions are met. Fund distributions attributable to other categories of Fund income, such as dividends from portfolio companies, will generally be subject to a 30% withholding tax when paid to foreign shareholders.The withholding tax may, however, be reduced (and, in some cases, eliminated) under an applicable tax treaty between the United States and a shareholder’s country of residence or incorporation, provided that the shareholder furnishes the Fund with a properly completed Form W-8BEN to establish entitlement for these treaty benefits.Also, for Fund taxable years beginning before January 1, 2008, Fund distributions attributable to U.S.-source interest income of the Fund will be exempt from U.S. federal income tax. All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in the Fund. State and Local Taxes You may also be subject to state and local taxes on distributions and redemptions.State income taxes may not apply, however, to any portions of the Fund’s distributions, if any, that are attributable to interest on U.S. government securities or interest on securities of the particular state or localities within the state. You should consult your tax adviser regarding the tax status of distributions in your state and locality. 18 Sunset of Tax Provisions Some of the tax provisions described above are subject to sunset provisions.Specifically, a sunset provision provides that the 15% long-term capital gain rate and the taxation of dividends at the long-term capital gain rate will change for taxable years after 2010. More tax information relating to the Fund is provided in the Statement of Additional Information. Distribution of Shares Distributor Kinetics Funds Distributor, Inc. (“KFD”), an affiliate of the Investment Adviser, 16 New Broadway, Sleepy Hollow, New York, 10591 is the distributor for the shares of the Fund.KFD is a registered broker-dealer and member of the National Association of Securities Dealers, Inc.Shares of the Fund are offered on a continuous basis. Shareholder Servicing Agents The Investment Adviser has entered into shareholder servicing agreements under which the Investment Adviser may perform, or arrange for others to perform, certain shareholder functions.For these shareholder services, the Investment Adviser and/or shareholder servicing agents are entitled to receive an annual shareholder servicing fee in the amount of 0.20% of the average daily net assets attributable to the Institutional Class.The Investment Adviser has contractually agreed to waive and/or reimburse the portion of the shareholder servicing fee with respect to the Institutional Class in excess of 0.05% of the average daily net assets attributable to the Institutional Class until at least May 1, 2008.The Adviser and/or its affiliates may pay additional compensation from time to time, out of their assets and not as an additional charge to the Funds, to selected shareholder servicing agents and other persons in connection with providing services to the holders of the Funds’ Institutional Class. Arrangements with Certain Financial Institutions The Investment Adviser and/or its affiliates may make payments to selected affiliated or unaffiliated broker-dealers and other financial institutions (“Financial Institutions”) from time to time in connection with the sale, distribution, retention and/or servicing of shares of the Fund and other funds managed by the Investment Adviser or its affiliates.These payments are made out of the Investment Adviser’s and/or its affiliates’ own assets and are not an additional charge to the Fund.The payments are in addition to the shareholder servicing fees described in this Prospectus.The amount of such payments may be significant in amount and the prospect of receiving any such payments may provide Financial Institutions or their employees with an incentive to favor sales of shares of the Fund over other investment options.You should contact your Financial Institution for more information about the payments it may receive and potential conflicts of interest. Fund Administrator U.S. Bancorp Fund Services, LLC (“USBFS”) serves as Administrator to the Fund and Portfolio. Custodian, Transfer Agent, Dividend Disbursing Agent and Fund Accountant U.S. Bank, N.A. serves as Custodian for the Fund’s cash and securities.The Custodian does not assist in, and is not responsible for, investment decisions involving assets of the Fund.USBFS acts as the Fund’s Transfer Agent, Dividend Disbursing Agent and Fund Accountant. Unique Characteristics of Master/Feeder Fund Structure Unlike other mutual funds which directly acquire and manage their own portfolio securities, the Fund invests all of its investable assets in the Portfolio, a separately registered investment company.The Portfolio, in turn, invests in securities, using the strategies described in this Prospectus. 19 In addition to selling a beneficial interest to the Fund, the Portfolio could also sell beneficial interests to other mutual funds or institutional investors.Such investors would invest in the Portfolio on the same terms and conditions and would pay a proportionate share of the Portfolio's expenses.However, other investors in the Portfolio are not required to sell their shares at the same public offering price as the Fund, and might bear different levels of ongoing expenses than the Fund.Shareholders of the Fund should be aware that these differences would result in differences in returns experienced in the different funds that invest in the Portfolio. Such differences in return are also present in other mutual fund structures. Smaller funds investing in the Portfolio could be materially affected by the actions of larger funds investing in the Portfolio.For example, if a large feeder fund were to withdraw from the Portfolio, the remaining funds might experience higher pro rata operating expenses, thereby producing lower returns.Additionally, the Portfolio could become less diverse, resulting in increased portfolio risk.However, that possibility also exists for traditionally structured funds that have large or institutional investors.Funds with a greater pro rata ownership in the Portfolio could have effective voting control of the Portfolio. Certain changes in the Portfolio’s objective, policies or restrictions might require the Company to withdraw the Fund's interest in the Portfolio.Any such withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution from the Portfolio).The Fund could incur brokerage fees or other transaction costs in converting such securities to cash.In addition, a distribution in kind could result in a less diversified portfolio of investments or adversely affect the liquidity of the Fund. The Company’s Board of Directors retains its right to withdraw the Fund’s investments from the Portfolio at any time if the Board of Directors determines that such withdrawal would be in the best interest of the Fund’s shareholders.The Fund would then resume investing directly in individual securities of other issuers or invest in another portfolio of the Trust. The SAI contains more information about the Fund and the Portfolio, the Master/Feeder Fund Structure and the types of securities in which the Portfolio may invest. Counsel and Independent Registered Public Accounting Firm Legal matters in connection with the issuance of shares of common stock of the Fund are passed upon by Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996.Tait, Weller & Baker LLP, 1818 Market Street, Suite 2400, Philadelphia,Pennsylvania 19103 is the independent registered public accounting firm for the Fund. 20 Kinetics Mutual Funds, Inc. The Water Infrastructure Fund Investment Adviser Kinetics Asset Management, Inc and Shareholder Servicing Agent 16 New Broadway Sleepy Hollow, New York, 10591 Sub-Adviser Aqua Terra Asset Management, LLC 4 Tower Bridge 200 Barr Harbor Drive, Suite 300 West Conshohocken, PA 19428-2979 Legal Counsel Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 Independent Registered Public Tait, Weller & Baker LLP Accounting Firm 1818 Market Street, Suite 2400 Philadelphia, PA 19103 Distributor Kinetics Funds Distributor, Inc. 16 New Broadway Sleepy Hollow, NY 10591 Transfer Agent, Fund Accountant, U.S. Bancorp Fund Services, LLC and Administrator 615 East Michigan Street Milwaukee, WI 53202 Custodian U.S. Bank, N.A. 1555 N. River Center Drive, Suite 302 Milwaukee, WI 53212 You may obtain the following and other information on the Fund free of charge: Statement of Additional Information (SAI) dated June 29, 2007 The SAI of the Fund provides more details about the Fund’s policies and management.The Fund’s SAI is incorporated by reference into this Prospectus. Annual and Semi-Annual Report The annual and semi-annual reports for the Fund provide the most recent financial reports and portfolio listings.The annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during the last fiscal year. To receive any of these documents or theFund’s Prospectus, free of charge, to request additional information aboutthe Companyor to make shareholder inquires, please contact us at: By Telephone: By Internet: (800) 930-3828 http://www.kineticsfunds.com By Mail: Kinetics Mutual Funds, Inc. c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 Additionally, the foregoing Fund documents are available on the Fund’s website listed above. SEC: Information about the Fund (including the SAI) can be reviewed and copied at the SEC Public Reference Room in Washington, D.C.Please call 1-202-551-8090 for information relating to the operation of the Public Reference Room.Reports and other information about the Fund are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov.Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-0102. 1940 Act File No. 811-09303 21 No Load, Institutional and Advisor Classes KINETICS MUTUAL FUNDS, INC. STATEMENT OF ADDITIONAL INFORMATION June 29, 2007 The Water Infrastructure Fund The Water Infrastructure Fund (the “Fund”) of Kinetics Mutual Funds, Inc. (the “Company”) is in a master/feeder fund structure.Unlike many other investment companies that directly acquire and manage their own portfolios of securities, the Fund seeks its investment objective by investing all of its investable assets in a corresponding portfolio series, the Water Infrastructure Portfolio (the “Portfolio”), of Kinetics Portfolio Trust (the “Trust”), a Delaware statutory trust.The Portfolio is an open-end, non-diversified investment company with an investment objective, strategies and policies that are substantially identical to those of the Fund. This Statement of Additional Information (“SAI”) provides general information about the Fund and the Portfolio.This SAI is not a Prospectus and should be read in conjunction with the Fund’s current No Load Class Prospectus, Institutional Class Prospectus or Advisor Classes Prospectus, each datedJune 29, 2007, as supplemented and amended from time to time, which are incorporated herein by reference.To obtain a copy of the Prospectuses, please write or call the Fund at the address or telephone number below.To obtain a copy of the Prospectus and SAI of the Portfolio dated June 29, 2007, that provide general information about the Portfolio and are incorporated herein by reference, please write or call the Portfolio at the address or telephone number shown below. Kinetics Mutual Funds, Inc. c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI53201-0701 Phone: (800) 930-3828 TABLE OF CONTENTS General Information about Kinetics Mutual Funds, Inc. 2 Description of the Fund 4 Investment Restrictions 4 Investment Policies and Associated Risks 5 Temporary Investments 11 Portfolio Turnover 12 Management of the Fund and the Portfolio 12 Control Persons and Principal Holders of Securities 18 Proxy Voting Policies 19 Investment Adviser and Sub-Adviser 19 Shareholder Servicing 21 Administrative Services 22 Distributor 22 Distribution Plans 22 Custodian 23 Codes of Ethics 23 Valuation of Shares 23 Portfolio Holdings Information 25 Purchasing Shares 26 Redemption of Shares 29 Brokerage 30 Taxes 32 Performance Information 33 Independent Registered Public Accounting Firm 35 1 General Information about Kinetics Mutual Funds, Inc. The Company is a Maryland corporation, established on March26, 1999.The Company is comprised of several series, including the Fund, all of which are open-end investment companies.The Trust is a Delaware statutory trust, established on March 14, 2000.The Trust is comprised of several series, including the Portfolio, all of which are open-end investment companies.The Fund and Portfolio are set up in a master/feeder fund structure whereby the Fund is a “feeder” fund that invests all of its investable assets in the “master” Portfolio.The principal business office for the Company and the Trust is located at 16 New Broadway, Sleepy Hollow, New York 10591. General Information about the Investment Adviser and Sub-Adviser Kinetics Asset Management, Inc. (“Kinetics” or “Adviser” or “Investment Adviser”) is a New York corporation that serves as the investment adviser to the Water Infrastructure Portfolio.Founded in 1996, the Adviser provides investment advisory services to the Trust, a family of eight mutual funds with discretionary management authority over approximately $10.2 billion in assets at December 31, 2006. The Investment Adviser has selected, and the Board of Trustees of the Trust has approved, Aqua Terra Asset Management, LLC (“Sub-Adviser” or “Aqua Terra”) as sub-adviser for the Water Infrastructure Portfolio.Aqua Terra, a Pennsylvania limited liability company located at 4 Tower Bridge, 200 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428, is a majority owned subsidiary of Boenning & Scattergood Holdings, Inc.Boenning & Scattergood is a full service investment and brokerage firm, founded in 1913.Aqua Terra provides investment advisory services in the water and water infrastructure sector. Aqua Terra, under the supervision of the Investment Adviser, is responsible for decisions to buy and sell securities for the Portfolio.Aqua Terra will also provide various administrative services, and supervise the daily business affairs of the Portfolio.Payments to the Sub-Adviser for its services are made by the Adviser, not by the Portfolio.The Adviser is entitled to receive an annual fee from the Portfolio for its services at the annual rate of 1.25% of the Portfolio’s average daily net assets. Capitalization The authorized capitalization of the Company consists of 1billion shares of common stock of $0.001 par value per share.Each share has equal dividend, distribution and liquidation rights.There are no conversion or preemptive rights applicable to any shares of the Fund.All shares issued are fully paid and non-assessable.Each holder of common stock has one vote for each share held.Voting rights are non-cumulative. The authorized capitalization of the Trust consists of an unlimited number of shares of beneficial interest with no par value.Each share has equal dividend, distribution and liquidation rights.There are no conversion or preemptive rights applicable to any shares of the Portfolio.All shares issued are fully paid and non-assessable.Each holder of shares of beneficial interest has one vote for each share held.Voting rights are non-cumulative. Title and Description of Share Classes The Company and the Trust each currently consist of eight series.Under the Company’s Articles of Incorporation and a Multiple Class Plan adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended (“1940 Act”), the Fund is permitted to offer several classes of shares as follows: No Load Class, Institutional Class, AdvisorClass A, and AdvisorClass C.AdvisorClass A shares are subject to a front-end sales load and a Rule 12b-1 fee as described in the applicable Prospectus.AdvisorClass C shares are subject to a Rule12b-1 fee as described in the applicable Prospectus. 2 All Classes are sold primarily to individuals who purchase shares through Kinetics Funds Distributor, Inc., (“KFD or the “Distributor”), the Company’s distributor.The expenses incurred pursuant to the Rule 12b-1 Plans will be borne solely by Advisor Class A and C shares of the Fund and constitute the only expenses allocated on a Class by Class basis. Rights of Each Share Class Each share of common stock of the Fund is entitled to one vote in electing Directors and other matters that may be submitted to shareholders for a vote.All shares of all Classes of the Fund generally have equal voting rights.However, matters affecting one particular Class of shares can be voted on only by shareholders in that Class.Only shareholders of Advisor Class A or Advisor Class C shares will be entitled to vote on matters submitted to a shareholder vote with respect to the Rule 12b-1 Plan applicable to such Class.All shareholders are entitled to receive dividends when and as declared by the Board of Directors from time to time and as further discussed in the Prospectuses. Master/Feeder Fund Structure Unlike other mutual funds that directly acquire and manage their own portfolio securities, the Fund invests all of its investable assets in the Portfolio, a separately registered investment company.The Portfolio, in turn, invests in securities using the strategies described in the Prospectus.Accordingly, a shareholder’s interest in the Portfolio’s underlying investment securities is indirect.In addition to selling a beneficial interest to the Fund, the Portfolio could also sell beneficial interests to other mutual funds or institutional investors.Such investors would invest in the Portfolio on the same terms and conditions and would pay a proportionate share of the Portfolio’s expenses.However, other mutual fund or institutional investors in the Portfolio are not required to sell their shares at the same public offering price as the Fund, and might bear different levels of ongoing expenses than the Fund.Shareholders of the Fund should be aware that these differences would result in differences in returns experienced by the different mutual funds or institutional investors of the Portfolio.Such differences in return are also present in other mutual fund structures.In addition, a Master/Feeder Fund Structure may serve as an alternative for large, institutional investors in the Fund who may prefer to offer separate, proprietary investment vehicles and who otherwise might establish such vehicles outside of the Fund’s current operational structure.The Master/Feeder Fund Structure may also allow the Fund to stabilize its expenses and achieve certain operational efficiencies.No assurance can be given, however, that the Master/Feeder Fund Structure will result in the Fund stabilizing its expenses or achieving greater operational efficiencies. The Fund’s methods of operation and shareholder services are not materially affected by its investment in the Portfolio, except that the assets of the Fund may be managed as part of a larger pool of assets.Since the Fund invests all of its assets in the Portfolio, it holds only beneficial interests in the Portfolio; the Portfolio invests directly in individual securities of other issuers. Certain changes in the Portfolio’s objective, policies and/or restrictions may require the Company to withdraw the Fund’s interest in the Portfolio.Any withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution) from the Portfolio.The Fund could incur brokerage fees or other transaction costs in converting such securities to cash.In addition, a distribution in kind may result in a less diversified portfolio of investments or adversely affect the liquidity of the Fund.The Company’s Board of Directors retains the right to withdraw the investments of the Fund from the Portfolio at any time if it determines that such withdrawal would be in the best interest of the Fund’s shareholders.The Fund would then resume investing directly in individual securities of other issuers or invest in another Portfolio of the Trust. Smaller funds investing in the Portfolio may be materially affected by the actions of larger funds investing in the Portfolio.For example, if a large fund withdraws from the Portfolio, the remaining funds may experience higher pro rata operating expenses, thereby producing lower returns.Additionally, the Portfolio may become less diverse, resulting in increased portfolio risk.However, this possibility also exists for traditionally structured funds that have large or institutional investors.A fund with a greater pro rata ownership in the Portfolio could have effective voting control of the operations of the Portfolio.Whenever the Fund is requested to vote on matters pertaining to the Portfolio, the Company will hold a meeting of shareholders of the Fund and the Fund will cast all of its votes in the Portfolio in the same proportion as the Fund’s shareholders.Shares of the Fund for which no voting instructions have been received will be voted in the same proportion as those shares for which instructions are received. 3 Description of the Fund The Water Infrastructure Fund’s investment objective is to seek to provide investors with long-term capital growth and secondarily with current income.This investment objective is fundamental and cannot be changed without the approval of shareholders. The Fund seeks to achieve its objective by investing all of its investable assets in the Portfolio.Under normal circumstances, the Portfolio invests at least 80% of its net assets plus any borrowings for investment purposes in equity and fixed income securities issued by U.S. and foreign companies engaged in water infrastructure and natural resources with a specific water theme and related activities. The Fund is classified as a non-diversified investment company.The Fund should not be used as a trading vehicle. Investment Restrictions Unless otherwise noted, the Fund and the Portfolio have adopted and are subject to substantially identical fundamental investment restrictions.The investment restrictions of the Fund may be changed only with the approval of the holders of a majority of the Fund’s outstanding voting securities.The investment restrictions of the Portfolio may be changed only with the approval of the holders of a majority of the Portfolio’s outstanding voting securities.As used in this SAI, “a majority of the Fund’s (or Portfolio’s) outstanding voting securities” means the lesser of (1)67% of the shares of common stock/beneficial interest of the Fund/Portfolio represented at a meeting at which more than 50% of the outstanding shares are present in person or by proxy, or (2)more than 50% of the outstanding shares of common stock/beneficial interest of the Fund/Portfolio. 1. The Fund/Portfolio will not act as underwriter for securities of other issuers. 2. The Fund/Portfolio will not make loans amounting to more than 33 1/3% of its total assets (including any collateral posted) or 50% of its total assets (excluding any collateral posted). 3. The Fund/Portfolio will not borrow money or pledge, mortgage, or hypothecate its assets except to facilitate redemption requests that might otherwise require the untimely disposition of portfolio securities and then only from banks and in amounts not exceeding the lesser of 10% of its total assets valued at cost or 5% of its total assets valued at market at the time of such borrowing, pledge, mortgage, or hypothecation and except that the Fund may enter into futures contracts and related options. 4. The Fund/Portfolio will not invest more than 15% of the value of its net assets in illiquid securities, restricted securities, and other securities for which market quotations are not readily available.This policy shall not be deemed violated to the extent that the Fund invests all of its investable assets in the Portfolio. 5. The Fund/Portfolio will not invest in the securities of any one industry except the water infrastructure and natural resources with a specific water theme and related industries, with the exception of securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, if, as a result, more than 20% of the Fund’s/Portfolio’s total net assets would be invested in the securities of such industries.Except during defensive periods, at least 80% of the Fund’s/Portfolio’s total net assets will be invested in the securities of U.S. and foreign companies that are engaged in water infrastructure and natural resources with a specific water theme and related activities.This policy shall not be deemed violated to the extent that the Fund invests all its investable assets in the Portfolio. 4 6. The Fund/Portfolio will not issue senior securities. 7. The Fund/Portfolio will not purchase or sell commodities or commodity contracts, or invest in oil, gas or mineral exploration or development programs or real estate except that the Fund/Portfolio may purchase and sell securities of companies that deal in oil, gas, or mineral exploration or development programs or interests therein. Non-Fundamental Investment Limitations The following are the Fund’s and Portfolio’s non-fundamental operating policies that may be changed by the Board of Directors of the Company and the Board of Trustees of the Trust, respectively, without shareholder approval. The Fund/Portfolio will not make any changes in its investment policy of investing at least 80% of net assets in the investments suggested by its name without first providing its shareholders with at least 60 days’ prior notice. Investment Policies and Associated Risks The Fund’s and Portfolio’s investment policies and risks are substantially identical.The following paragraphs provide a more detailed description of the Fund’s and Portfolio’s investment policies and risks identified in the Prospectus.Unless otherwise noted, the policies described in this SAI pertain to the Fund and the Portfolio.Furthermore, unless otherwise noted, the policies described in this SAI are not fundamental and may be changed by the Board of Directors of the Company and the Board of Trustees of the Trust, respectively, without shareholder approval. 5 Common and Preferred Stock; Convertible Securities Common stocks are units of ownership of a corporation.Preferred stocks are stocks that often pay dividends at a specific rate and have a preference over common stocks in dividend payments and liquidation of assets.Some preferred stocks may be convertible into common stock.Convertible securities are securities that may be converted into or exchanged for a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. Debt Securities The Portfolio may invest in convertible and non-convertible debt obligations without regard to rating, and as a result, the Portfolio may purchase or hold securities in the lowest rating categories.Debt securities in these lowest investment grade categories are considered to be below investment grade securities that may not have adequate capacity to pay principal or that otherwise generally lack the characteristics of desirable investments.As compared to debt securities with higher ratings, these “high risk” securities are vulnerable to nonpayment and depend to a larger degree upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation.At no time will the Portfolio have more than 20% of its total assets invested in any debt securities that are rated below investment grade or if the security is unrated, of comparable quality as determined by the Portfolio’s Sub-Adviser, either at the time of purchase or as a result of a reduction in rating after purchase.Please see “Appendix A” to this SAI for a description of debt security ratings. The fixed-income securities in which the Portfolio may invest are generally subject to interest rate risk, credit risk, market risk and call risk. Interest Rate Risk – Therisk that when interest rates increase, fixed-income securities held by a Fund will decline in value.Long-term fixed-income securities will normally have more price volatility because of this risk than short-term fixed-income securities. Credit Risk relates to the ability of the issuer to meet interest and principal payments, as they become due.The ratings given a security by rating services such as Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Rating Service (“S&P”) provide a generally useful guide as to such credit risk.The lower the rating given a security by such rating service, the greater the credit risk such rating service perceives to exist with respect to such security.Increasing the amount of Portfolio assets invested in unrated or lower-grade securities, while intended to increase the yield produced by those assets, will also increase the credit risk to which those assets are subject. Market Risk. All mutual funds are affected by changes in the economy and swings in investment markets.These can occur within or outside the U.S. or worldwide, and may affect only particular companies or industries. Call Risk – Therisk that an issuer will exercise its right to pay principal on an obligation held by a Fund (such as an asset-backed security) earlier than expected.This may happen when there is a decline in interest rates.Under these circumstances, a Fund may be unable to recoup all of its initial investment and will also suffer from having to reinvest in lower yielding securities. Depositary Receipts.The Portfolio may invest in ADRs and other forms of depositary receipts, such as IDRs.Depository receipts are typically issued in connection with a U.S. or foreign bank or trust company and evidence ownership of underlying securities issued by a foreign corporation.In particular, ADRs represent the right to receive securities of foreign issuers deposited in a bank or other depositary.ADRS are traded in the United States and the prices of ADRs are quoted in U.S. dollars. Investments in depositary receipts involve certain inherent risks generally associated with investments in foreign securities, including the following: Political and Economic Factors.Individual foreign economies of certain countries may differ favorably or unfavorably from the United States economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, diversification and balance of payments position.The internal politics of certain foreign countries may not be as stable as those of the United States.Governments in certain foreign countries also continue to participate to a significant degree, through ownership interest or regulation, in their respective economies.Action by these governments could include restrictions on foreign investment, nationalization, expropriation of goods or imposition of taxes, and could have a significant effect on market prices of securities and payment of interest.The economies of many foreign countries are heavily dependent upon international trade and are accordingly affected by the trade policies and economic conditions of their trading partners.Enactment by these trading partners of protectionist trade legislation could have a significant adverse effect upon the securities markets of such countries. 6 Currency Fluctuations.A change in the value of any foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of an ADR’s underlying portfolio securities denominated in that currency.Such changes will affect the Portfolio to the extent that it is invested in ADRs comprised of foreign securities. Taxes.The interest and dividends payable on certain foreign securities comprising an ADR may be subject to foreign withholding taxes, thus reducing the net amount of income to be paid to the Portfolio and that may ultimately be available for distribution to the Portfolio’s and Fund’s shareholders. When-Issued and Delayed Delivery Transactions The Portfolio may purchase short-term obligations on a when-issued or delayed delivery basis.These transactions are arrangements in which the Portfolio purchases securities with payment and delivery scheduled for a future time.The seller’s failure to complete these transactions may cause the Portfolio to miss a price or yield considered advantageous.Settlement dates may be a month or more after entering into these transactions and the market values of the securities purchased may vary from the purchase prices. The Portfolio may dispose of a commitment prior to settlement if the Sub-Adviser deems it appropriate to do so.In addition, the Portfolio may enter into transactions to sell its purchase commitments to third parties at current market values and simultaneously acquire other commitments to purchase similar securities at later dates.The Portfolio may realize short-term profits or losses upon the sale of such commitments. These transactions are made to secure what is considered to be an advantageous price or yield for the Portfolio.No fees or other expenses, other than normal transaction costs, are incurred.However, liquid assets of the Portfolio sufficient to make payment for the securities to be purchased are segregated on the Portfolio’s records at the trade date.These assets are marked to market daily and are maintained until the transaction is settled.The Portfolio does not intend to engage in when-issued and delayed delivery transactions to an extent that would cause the segregation of more than 20% of the total value of its assets. Restricted and Illiquid Securities The Portfolio may invest in a limited amount of restricted securities.Restricted securities are any securities in which the Portfolio may invest pursuant to its investment objective and policies but which are subject to restrictions on resale under federal securities laws.An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Portfolio has valued the investment. Derivatives Buying Call and Put Options.The Portfolio may purchase call options.Such transactions may be entered into in order to limit the risk of a substantial increase in the market price of a security that the Portfolio intends to purchase.Prior to its expiration, a call option may be sold in a closing sale transaction.Any profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the call option plus the related transaction cost. 7 The Portfolio may purchase put options.By buying a put, the Portfolio has the right to sell a security at the exercise price, thus limiting its risk of loss through a decline in the market value of the security until the put expires.The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid for the put option and any related transaction cost.Prior to its expiration, a put option may be sold in a closing sale transaction and any profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. Writing (Selling) Call and Put Options.The Portfolio may write covered options on equity and debt securities and indices.This means that, in the case of call options, so long as the Portfolio is obligated as the writer of a call option, it will own the underlying security subject to the option and, in the case of put options, it will, through its custodian, deposit and maintain either cash or securities with a market value equal to or greater than the exercise price of the option. Covered call options written by the Portfolio give the holder the right to buy the underlying securities from the Portfolio at a stated exercise price.A call option written by the Portfolio is “covered” if the Portfolio owns the underlying security that is subject to the call or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian bank) upon conversion or exchange of other securities held in its portfolio.A call option is also covered if the Portfolio holds a call on the same security and in the same principal amount as the call written where the exercise price of the call held (a)is equal to or less than the exercise price of the call written or (b)is greater than the exercise price of the call written if the difference is maintained by the Portfolio in cash and high grade debt securities in a segregated account with its custodian bank. The Portfolio may purchase securities, which may be covered with call options solely on the basis of considerations consistent with the investment objective and policies of the Portfolio.The Portfolio’s turnover may increase through the exercise of a call option; this will generally occur if the market value of a “covered” security increases and the Portfolio has not entered in to a closing purchase transaction. As a writer of an option, the Portfolio receives a premium less a commission, and in exchange foregoes the opportunity to profit from any increase in the market value of the security exceeding the call option price.The premium serves to mitigate the effect of any depreciation in the market value of the security.The premium paid by the buyer of an option will reflect, among other things, the relationship of the exercise price to the market price, the volatility of the underlying security, the remaining term of the option, the existing supply and demand, and the interest rates. The writer of a call option may have no control over when the underlying securities must be sold because the writer may be assigned an exercise notice at any time prior to the termination of the obligation.Exercise of a call option by the purchaser will cause the Portfolio to forego future appreciation of the securities covered by the option.Whether or not an option expires unexercised, the writer retains the amount of the premium.This amount may, in the case of a covered call option, be offset by a decline in the market value of the underlying security during the option period.If a call option is exercised, the writer experiences a profit or loss from the sale of the underlying security.Thus during the option period, the writer of a call option gives up the opportunity for appreciation in the market value of the underlying security or currency above the exercise price.It retains the risk of the loss should the price of the underlying security or foreign currency decline.Writing call options also involves risks relating to the Portfolio’s ability to close out the option it has written. The Portfolio may write exchange-traded call options on its securities.Call options may be written on portfolio securities indices, or foreign currencies.With respect to securities and foreign currencies, the Portfolio may write call and put options on an exchange or over-the-counter.Call options on portfolio securities will be covered since the Portfolio will own the underlying securities.Call option on securities indices will be written only to hedge in an economically appropriate way portfolio securities that are not otherwise hedged with options or financial futures contracts and will be “covered” by identifying the specific portfolio securities being hedged.Options on foreign currencies will be covered by securities denominated in that currency.Options on securities indices will be covered by securities that substantially replicate the movement of the index. 8 A put option on a security, security index, or foreign currency gives the purchaser of the option, in return for the premium paid to the writer (seller), the right to sell the underlying security, index, or foreign currency at the exercise price at any time during the option period.When the Portfolio writes a secured put option, it will gain a profit in the amount of the premium, less a commission, so long as the price of the underlying security remains above the exercise price.However, the Portfolio remains obligated to purchase the underlying security from the buyer of the put option (usually in the event the price of the security falls bellows the exercise price) at any time during the option period.If the price of the underlying security falls below the exercise price, the Portfolio may realize a loss in the amount of the difference between the exercise price and the sale price of the security, less the premium received.Upon exercise by the purchaser, the writer of a put option has the obligation to purchase the underlying security or foreign currency at the exercise price.A put option on a securities index is similar to a put option on an individual security, except that the value of the option depends on the weighted value of the group of securities comprising the index and all settlements are made in cash. During the option period, the writer of a put option has assumed the risk that the price of the underlying security or foreign currency will decline below the exercise price.However, the writer of the put option has retained the opportunity for appreciation above the exercise price should the market price of the underlying security or foreign currency increase.Writing put options also involves risks relating to the Portfolio’s ability to close out the option that it has written. The writer of an option who wishes to terminate its obligation may effect a “closing purchase transaction” by buying an option of the same series as the option previously written.The effect of the purchase is that the clearing corporation will cancel the writer’s position.However, a writer may not effect a closing purchase transaction after being notified of the exercise of an option.There is also no guarantee that the Portfolio will be able to effect a closing purchase transaction for the options it has written. Effecting a closing purchase transaction in the case of a written call option will permit the Portfolio to write another call option on the underlying security with a different exercise price, expiration date, or both.Effecting a closing purchase transaction will also permit the Portfolio to use cash or proceeds from the investments.If the Portfolio desires to sell a particular security from its portfolio on which it has written a call option, it will effect a closing purchase transaction before or at the same time as the sale of the security. The Portfolio will realize a profit from a closing purchase transaction if the price of the transaction is less than the premium received from writing the option.Likewise, the Portfolio will realize a loss from a closing purchase transaction if the price of the transaction is more than the premium received from writing the option.Because increases in the market price of a call option will generally reflect increases in the market price of the underlying security, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security owned by the Portfolio. Writing Over-The-Counter (“OTC”) Options.The Portfolio may engage in options transactions that trade on the OTC market to the same extent that it intends to engage in exchange-traded options.Just as with exchange-traded options, OTC options give the holder the right to buy an underlying security from, or sell an underlying security to, an option writer at a stated exercise price.However, OTC options differ from exchange-traded options in certain material respects. OTC options are arranged directly with dealers and not, as is the case with exchange-traded options, through a clearing corporation.Thus, there is a risk of non-performance by the dealer.Because there is no exchange, pricing is typically done by reference to information obtained from market makers.Since OTC options are available for a greater variety of securities and in a wider range of expiration dates and exercise prices, the writer of an OTC option is paid the premium in advance by the dealer. A writer or purchaser of a put or call option can terminate it voluntarily only by entering into a closing transaction.There can be no assurance that a continuously liquid secondary market will exist for any particular option at any specific time.Consequently, the Portfolio may be able to realize the value of an OTC option it has purchased only by exercising it or entering into a closing sale transaction with the dealer that issued it.Similarly, when the Portfolio writes an OTC option, it generally can close out that option prior to its expiration only by entering into a closing purchase transaction with the dealer to which it originally wrote to option.If a covered call option writer cannot effect a closing transaction, it cannot sell the underlying security or foreign currency until the option expires or the option is exercised.Therefore, the writer of a covered OTC call option may not be able to sell an underlying security even though it might otherwise be advantageous to do so.Likewise, the writer of a secured OTC put option may be unable to sell the securities pledged to secure the put for other investment purposes while it is obligated as a put writer.Similarly, a purchaser of an OTC put or call option might also find it difficult to terminate its position on a timely basis in the absence of a secondary market. 9 The staff of the Securities and Exchange Commission (“SEC”) has often taken the position that purchased OTC options and the assets used to “cover” written OTC options are illiquid securities.The Portfolio will adopt procedures for engaging in OTC options transactions for the purpose of reducing any potential adverse effect of such transactions on the liquidity of the Portfolio. Futures Contracts.The Portfolio may buy and sell stock index futures contracts traded on domestic stock exchanges to hedge the value of its portfolio against changes in market conditions.A stock index futures contract is an agreement between two parties to take or make delivery of an amount of cash equal to a specified dollar amount, times the difference between the stock index value at the close of the last trading day of the contract and the price at which the futures contract is originally struck.A stock index futures contract does not involve the physical delivery of the underlying stocks in the index.Although stock index futures contracts call for the actual taking or delivery of cash, in most cases the Portfolio expects to liquidate its stock index futures positions through offsetting transactions, which may result in a gain or a loss, before cash settlement is required. The Portfolio will incur brokerage fees when it purchases and sells stock index futures contracts, and at the time the Portfolio purchases or sells a stock index futures contract, it must make a good faith deposit known as the “initial margin”.Thereafter, the Portfolio may need to make subsequent deposits, known as “variation margin”, to reflect changes in the level of the stock index.The Portfolio may buy or sell a stock index futures contract so long as the sum of the amount of margin deposits on open positions with respect to all stock index futures contracts does not exceed 5% of the Portfolio’s net assets. To the extent the Portfolio enters into a stock index futures contract, it will maintain with its custodian bank (to the extent required by the rules of the SEC) assets in a segregated account to cover its obligations.Such assets may consist of cash, cash equivalents, or high quality debt securities from its portfolio in an amount equal to the difference between the fluctuating market value of such futures contract and the aggregate value of the initial and variation margin payments. Risks Associated With Options and Futures.Although the Portfolio may write covered call options and purchase and sell stock index futures contracts to hedge against declines in market value of its portfolio securities, the use of these instruments involves certain risks.As the writer of covered call options, the Portfolio receives a premium but loses any opportunity to profit from an increase in the market price of the underlying securities, though the premium received may partially offset such loss. Although stock index futures contracts may be useful in hedging against adverse changes in the value of the Portfolio’s investment securities, they are derivative instruments that are subject to a number of risks.During certain market conditions, purchases and sales of stock index futures contracts may not completely offset a decline or rise in the value of the Portfolio’s investments.In the futures markets, it may not always be possible to execute a buy or sell order at the desired price, or to close out an open position due to market conditions, limits on open positions and/or daily price fluctuations.Changes in the market value of the Portfolio’s investment securities may differ substantially from the changes anticipated by the Portfolio when it established its hedged positions, and unanticipated price movements in a futures contract may result in a loss substantially greater than the Portfolio’s initial investment in such a contract. 10 Successful use of futures contracts depends upon the Sub-Adviser’s ability to correctly predict movements in the securities markets generally or of a particular segment of a securities market.No assurance can be given that the Sub-Adviser’s judgment in this respect will be correct. The Commodity Futures Trading Commission (“CFTC”) and the various exchanges have established limits referred to as “speculative position limits” on the maximum net long or net short position that any person may hold or control in a particular futures contract.Trading limits are imposed on the number of contracts that any person may trade on a particular trading day.An exchange may order the liquidation of positions found to be in violation of these limits and it may impose sanctions or restrictions.These trading and positions limits will not have an adverse impact on a Portfolio’s strategies for hedging its securities. Distressed Investments The Portfolio may invest up to 5% of its assets in securities of companies that are in financial distress (i.e., involved in bankruptcy or reorganization proceedings).These securities may include, among other things, senior or subordinated fixed income securities, common stock, preferred stock, warrants and other kinds of indebtedness.There can be no assurance that the Sub-Adviser will correctly evaluate all the factors that could affect the outcome of an investment in these types of securities.Financially distressed securities involve considerable risk that can result in substantial or even total loss on the Portfolio’s investment. It is often difficult to obtain information as to the true condition of financially distressed securities.These securities are often subject to litigation among the participants in the bankruptcy or reorganization proceedings.Such investments may also be adversely affected by federal and state laws relating to, among other things, fraudulent transfers and other voidable transfers or payments, lender liability and a bankruptcy court’s power to disallow, reduce, subordinate or disenfranchise particular claims.These and other factors contribute to above-average price volatility and abrupt and erratic movements of the market prices of these securities.In addition, the spread between the bid and asked prices of such securities may be greater than normally expected and it may take a number of years for the market price of such securities to reflect their intrinsic value. Securities of financially troubled companies require active monitoring and may, at times, require participation in bankruptcy or reorganization proceedings by the Sub-Adviser.To the extent that the Sub-Adviser becomes involved in such proceedings, the Adviser may have a more active participation in the affairs of the issuer than that assumed generally by a shareholder, and such participation may generate higher legal fees and other transaction costs relating to the investment than would normally be the case. In bankruptcy and other forms of corporate reorganization, there exists the risk that the reorganization will: (1)be unsuccessful (due to, for example, failure to obtain the necessary approvals); (2) be delayed (for example, until various liabilities, actual or contingent, have been satisfied); or (3) result in a distribution of cash or a new security the value of which will be less than the purchase price of the security in respect to which such distribution was made. Temporary Investments Due to the changing nature of the water infrastructure and natural resources and related industries, the national economy and market conditions, the Fund and Portfolio may, as a temporary defensive measure, invest without limitation, in short-term debt securities and money market securities with a rating of A2-P2 or higher. In order to have funds available for redemption and investment opportunities, the Portfolio may also hold a portion of its assets in cash or U.S. short-term money market instruments.Certificates of deposit purchased by the Portfolio will be those of U.S. banks having total assets at the time of purchase in excess of $1 billion, and banker’s acceptances purchased by the Portfolio will be guaranteed by U.S. or foreign banks having total assets at the time of purchase in excess of $1 billion.The Portfolio anticipates that not more than 10% of its total assets will be so invested or held in cash at any given time, except when the Portfolio is in a temporary defensive posture. 11 Portfolio Turnover In order to qualify for the beneficial tax treatment afforded regulated investment companies, and to be relieved of Federal tax liabilities, both the Fund and the Portfolio must distribute substantially all of their net income to shareholders generally on an annual basis.Thus, the Portfolio may have to dispose of portfolio securities under disadvantageous circumstances to generate cash or borrow cash in order to satisfy the distribution requirement.The Portfolio does not trade in securities for short-term profits but, when circumstances warrant, securities may be sold without regard to the length of time they have been held.Portfolio turnover rates may vary depending on the volume of buying and selling activities.Rates over 100% are considered high.The Water Infrastructure Portfolio expects to have a turnover rate of approximately 35% during the first year of operation. Management of the Fund and the Portfolio Board of Directors/Board of Trustees The management and affairs of the Fund and the Portfolio are supervised by the Board of Directors of the Company and the Board of Trustees of the Trust, respectively.Each Board consists of the same eight individuals, five of whom are not “interested persons” of the Company or the Trust as that term is defined in the 1940 Act.The Directors are fiduciaries for the Fund’s shareholders and are governed by the laws of the State of Maryland in this regard.The Trustees are fiduciaries for the Portfolio’s shareholders and are governed by the laws of the State of Delaware in this regard.Each Board establishes policies for the operation of the Fund and the Portfolio and appoints the officers who conduct the daily business of the Fund and the Portfolio.Officers and Directors/Trustees of the Company and the Trust are listed below with their addresses, present positions with the Company and Trust and principal occupations over at least the last five years.Each Director/Trustee may be contacted by writing to the Director/Trustee c/o Kinetics Mutual Funds, Inc., 16 New Broadway, Sleepy Hollow, New York, 10591. 12 Independent Directors/Trustees Name, Address and Age Position(s) Held with Company/ Trust Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years # of Portfolios in Fund Complex** Overseen by Director/ Trustee Other Directorships Held by Director/ Trustee John J. Sullivan (76) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Independent Director/ Independent Trustee Indefinite/ 7 years Retired; Senior Advisor, Long Term Credit Bank of Japan, Ltd.; Executive Vice President, Long Term Credit Bank Trust Company (1987-1999). 16 Director, The Kinetics Funds (2003 to Present) Steven T. Russell (43) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Independent Director/ Independent Trustee Indefinite/ 7 years Attorney and Counselor at Law, Partner, Law firm of Russell and Fig (since September 2002); Steven Russell Law Firm (1994 to 2002); Professor of Business Law, Suffolk County Community College (1997 to Present). 16 N/A Douglas Cohen C.P.A. (45) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Independent Director/ Independent Trustee Indefinite/ 7 years Sunrise Credit Services, Inc. (2005-Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to present); Leon D. Alpern & Co. (1985 to 1997). 16 Director, The Kinetics Funds (1996 to Present) William J. Graham (46) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Independent Director/ Independent Trustee Indefinite/ 7 years Attorney, William J. Graham, PC (2001 to present); Bracken & Margolin, LLP (1997 to 2001). 16 N/A 13 Name, Address and Age Position(s) Held with Company/ Trust Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years # of Portfolios in Fund Complex** Overseen by Director/ Trustee Other Directorships Held by Director/ Trustee Joseph E. Breslin (53) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Independent Director/ Independent Trustee Indefinite/ 7 years Chief Operating Officer, Aladdin Capital Management (2005-Present); Independent Consultant, Independence Community Bank (2003-2005); Senior Managing Director, Marketing & Sales, Whitehall Asset Management, a financial services company (1999 to May 2003). 16 Director, AIP Funds 14 Interested Directors/Trustees & Officers Name, Address and Age Position(s) Held with the Company/ Trust Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years # of Portfolios in Fund Complex** Overseen by Director/ Trustee Other Directorships Held by Director/ Trustee Murray Stahl* (54) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Director/Trustee, Secretary Indefinite/ 7 years Chairman, The FRMO Corp. (2001 to present) (provides consulting services to private investment funds and research services with respect to marketable securities.); Chairman Horizon Asset Management, Inc. (an investment adviser) (1994 to present); Director of Research, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (2002 to present). 16 Chairman of Horizon Asset Management; Chairman of FRMO Corporation Peter B. Doyle* (45) c/o Kinetics Asset Management, Inc. 16 New Broadway Sleepy Hollow, New York, 10591 Director/Trustee, President & Chairman of the Board Indefinite/ 5 years President, Kinetics Asset Management (2002 to present); Director, Kinetics Advisers, LLC (2000 to Present), Director and Officer, Horizon Asset Management, Inc. (1994 to Present); Chief Investment Strategist, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (1998 to Present). 16 Director, The Kinetics Funds (2001 to present); Director and Officer of FRMO Corporation 15 Name, Address and Age Position(s) Held with the Company/ Trust Term of Office and Length of Time Served Principal Occupation(s) During Past Five Years # of Portfolios in Fund Complex** Overseen by Director/ Trustee Other Directorships Held by Director/ Trustee Leonid Polyakov* (48) 16 New Broadway Sleepy Hollow, NY10591 Director/Trustee & Treasurer Indefinite/ 5 years CFO, Kinetics Asset Management, Inc. (2000 to Present); President, Kinetics Funds Distributor, Inc. (2002 to Present); Director Kinetics Advisers, LLC (2000 to Present); CFO, KBD Securities, LLC (2000 to Present) Vice President, JP Morgan (1997 to 2000). 16 Director, The Kinetics Funds (2001 to present) *Directors/Trustees who are considered "interested persons" as defined in Section 2(a)(19) of the 1940 Act because of their association with the Adviser and its affiliates. **The term “fund complex” refers to the Company and the Trust, which hold themselves out as related for investment purposes. Board Committees The Board has two standing committees as described below: Audit Committee Members Description # of Meetings during Past Fiscal Year Joseph E. Breslin Douglas Cohen William J. Graham Steven T. Russell John J. Sullivan Responsible for advising the full Board with respect to accounting, auditing and financial matters affecting the Fund/Portfolio. The Committee met two times during the year ended December 31, 2006. Pricing Committee Members Description # of Meetings during Past Fiscal Year Joseph E. Breslin Douglas Cohen William J. Graham Steven T. Russell John J. Sullivan Responsible for (1) monitoring the valuation of the Portfolio’s securities and other investments; and (2) as required by the Portfolio’s valuation policies, when the full Board is not in session, determining the fair value of illiquid and other holdings after consideration of all relevant factors, which determinations shall be reported to the full Board. The Committee met once during the year ended December 31, 2006. 16 Board Interest in the Fund As of December 31, 2006, the Directors/Trustees owned the following amounts in the Fund and in all the Funds/Portfolios overseen by the Directors/Trustees: Name of Director/Trustee Dollar Range of Equity Securities in the Fund Aggregate Dollar Range of Equity Securities in All Funds/Portfolios Overseen by Director/Trustee INDEPENDENT DIRECTORS/TRUSTEES Steven T. Russell None None Douglas Cohen, C.P.A. None $10,001 - $50,000 William J. Graham None None Joseph E. Breslin None over $100,000 John J. Sullivan None None INTERESTED DIRECTORS/TRUSTEES Murray Stahl None $50,001 - $100,000 Leonid Polyakov None over $100,000 Peter B. Doyle None over $100,000 Compensation For their service as Directors of the Company and Trustees of the Trust, the Independent Directors/Independent Trustees receive, effective January 1, 2007 an aggregate fee of $19,000 per year and $2,500 per Board meeting attended with an additional $1,500 for each Pricing and/or Audit Committee meeting attended, as well as reimbursement for expenses incurred in connection with attendance at such meetings.In addition, each Committee Chairman of the Company and the Trust (such as the Audit Committee or Pricing Committee) receives an additional fee of $5,000 per year for his service as chairman.Prior to January 1, 2007, the Independent Directors/Independent Trustees received an aggregate fee of $15,000 per year and $1,000 per meeting attended (including Pricing or Audit Committee Meetings), as well as reimbursement for expenses incurred in connection with attendance at such meetings.In addition, each Committee Chairman of the Company and the Trust (such as the Audit Committee or Pricing Committee) received an additional fee of $5,000 per year for his service as chairman.The “interested persons” who serve as Directors of the Company or Trustees of the Trust receive no compensation for their service as Directors or Trustees.None of the executive officers receive compensation from the Fund or the Portfolio except the Company’s/Trust’s Chief Compliance Officer.The following table provides compensation information for the Directors/Trustees for the year-ended December 31, 2006. 17 Compensation Table Name and Position Aggregate Compensation From Fund/Portfolio*** Pension or Retirement Benefits Accrued as Part of Fund/Portfolio Expenses Estimated Annual Benefits Upon Retirement Total Compensation from Fund and Fund Complex Paid to Directors/Trustees** Murray Stahl* Director/Trustee None None None None Peter B. Doyle* Director/Trustee None None None None Leonid Polyakov* Director/Trustee None None None None Steven T. Russell Independent Director/ Independent Trustee None None None $22,000 Douglas Cohen, CPA Independent Director/ Independent Trustee None None None $27,000 William J. Graham Independent Director/ Independent Trustee None None None $22,000 Joseph E. Breslin Independent Director/ Independent Trustee None None None $27,000 John J. Sullivan Independent Director/ Independent Trustee None None None $22,000 * “Interested person” as defined under the 1940 Act. ** Includes compensation paid by Kinetics Portfolios Trust. *** The Water Infrastructure Fund/Portfolio had not commenced operations as of December 31, 2006. Control Persons and Principal Holders of Securities A control person is one who owns beneficially or through controlled companies more than 25% of the voting securities of a company or acknowledges the existence of control.Please note that since the Fund had not commenced operations prior to the date of this SAI, no information is available. 18 Management Ownership As of December 31, 2006, the officers and/or Directors of the Fund did not own any outstanding shares of the Fund. Proxy Voting Policies The Trust, on behalf of the Portfolio, has delegated the voting of portfolio securities to the Adviser.The Adviser has adopted policies and procedures for the voting of proxies on behalf of client accounts, including the Portfolio, for which the Adviser has voting discretion.Pursuant to these policies and procedures, the Adviser’s guiding principles in voting proxies is to ensure that the manner in which proxies are voted is in the best interest of its clients and the value of the investment.To this end, an independent third party proxy service, Institutional Shareholder Service (ISS), has been retained by the Adviser for their fundamental research on the proxy question and subsequent recommendations.Proxies are voted by ISS in accordance with their proxy voting guidelines with the intent of serving the best interests of the Adviser’s clients.A summary of ISS’s guidelines is attached as Exhibit B. ISS will inform the Adviser’s proxy administrator of any proxies that do not fall within the adopted guidelines.The Adviser’s proxy administrator will send the proxies in question to the Portfolio’s portfolio manager for review, documentation of vote rationale, and signature.In the event the designated portfolio manager is unavailable, the proxy will be forwarded to the Chief Investment Strategist for execution. ISS also updates and revises the Guidelines on a periodic basis, and the revisions are reviewed by the Adviser to determine whether they are consistent with the Adviser’s guiding principles.ISS also assists the Adviser in the proxy voting process by providing operational, recordkeeping and reporting services. The Adviser is responsible for reviewing its relationship with ISS and for evaluating the quality and effectiveness of the various services provided by ISS.The Adviser may hire other service providers to replace or supplement ISS with respect to any of the services the Adviser currently receives from ISS. The Adviser has implemented procedures that are intended to prevent conflicts of interest from influencing proxy voting decisions.These procedures include the Adviser’s use of ISS as an independent third party and a review and approval process for individual decisions that do not follow ISS’s recommendations. The Portfolio’s actual voting records relating to portfolio securities during the most recent 12-month period ended June30 will be available without charge, upon request by calling toll-free at (800) 930-3828 or by accessing the SEC’s website at www.sec.gov.In addition, a copy of the Trust’s proxy voting policies and procedures are also available by calling toll-free at (800) 930-3828 and will be sent within three business days of receipt of a request. Investment Adviser and Sub-Adviser The Board of the Trustees of the Trust, on behalf of the Portfolio, approved an advisory contract (the “Advisory Agreement”) with Kinetics.This Advisory Agreement continues on a year-to-year basis provided that specific approval is voted at least annually by the Board of Trustees of the Trust or by the vote of the holders of a majority of the outstanding voting securities of the Portfolio.In either event, it must also be approved by a majority of the Trustees of the Portfolio who are neither parties to the Advisory Agreement nor “interested persons” of the Trust as defined in the 1940 Act at a meeting called for the purpose of voting on such approval.The Adviser’s investment decisions are made subject to the direction and supervision of the Board of Trustees.The Advisory Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees or by vote of a majority of the outstanding voting securities of the Portfolio. 19 The Portfolio’s Advisory Agreement with Kinetics authorizes Kinetics to engage a sub-adviser to assist it in the performance of its advisory services.Pursuant to such authorization, Kinetics has appointed Aqua Terra as the sub-adviser to the Portfolio.Under the Advisory Agreement, Kinetics will review, monitor and report to the Board of Trustees of the Trust on the performance and investment procedures of Aqua Terra and assist and consult with Aqua Terra in connection with the Water Infrastructure Portfolio’s investment program.The Adviser will also be responsible for the selection of broker-dealers and the negotiation of commission rates for transactions of the Portfolio. Under its Sub-Advisory Agreement with Kinetics, Aqua Terra is responsible for decisions to buy and sell securities for the Portfolio.Unless sooner terminated by Kinetics or the Board of Trustees upon not less than 30 nor more than 60 days’ written notice or by Aqua Terra on not less than 90 days’ written notice, the Sub-Advisory Agreement will continue in effect from year to year as long as such continuance is approved at least annually as described above. Advisory and Sub-Advisory Fees For the above advisory services, the Portfolio has agreed to pay to Kinetics an annual fee of 1.25% of the Portfolio’s average daily net assets.All fees are computed on the average daily closing net asset value (“NAV”) of the Portfolio and are payable monthly. For the above sub-advisory services Aqua Terra receives sub-advisory fees from Kinetics at the annual rate of .35% of daily net assets of the Portfolio. Fees of the custodian, administrator, fund accountant and transfer agent are paid by the Fund or by the Portfolio or by the Fund and the Portfolio jointly, as more fully described below.The Fund and/or Portfolio pays all other expenses, including: · fees and expenses of directors not affiliated with the Adviser or Sub-Adviser; · legal and accounting fees; · interest, taxes, and brokerage commissions; and · record keeping and the expense of operating its offices. Portfolio Managers William S. Brennan William S. Brennan serves as portfolio manager for the Portfolio.The following provides information regarding other accounts managed by Mr. Brennan as of May 31, 2007: Category of Account Total Number of Accounts Managed Total Assets in Accounts Managed Number of Accounts for which Advisory Fee is Based on Performance Assets in Accounts for which Advisory Fee is Based on Performance Other Registered Investment Companies 0 0 0 0 Other Pooled Investment Vehicles 2 $10,500,000 1 $10,000,000 Other Accounts 0 0 0 0 20 Gerald Sweeney Gerald Sweeney serves as Senior Analyst and Portfolio Administrator for the Portfolio.The following provides information regarding other accounts managed by Mr. Sweeney as of May 31, 2007 Category of Account Total Number of Accounts Managed Total Assets in Accounts Managed Number of Accounts for which Advisory Fee is Based on Performance Assets in Accounts for which Advisory Fee is Based on Performance Other Registered Investment Companies 0 0 0 0 Other Pooled Investment Vehicles 0 0 0 0 Other Accounts 0 0 0 0 As of the date of this SAI, the Portfolio Managers did not beneficially own shares of the Fund. Compensation Portfolio Managers of the Sub-Adviser are compensated with a base salary and bonus. Material Conflicts of Interest. The Sub-Adviser’s portfolio managers are responsible for managing the Portfolio, as well as other accounts. A portfolio manager may manage a separate account or other pooled investment vehicle that may have a materially higher or lower fee arrangement than the Portfolio or that may have a performance fee arrangement.The side-by-side management of these accounts may raise potential conflicts of interest relating to cross trading, the allocation of investment opportunities and the aggregation and allocation of trades.In addition, while portfolio managers generally only manage accounts with similar investment strategies, it is possible that due to varying investment restrictions among accounts that certain investments could be made for some accounts and not others or conflicting investment positions could be taken among accounts and for other reasons.The Sub-Adviser has a fiduciary responsibility to manage all client accounts in a fair and equitable manner.The Sub-Adviser seeks to provide best execution of all securities transactions and aggregate and then allocate securities to client accounts in a fair and timely manner.To this end, the Sub-Adviser has developed policies and procedures designed to mitigate and manage the potential conflicts of interest that may arise from side-by-side management. Shareholder Servicing The Adviser has entered into shareholder servicing agreements with the Fund under which the Adviser may perform, or arrange for others to perform, certain shareholder servicing functions.The Adviser has entered into written agreements with shareholder servicing agents that perform shareholder services on behalf of their clients who own shares of the Fund.For these shareholder servicing functions, the Adviser and/or shareholder servicing agents are entitled to receive an annual shareholder servicing fee in the amount of 0.25% of the average daily net assets for each of the No-Load Class and Advisor Classes of the Fund and 0.20% of the average daily net assets of the Institutional Class of the Fund.The Adviser has contractually agreed to waive and/or reimburse a portion of the shareholder servicing fee with respect to the Institutional Class in excess of 0.05% of the average daily net assets of the Institutional Class until at least May 1, 2008.The Adviser and/or its affiliates may pay additional compensation from time to time, out of their respective assets and not as an additional charge to the Fund, to selected shareholder servicing agents and other persons in connection with providing services to shareholders of the Fund. 21 Administrative Services U.S. Bancorp Fund Services, LLC (“U.S. Bancorp”), located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, serves as Administrator of the Fund and the Portfolio.The Administrator is entitled to receive annual fees of 0.05%, which are payable monthly, based on the Fund’s average net assets.U.S. Bancorp also serves as the Fund’s accountant and transfer agent.As such, U.S. Bancorp provides certain shareholder services and record management services and acts as the Portfolio’s dividend disbursement agent. Administrative services include, but are not limited to, providing office space, equipment, telephone facilities, various personnel, including clerical and supervisory, and computers, as is necessary or beneficial to: · establish and maintain shareholders’ accounts and records, · process purchase and redemption transactions, · process automatic investments of client account cash balances, · answer routine client inquiries regarding the Portfolio, · assist clients in changing dividend options, · account designations, and addresses, and · providing such other services as the Portfolio may reasonably request. Distributor Kinetics Funds Distributor, Inc., 16 New Broadway, Sleepy Hollow, New York 10597, is the distributor of the Fund’s shares.KFD is a registered broker-dealer and member of the National Association of Securities Dealers, Inc., and an affiliate of the Adviser. Distribution Plans The Company, on behalf of the Fund, has adopted separate Distribution Plans pursuant to Rule 12b-1 promulgated by the SEC pursuant to the 1940 Act (the “Plans”) for each of the Advisor Class A and Advisor Class C shares.Under the Advisor Class A Plan, Advisor Class A shares may pay up to an annual rate of 0.50% (currently limited to 0.25%) of the average daily NAV of such shares to the Distributor or other qualified recipient under the Plan.Under the Advisor Class C Plan, Advisor Class C shares may pay an annual rate of 0.75% of the average daily NAV of Advisor Class C shares to the Distributor.The Plans were adopted to facilitate the sale of a sufficient number of shares to allow the Fund to achieve economic viability. The Plan for the Advisor Class A shares is a “reimbursement” Plan that provides the Company the ability to use assets of the Fund to reimburse KFD and other qualified recipients (e.g., securities dealers, financial institutions and other industry professionals) for any expenses incurred in connection with any activity that is principally intended to result in the sale of the Fund’s shares subject to the Plan up to 0.50% of average daily net assets. The Plan for Advisor Class C shares is a “compensation” type plan that provides the Company with the ability to use assets of the Fund to pay KFD and other qualified recipients (e.g., securities dealers, financial institutions and other industry professionals) fees in the amount of 0.75% of average daily net assets to finance any activity that is principally intended to result in the sale of the Fund’s shares subject to the Plan. Activities covered by the Plans include: 22 · the advertising and marketing of shares of the Fund covered by the Plans; · preparing, printing, and distributing Prospectuses and sales literature to prospective shareholders, brokers, or administrators; and · implementing and operating the Plans. The Plans must be renewed annually by the Board of Directors, including a majority of the Directors who have no direct or indirect financial interest in the operation of the Plans (“Independent Directors”), cast in person at a meeting called for that purpose.As long as the Plans are in effect, the Independent Directors must select and nominate other Independent Directors. The Plans and any related agreements may not be amended to materially increase the amounts to be spent for distribution expenses without approval by a majority of the Fund’s outstanding shares covered by the Plans.All material amendments to the Plans or any related agreements must be approved by a vote of the Independent Directors, cast in person at a meeting called for the purpose of voting on any such amendment. KFD is required to report in writing to the Board of Directors, at least quarterly, on the amounts and purpose of any payments made under the Plans.KFD is also required to furnish the Board of Directors with such other information as may reasonably be requested in order to enable the Directors to make an informed determination of whether the Plans should be continued. Custodian U.S. Bank, N.A. (“U.S. Bank”) with principal offices at 1555 N. River Center Drive, Suite 302, Milwaukee, Wisconsin 53212, is custodian for the securities and cash of the Portfolio.Under a Custody Agreement, U.S. Bank holds the Portfolio’s assets in safekeeping and keeps all necessary records and documents relating to its duties.U.S. Bank receives an annual fee equal to 0.005% of the Portfolio’s market value with a minimum annual fee of $3,000. U.S. Bank also serves as custodian of the shares of beneficial interest of the Portfolio held by the Fund pursuant to a Custody Agreement under which U.S. Bank is responsible for the safekeeping of such shares of beneficial interest and all necessary records and documents relating to such shares. Codes of Ethics The Company, Kinetics,KFD and the Sub-Adviser have adopted Codes of Ethics pursuant to Rule 17j-1 under the 1940 Act that permit investment personnel subject to the particular Code of Ethics to invest in securities, including securities that may be purchased or held by the Portfolio, for their own accounts. Valuation of Shares Shares of the Fund are sold on a continual basis at the NAV per share next computed, plus any applicable sales charge, following acceptance of an order by the Fund.The Fund’s NAV per share for the purpose of pricing purchase and redemption orders is determined at the close of normal trading (currently 4:00 p.m. Eastern Time) on each day the New York Stock Exchange (“NYSE”) is open for trading.The NYSE is closed on the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Portfolio’s investment securities are valued each day at the last quoted sales price on the securities’ principal exchanges.If market quotations are not readily available, securities will be valued at their fair value as determined in good faith in accordance with procedures approved by the Board of Trustees.The Portfolio may use independent pricing services to assist in calculating the NAV of the Portfolio’s shares. 23 The Portfolio’s investment securities that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made.Price information on listed securities is taken from the exchange where a security is primarily traded. All equity securities that are traded using NASDAQ are valued using the NASDAQ Official Closing Price (“NOCP”).In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the NYSE, “fair value” will be determined. Options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the mean of the most recent quoted bid and asked price. Trading in foreign securities may be completed at times when the NYSE is closed.In computing the NAV of the Fund and the Portfolio, the value of a foreign security is determined as of the close of trading on the foreign exchange on which it is principally traded or as of the scheduled close of trading on the NYSE, whichever is earlier, at the closing sales prices provided by approved pricing services or other alternate sources.In the absence of sales, the last available mean price between the closing bid and asked prices will be used.Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees.Values of foreign securities are translated from the local currency into U.S. dollars on the basis of the foreign currency exchange rates, as provided by an independent pricing service or reporting agency, generally prior to the close of the NYSE.Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the NYSE, which events would not be reflected in the computation of the Portfolio’s net asset value.If events materially affecting the value of such securities or currency exchange rates occur during such time period, the securities will be valued at their fair value as determined in good faith by or under the direction of the Board of Trustees. The NAV per share of each Class of shares of the Fund is computed by dividing the value of the securities held by the Fund plus any cash or other assets attributable to that Class (including interest and dividends accrued but not yet received) minus all liabilities (including accrued expenses) attributable to that Class by the total number of shares of that Class outstanding at such time, as shown below: (Value of Assets of the Class) - (Liabilities of the Class) NAV per share Shares Outstanding of the Class Because the Fund has not yet commenced operations, there is no NAV of shares as of the fiscal year ended December 31, 2006. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.Fixed-income securities purchased with remaining maturities of 60 days or less are valued at amortized cost if it reflects fair value.In the event that amortized cost does not reflect market value, market prices as determined above will be used.Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Portfolio. 24 Portfolio Holdings Information The Company, on behalf of the Fund, and the Trust, on behalf of the Portfolio, maintain policies and procedures relating to selective disclosure of portfolio holdings (“Portfolio Holdings Policies”) that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Fund and the Portfolio.These Portfolio Holdings Policies have been approved by the Board of Directors of the Company on behalf of the Fund and the Board of Trustees of the Trust on behalf of the Portfolio.Disclosure of the Fund’s/Portfolio’s complete holdings is required to be made quarterly within 60 days of the end of each fiscal quarter in the Annual Report and Semi-Annual Report to Fund shareholders and in the quarterly holdings report on Form N-Q.These reports are available, free of charge, on the EDGAR database on the SEC’s web-site at www.sec.gov.Under the Portfolio Holdings Policies, neither the Company/Trust nor any representative of the Company/Trust may solicit or accept any compensation or other consideration in connection with Portfolio Holdings. The Adviser only discloses information concerning securities held by the Fund and the Portfolio under the following circumstances: · twenty calendar days after the end of each calendar month, the Adviser posts (a) the top fifteen (15) securities held by each Fund/Portfolio and their respective percentage of the Portfolio on the Company’s website and (b) the top five (5) performing and the bottom five (5) performing securities held by each of the Trust’s portfolios; and · as required by the federal securities laws, the Fund/Portfolio will disclose portfolio holdings in their applicable regulatory filings, including shareholder reports, reports on Forms N-CSR and N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require. Portfolio holdings information that is not filed with the SEC or posted on the Company’s website may be provided to third parties only if the third party recipients are required to keep all portfolio holdings information confidential and are prohibited from trading on the information they receive.Disclosure to such third parties must be approved in advance by the Company’/Trust’s or Adviser’s President.The Administrator is responsible for portfolio holdings disclosure to third party service providers of auditing, custody, proxy voting and other similar services for the Fund/Portfolio, as well as rating and ranking organizations, which will generally be permitted; however, information may be disclosed to other third parties (including, without limitation, individuals, institutional investors, and intermediaries that sell shares of the Fund/Portfolio,) only upon approval by the Company’s/Trust’s or Adviser’s President, who must first determine that the Fund/Portfolio has a legitimate business purpose for doing so.In general, each recipient of non-public portfolio holdings information must sign a confidentiality and non-trading agreement, although this requirement will not apply when the recipient is otherwise subject to a duty of confidentiality.In accordance with the policy, the identity of those recipients who receive non-public portfolio holdings information on an ongoing basis is as follows: the Trust’s Adviser, the Trust’s Sub-Adviser, the Company’s/Trust’s transfer agent and Administrator – U.S. Bancorp Fund Services, LLC, the Company’s/Trust’s independent registered public accounting firm, the Company’s/Trust’s custodian, the Company’s/Trust’s legal counsel and the Company’s/Trust’s proxy voting service.Such holdings are released on conditions of confidentiality, which include appropriate trading prohibitions.“Conditions of confidentiality” include confidentiality terms included in written agreements, implied by the nature of the relationship (e.g. attorney-client relationship), or required by fiduciary or regulatory principles (e.g., custody services provided by financial institutions).Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the portfolio.Third party providers of custodial or accounting services to the Fund may release non-public portfolio holdings information of the Fund/Portfolio only with the permission of the Administrator.From time to time portfolio holdings information may be provided to broker-dealers solely in connection with the Fund/Portfolio seeking portfolio securities trading suggestions.In providing this information reasonable precautions, including limitations on the scope of the portfolio holdings information disclosed, are taken to avoid any potential misuse of the disclosed information. 25 The Company’s/Trust’s Portfolio Holdings Policies set forth the third parties who receive portfolio holdings information pursuant to ongoing arrangements.Furthermore, the Policies can only be revised by Board approval.The Board will be notified by the Adviser and the Administrator if disclosures are made concerning the Company’s/Trust’s portfolio holdings in contravention of the Company’s/Trust’s Portfolio Holdings Policies. In determining the existence of a legitimate business purpose, and in order to ensure that the disclosure of the Company’s/Trust’s portfolio holdings is in the best interests of the Company’s/Trust’s shareholders, the following factors, and any additional relevant factors, shall be considered by the Company/Trust or its service providers when disclosing non-public portfolio holdings information to selected third parties:(1) whether the disclosure is consistent with the anti-fraud provisions of the federal securities laws; and (2) avoidance of any conflicts of interest between the interests of the Company’s/Trust’s shareholders and the service providers. Purchasing Shares Shares of the Fund are sold in a continuous offering and may be purchased on any business day through authorized investment dealers or directly from the Fund.Shares of the Fund are sold at their NAV plus any applicable sales charge.Except for the Fund itself (through KFD), only investment dealers that have an effective selling agreement with the Fund are authorized to sell shares of the Fund. Anti-Money Laundering Program The Fund has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”).To ensure compliance with this law, the Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing training program and an independent audit function to determine the effectiveness of the Program. Procedures to implement the Program include, but are not limited to, determining that the Fund’s Distributor and transfer agent have established proper anti-money laundering procedures, reporting suspicious and/or fraudulent activity and a complete and thorough review of all New Account Application Forms.The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act. Offering Price of Advisor Class A Shares Advisor Class A Shares of the Fund are sold with maximum front-end sales charge of 5.75%.Using a hypothetical NAV per share, the maximum offering price of the Fund’s Advisor Class A Shares would be as follows: Net Asset Value Maximum Sales Charge Offering Price to Public Water Infrastructure Fund $10.00 5.75% $10.61 The actual sales charge that is paid by an investor on the purchase of Advisor Class A Shares may differ slightly from the sales charge listed above or in the applicable Prospectus due to rounding in the calculations.Contact your broker or dealer for further information. Advisor Class A Shares – Sales Load Waivers You will not have to pay a sales charge on purchases of Advisor Class A shares if: · You are an employee of a broker-dealer or agent that has a selling agreement with the Distributor; 26 · You buy Advisor Class A shares under a wrap program or other all-inclusive program offered by your broker-dealer or agent; or · The sales charge is voluntarily waived under certain circumstances by your broker-dealer or agent at their discretion. Please consult your broker-dealer or agent to determine whether you may be eligible for these waivers. Employees, directors or trustees of the Adviser, KFD, the Company, the Trust or any of their affiliates, and members of the families (including parents, grandparents, siblings, spouses, children, and in-laws) of such entities, employees, directors or trustees will also not have to pay a sales charge on Advisor Class A shares. Advisor Class A Shares – Reducing the Sales Charge Advisor Class A shares of the Fund are sold at their NAV plus a sales charge as described in the Prospectus.Shareholders can reduce the sales charge on purchases of Advisor Class A shares by: · purchasing larger quantities of shares or putting a number of purchases together to obtain the discounts · signing a 13-month letter of intent · using the reinvestment privilege · making concurrent purchases Certain broker-dealers may reduce sales charges under certain circumstances.Consult your broker-dealer. Large Purchases and Quantity DiscountsAs indicated in the applicable Prospectus, the more Advisor Class A shares a shareholder purchases, the smaller the sales charge per share.If a shareholder purchases Advisor Class A shares on the same day as his or her spouse or children under 21, all such purchases will be combined in calculating the sales charges. Also, if shareholders later purchase additional shares of the Fund, the purchases will be added together with the amount already invested in the Fund.For example, if a shareholder already owns shares of the Fund with a value at the current NAV of $40,000 and subsequently purchases $10,000 more at the current NAV, the sales charge on the additional purchase would be 4.75%, not 5.75% as shown in the Prospectus.At the time of purchasing additional purchases, shareholders should inform the Fund in writing that they already own Advisor Class A shares of the Fund. Signing a Letter of IntentIf investors intend to purchase at least $50,000 of Advisor Class A shares over the next 13 months, they should consider signing a letter of intent (“LOI”) to reduce the sales charge.A letter of intent includes a provision providing for the assessment of the sales charge for each purchase based on the amount you intend to purchase within the 13-month period.It also allows the custodian to hold the maximum sales charge (i.e., 5.75%) in shares in escrow until the purchases are completed.The shares held in escrow in the investor’s account will be released when the 13-month period is over.If the investor does not purchase the amount stated in the letter of intent, the Fund will redeem the appropriate number of escrowed shares to cover the difference between the sales charge paid and the sales charge applicable to the individual purchases had the LOI not been in effect.Any remaining escrow shares will be released from escrow. The letter of intent does not obligate the investor to purchase shares, but simply allows the investor to take advantage of the lower sales charge applicable to the total amount intended to be purchased.Any shares (except money market shares) purchased within 90 days of the date you establish a letter of intent may be used as credit toward fulfillment of the letter of intent, but the reduced sales charge will only apply to new purchases made on or after that date.The investor’s prior trade prices will not be adjusted, however. Reinvestment PrivilegeIf Advisor Class A shares of the Fund have been redeemed, the investor has a one-time right, within 60 days, to reinvest the redemption proceeds at the next-determined NAV without any sales charge.Shareholders should inform the Fund, in writing, that they are reinvesting so that they will not be overcharged. 27 Concurrent PurchasesAnother way to reduce the sales charge is to combine purchases made at the same time in the Fund and one or more other funds offered by the Company that apply sales charges.For example, if an investor invests $30,000 in Advisor Class A shares of the Fund, and $70,000 in Advisor Class A shares of another fund, the sales charge would be lower.Investors should inform the Fund in writing about the concurrent purchases so that they will not be overcharged. Broker-Dealer PurchasesPurchases of Advisor Class A shares may be made with no initial sales charge (i) by an investment adviser, broker or financial planner, provided arrangements are pre-approved and purchases are placed through an omnibus account with the Fund or (ii) by clients of such investment adviser or financial planner who place trades for their own accounts, if such accounts are linked to a master account of such investment adviser or financial planner on the books and records of the broker or agent. Such purchases may also be made for retirement and deferred compensation plans and trusts used to fund those plans. Exchange Privilege Shareholders may exchange shares of the Fund for shares of any other fund offered by the Company.Exercising the exchange privilege is treated as a sale for federal income tax purposes and you may realize short- or long-term capital gains or losses on the exchange.An exchange of Fund shares held for less than 30 days may be subject to a 2.00% redemption fee. Shareholders may exchange shares by telephone or in writing as follows: · By Telephone You may exchange shares by telephone only if the shareholders registered on your account are the same shareholders registered on the account into which you are exchanging.Exchange requests must be received before 4:00 p.m. Eastern time to be processed that day. · In Writing You may send your exchange request in writing.Please provide the Fund name and account number for the Fund involved in the exchange and make sure the letter of instruction is signed by all shareholders on the account. Generally, you may only exchange No Load shares for No Load shares, Institutional Class shares for Institutional Class shares, Advisor Class A shares for Advisor Class A shares, and Advisor Class C shares for Advisor Class C shares.However, any share Class of the Fund may exchange into and out of the No Load Class of the Company’s Government Money Market Fund. NOTE:The Fund may modify or terminate the exchange privilege at any time upon 60 days prior notice to shareholders.Investors may have difficulty making exchanges by telephone through brokers or banks during times of drastic market changes.If you cannot contact your broker or bank by telephone, you should send your request in writing via overnight mail. Stock Certificates and Confirmations The Fund does not intend to issue stock certificates representing shares purchased.Confirmations of the opening of an account and of all subsequent transactions in the account are forwarded by the Fund to the shareholder’s address of record. 28 Special Incentive Programs At various times the Fund may implement programs under which a dealer’s sales force may be eligible to (a) win nominal awards for certain sales efforts or as part of recognition programs conforming to criteria established by the Fund, or (b) participate in sales programs sponsored by the Fund.In addition, the Adviser, in its discretion may from time to time, pursuant to objective criteria established by the Adviser, sponsor programs designed to reward selected dealers for certain services or activities that are primarily intended to result in the sale of shares of the Fund.These programs will not change the price you pay for your shares or the amount that the Fund will receive from such sale. Investing Through Authorized Brokers or Dealers The Fund may authorize one or more brokers to accept purchase orders on a shareholder’s behalf.Brokers are authorized to designate intermediaries to accept orders on the Fund’s behalf.An order is deemed to be received when an authorized broker or agent accepts the order.Orders will be priced at the Fund’s NAV next computed after they are accepted by an authorized broker or agent. For all classes other than the Institutional Class, if any authorized dealer receives an order of at least $1,000, the dealer may contact the Fund directly.Orders received by dealers by the close of trading on the NYSE on a business day that are transmitted to the Fund by 4:00 p.m. Eastern Time on that day will be effected at the NAV per share determined as of the close of trading on the NYSE on that day.Otherwise, the orders will be effected at the next determined NAV.It is the dealer’s responsibility to transmit orders so that they will be received by the Distributor before 4:00 p.m. Eastern Time. Redemption of Shares To redeem shares, shareholders may send a written request in “good order” to: Kinetics Mutual Funds, Inc. c/o U.S. Bancorp Fund Services P.O. Box 701 Milwaukee, WI53201-0701 (800) 930-3828 A written request in “good order” to redeem shares must include: · the shareholder’s name, · the name of the Fund; · the account number; · the share or dollar amount to be redeemed; and · signatures by all shareholders on the account. The proceeds will be wired to the bank account of record or sent to the address of record within seven days. If shareholders request redemption proceeds be sent to an address other than that on record with the Fund or proceeds be made payable other than to the shareholder(s) of record, the written request must have signatures guaranteed by: · a trust company or commercial bank whose deposits are insured by the BIF, which is administered by the FDIC; · a member of the New York, Boston, American, Midwest, or Pacific Stock Exchange; · a savings bank or savings association whose deposits are insured by the SAIF, which is administered by the FDIC; or · any other ‘‘eligible guarantor institution’’ as defined in the Securities Exchange Act of 1934. 29 The Fund does not accept signatures guaranteed by a notary public. The Fund and its transfer agent have adopted standards for accepting signature guarantees from the above institutions.The Fund may elect in the future to limit eligible signature guarantors to institutions that are members of a signature guarantee program.The Fund and its transfer agent reserve the right to amend these standards at any time without notice. Redemption Fees The Fund is designed for long-term investors willing to accept the risks associated with a long-term investment.The Fund is not designed for short-term traders. For these reasons, the Fund assesses a 2.00% fee on the redemption or exchange of Fund shares held for less than 30 days.These fees will be paid to the Fund to help offset transaction costs.The Fund reserves the right to waive the redemption fee, subject to its sole discretion in instances it deems not to be disadvantageous to the Fund. The Fund will use the first-in, first-out (“FIFO”) method to determine the 30-day holding period.Under this method, the date of the redemption or exchange will be compared to the earliest purchase date of shares held in the account.If this holding period is less than 30 days, the redemption fee will be assessed using the current NAV of those shares.The redemption fee will be applied on redemptions and exchanges of each investment made by a shareholder that does not remain in the Fund for a 30-day period from the date of purchase. The redemption fee will not apply to any shares purchased through reinvested distributions (dividends and capital gains), or to redemptions made under the Fund’s Systematic Withdrawal Plan, as these transactions are typically de minimis.This fee will also not be assessed to the participants in employer-sponsored retirement plans that are held at the Fund in an omnibus account (such as 401(k), 403(b), 457, Keogh, Profit Sharing Plans, and Money Purchase Pension Plans) or to accounts held under trust agreements at a trust institution held at the Fund in an omnibus account.The redemption fee will also not be assessed to accounts of the Adviser or their affiliates used to capitalize the Fund as such accounts will be used specifically to control the volatility of shareholder subscriptions and redemptions to avoid adverse effects to the Fund. Brokerage The Portfolio’s assets are invested by the Sub-Adviser in a manner consistent with the Portfolio’s investment objective, strategies, policies and restrictions and with any instructions the Board of Trustees may issue from time to time.Within this framework, the Sub-Adviser is responsible for making all determinations as to the purchase and sale of portfolio securities and for taking all steps necessary to implement securities transactions on behalf of the Portfolio, other than the selection of broker-dealers and the negotiation of commission rates for transactions of the Portfolio, which is the responsibility of the Adviser. Transactions on U.S. stock exchanges, commodities markets and futures markets and other agency transactions may involve the payment by the Adviser on behalf of the Portfolio of negotiated brokerage commissions.Such commissions vary among different brokers.A particular broker may charge different commissions according to such factors as the difficulty and size of the transaction.Transactions in foreign investments often involve the payment of fixed brokerage commissions, which may be higher than those in the United States.There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid by the Adviser usually includes an undisclosed dealer commission or mark-up.In underwritten offerings, the price paid by the Adviser on behalf of the Portfolio includes a disclosed, fixed commission or discount retained by the underwriter or dealer. 30 U.S. Government securities generally are traded in the over-the-counter market through broker-dealers.A broker-dealer is a securities firm or bank that makes a market for securities by offering to buy at one price and sell at a slightly higher price.The difference between the prices is known as a spread. In placing orders for the purchase and sale of portfolio securities for the Portfolio, the Adviser and Sub-Adviser seek to obtain the best price and execution, taking into account such factors as price, size of order, difficulty and risk of execution and operational facilities of the firm involved.For securities traded in the over-the-counter markets, the Adviser deals directly with the dealers who make markets in these securities unless better prices and execution are available elsewhere.The Adviser negotiates commission rates with brokers based on the quality and quantity of services provided in light of generally prevailing rates, and while the Adviser generally seeks reasonably competitive commission rates, the Portfolio does not necessarily pay the lowest commissions available.The Board of Trustees periodically reviews the commission rates and allocation of orders. When consistent with the objectives of best price and execution, business may be placed with broker-dealers who furnish investment research or services to the Adviser or Sub-Adviser.Such research or services include advice, both orally and in writing, as to the value of securities; the advisability of investing in, purchasing or selling securities; and the availability of securities, or purchasers or sellers of securities; as well as analyses and reports concerning issues, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts.To the extent portfolio transactions are effected with broker-dealers who furnish research services to the Adviser or Sub-Adviser, the Adviser or Sub-Adviser receives a benefit, not capable of evaluation in dollar amounts, without providing any direct monetary benefit to the Portfolio from these transactions.The Adviser and Sub-Adviser believe that most research services obtained by them generally benefit several or all of the investment companies and private accounts that they manage, as opposed to solely benefiting one specific managed fund or account. The Trust, on behalf of the Portfolio, may also enter into arrangements, commonly referred to as “broker/service arrangements” with broker-dealers pursuant to which a broker-dealer agrees to pay the cost of certain products or services provided to the Portfolio in exchange for fund brokerage.Under a typical brokerage/service arrangement, a broker agrees to pay a portion of the Portfolio’s custodian, administrative or transfer agency fees, etc., and, in exchange, the Portfolio agrees to direct a minimum amount of brokerage to the broker.The Adviser on behalf of the Trust, usually negotiates the terms of the contract with the service provider, which is paid directly by the broker. The Portfolio may direct certain portfolio trades to unaffiliated brokers who pay a portion of the commissions for those trades in cash to the applicable Portfolio that generated the commission. From time-to-time, the Adviser and Sub-Adviser may effect transactions in portfolio securities with executing brokers that may also promote or sell shares of the Fund (“selling brokers”) pursuant to policies adopted by the Company’s Board of Directors.These policies provide that the Adviser and Sub-Adviser shall not (i) take into consideration the promotion or sale of the Fund’s shares as a factor in selecting executing brokers for the Fund, (ii) enter into an arrangement or understanding (whether oral or written) pursuant to which the Adviser and Sub-Adviser directs, or is expected to direct, portfolio securities transactions or any other remuneration (as described below) to any broker or dealer in consideration for the promotion or sale of the Fund, and (iii) enter into a “step out” or any other type of arrangement under which a portion of the Fund’s commission is directed to the selling brokers for the purpose of compensating such brokers for promoting or selling shares of the Fund.This prohibition applies to all transactions whether such transaction involves a commission, mark-up, mark down, other fee or portion of another fee paid or to be paid from a transaction effected through an executing broker. The same security may be suitable for the Portfolio and other accounts managed by the Sub-Adviser.If and when the Portfolio and two or more accounts simultaneously purchase or sell the same security, the transactions will be allocated as to price and amount in accordance with arrangements equitable to the Portfolio and the accounts.The simultaneous purchase or sale of the same securities by the Portfolio and other accounts may have a detrimental effect on the Portfolio, as this may affect the price paid or received by the Portfolio or the size of the position obtainable or able to be sold by the Portfolio. 31 All brokerage commissions are reflected at the Portfolio level. Taxes The following summarizes certain additional tax considerations generally affecting the Fund and its shareholders that are not described in the Prospectuses.No attempt is made to present a detailed explanation of the tax treatment of theFund or its shareholders, and the discussions here and in the Prospectusesare not intended as a substitute for careful tax planning.Potential investors should consult their tax advisorwith specific reference to their own tax situations. The discussions of the federal tax consequences in the Prospectusesand this SAI are based on theInternal Revenue Code (the “Code”) and the laws and regulations issued thereunder as in effect on the date of this SAI.Future legislative or administrative changes or court decisions may significantly change the statements included herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Federal - General Information The Fund has elected to be treated and intends to qualify for each taxable year as a regulated investment company under Subchapter M of Subtitle A, Chapter 1, of the Code.As a regulated investment company, the Fund generally is exempt from federal income tax on its net investment income and realized capital gains that it distributes to shareholders.To qualify for treatment as a regulated investment company, it must meet three important tests each year. First, the Fund must derive with respect to each taxable year at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans and gains from the sale or other disposition of stock or securities or foreign currencies, other income derived with respect to its business of investing in such stock, securities, or currencies or net income derived from an interest in a qualified publicly traded partnership. Second, generally, at the close of each quarter of its taxable year, at least 50% of the value of the Fund’s assets must consist of cash and cash items, U.S. government securities, securities of other regulated investment companies and securities of other issuers (as to which the Fund has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of the Fund’s total assets may be invested in the securities of (1) any one issuer (other than U.S. government securities and securities of other regulated investment companies), (2) two or more issuers that the Fund controls and which are engaged in the same or similar trades or businesses, or (3) one or more qualified publicly traded partnerships. The Fund invests all of its assets in and derives all of its income from the corresponding master portfolio, which is treated as a partnership for federal tax purposes, and the Fund will be treated as recognizing an allocable share of the income, gain, loss, deduction and credit of the master portfolio in which it invests.For purposes of the Income and Diversification Requirements, the Fund will be treated as receiving its allocable share of items of income and gain of the master portfolio and as owning its allocable share of the master portfolio’s assets.Thus, the Fund’s ability to satisfy the Income and Diversification Requirements depends upon the character of the master portfolio’s income and assets.The master portfolio intends to invest its assets so that the Fund investors will satisfy the Income and Diversification Requirements. Third, the Fund must distribute an amount equal to at least the sum of 90% of its investment company taxable income (net investment income and the excess of net short-term capital gain over net long-term capital loss) and 90% of its tax-exempt income, if any, for the year.The Fund intends to comply with this distribution requirements.If the Fund were to fail to make sufficient distributions, it could be liable for corporate income tax and for excise tax in respect of the shortfall or, if the shortfall is large enough, the Fund could be disqualified as a regulated investment company. 32 If for any taxable year the Fund were not to qualify as a regulated investment company, all its taxable income would be subject to tax at regular corporate rates without any deduction for distributions to shareholders.In that event, shareholders would recognize dividend income on distributions to the extent of the Fund’s current and accumulated earnings and profits, and corporate shareholders could be eligible for the dividends-received deduction. The Code imposes a nondeductible 4% excise tax on regulated investment companies that fail to distribute each year an amount equal to specified percentages of their ordinary taxable income and capital gain net income (excess of capital gains over capital losses).The Fund intends to make sufficient distributions or deemed distributions each year to avoid liability for this excise tax. State and Local Taxes Although the Fund expects to qualify as a “regulated investment company” and to be relieved of all or substantially all federal income taxes, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which it is otherwise deemed to be conducting business, the Fund could be subject to the tax laws of such states or localities. Taxation of Certain Financial Instruments The tax principles applicable to transactions in financial instruments and futures contracts and options that may be engaged in by the master portfolio, and investments in passive foreign investment companies (“PFICs”), are complex and, in some cases, uncertain.The tax consequences of such transactions and investments will pass through to the Fund and may cause the Fund to recognize taxable income prior to the receipt of cash, thereby requiring the Fund to liquidate other positions, or to borrow money, so as to make sufficient distributions to shareholders to avoid corporate-level tax.Moreover, some or all of the taxable income recognized may be ordinary income or short-term capital gain, so that the distributions may be taxable to shareholders as ordinary income. In addition, in the case of any shares of a PFIC in which the master portfolio invests, the Fund may be liable for corporate-level tax on any ultimate gain or distributions on the shares if the master portfolio fails to make an election to recognize income annually during the period of its ownership of the shares of the PFIC. Performance Information Average Annual Total Returns The average annual total return of each Class of shares of the Fund is calculated according to the following formula: P(1+T)n ERV where P equals a hypothetical initial payment of $1,000; T equals average annual total return; n equals the number of years; and ERV equals the ending redeemable value at the end of the period of a hypothetical $1,000 payment made at the beginning of the period. Average annual total return, or “T” in the above formula, is computed by finding the average annual compounded rates of return over the period that would equate the initial amount invested to the ending redeemable value.Average annual total return assumes the reinvestment of all dividends and distributions. Average Annual Total Returns (after taxes on distributions) 33 The average annual total return (after taxes on distributions) of each Class of shares is computed by finding the average annual compounded rates of return over the periods that would equate the initial amount invested to the ending value, according to the following formula: P(1+T)nATVD where “P” equals a hypothetical initial payment of $1000; “T” equals average annual total return (after taxes on distributions; “n” equals the number of years; and

    Exhibit 10.1   AGREEMENT   This Agreement (“Agreement”) is made this 9th day of June, 2010 (the “Effective Date”), by and between Jeffrey D. Pinneo (“Executive”), an individual, and Horizon Air Industries, Inc. (“Horizon”), a Washington corporation that is a wholly owned subsidiary of Alaska Air Group, Inc. (“AAG”), a Delaware corporation.   WHEREAS, Executive is presently the President & Chief Executive Officer of Horizon.   employment with Horizon on different terms and conditions as hereinafter set forth and to provide for Executive’s retirement from employment with Horizon.   Executive and Horizon from and after the Effective Date and will supersede and negate all previous agreements with respect to such relationship.   WHEREAS, Horizon and Executive both desire that Executive should provide transition consulting services to Horizon for a period of time following his retirement from Horizon.   NOW, THEREFORE, Horizon and Executive, in consideration of the covenants undertaken and the releases below, enter into this Agreement:   1.           Employment; Retirement.     a. Employment.  Horizon hereby employs Executive, and Executive agrees to serve, as Horizon’s Executive Vice President/Strategic Projects for the period commencing on the Effective Date and continuing through January 31, 2011 (the “Separation Date”), on the terms and conditions expressly set forth in this Agreement.  (Such period is referred to herein as the “Period of Employment.”)  Executive will perform such duties as may be assigned from time to time by the Board of Directors of Horizon or AAG’s Chief Executive Officer, which relate to the business of Horizon, its subsidiaries, its affiliates, or any business ventures in which Horizon, its subsidiaries or its parent corporation may participate.  Executive will devote his productive time, ability, attention and effort to Horizon's business and will serve its interests during his employment by Horizon; provided, however, that Executive may devote reasonable periods of time to (a) engaging in personal investment activities (b) searching for other employment and (c) engaging in charitable or community materially interfere with Executive's duties to Horizon.     b. Retirement.  Executive hereby irrevocably resigns (i) effective as of the Effective Date, as the President & Chief Executive Officer of Horizon, and (ii) effective as of the Separation Date, as Executive Vice President/Strategic Projects of Horizon and as an officer, employee, member, manager, director and in any other capacity with AAG, Horizon and each of their affiliates.  The parties agree that Executive         waives any right or claim to reinstatement as an employee of AAG or Horizon after the Separation Date.  Executive shall have no further employment relationship with AAG, Horizon or any of their affiliates after the Separation Date.  On the Separation Date, Executive agrees that he shall confirm such retirement by executing the letter attached as Exhibit A hereto and promptly delivering such letter to the Chief Executive Officer of AAG.   2.           Compensation.  Horizon agrees to pay and Executive agrees to accept in exchange for the services rendered hereunder by him during the Period of Employment, the following compensation:     a. Base Salary: Executive's base salary shall be at an annualized rate of $240,000 (the “Base Salary”), subject to any required tax withholding and all customary payroll deductions.  Such annual Base Salary shall be paid in substantially equal installments and at the same intervals as other officers of Horizon are paid.     b. Officers Supplemental Retirement Plan: Executive shall continue to participate in the Alaska Air Group, Inc. 1995 Elected Officers Supplementary Retirement Plan (“OSRP”), in accordance with the terms and conditions of the plan as in     c. Benefits. Executive will be entitled to participate, subject to and in accordance with applicable terms and conditions of each program, in fringe benefit programs, including but not limited to, health, dental and vision insurance, group life insurance, executive perquisite allowance, and such other programs as shall be provided from time to time by Horizon for its officers generally.     d. Equity.  Executive shall not participate in any future equity grants or other incentive awards.   3.           Separation Benefits.  In addition to any vested retirement benefits to which Executive has contributed and/or Horizon has contributed on Executive’s behalf, Horizon shall, subject to the conditions set forth in Section 3(f) below, provide to Executive the following separation benefits on and following the Separation Date:     a. Separation Date Payments.  On the Separation Date, Executive will receive a lump sum payment of $240,000, less applicable taxes and other withholdings.  The lump sum payment shall be payable as soon as practicable after the Supplemental Release Agreement referred to below becomes irrevocable in accordance with applicable law and in all events not later than sixty (60) days following Executive’s Separation from Service.  Executive will also receive a payment of $50,000 less applicable taxes and other withholdings on each of the following dates: March 31, 2011; June 30, 2011; September 30, 2011; and December 31, 2011.  As used herein, a “Separation from Service” occurs when Executive dies, retires, or otherwise has a termination of employment with Horizon that             b. Performance-Based Pay Plan.  Executive will be eligible for a 2010 Performance-Based Pay (“PBP”) payout, if any, based on 2010 base wages earned through December 31, 2010, with any such amount to be paid when PBP payments for 2010 are made to Horizon’s other executive officers generally.  Executive will not be eligible to participate in the PBP for 2011.     c. Travel Privileges.  Executive shall receive online travel privileges and Alaska Airlines Boardroom privileges at the same level received by Executive while an employee through January 31, 2011.  Following January 31, 2011, Executive, Executive’s spouse, and his eligible dependents will receive Q1/A1 boarding priority per Executive’s retired officer status.  Following January 31, 2011, Executive and Executive’s spouse shall receive lifetime MVP Gold status and lifetime Alaska Airlines Boardroom membership.     d. Equity Awards.  The terms of each equity award will continue to apply to Executive in his retiree status.     e. Medical Coverage.  Unless and until Executive attains medical insurance coverage, the Company will provide COBRA continuation coverage for as long as Executive is eligible.  For the first 12 months of COBRA continuation (or for as long as Executive is eligible, if less than 12 months), Executive will be charged only the same monthly premium as an active full-time Horizon employee would pay for the same plan and same level of coverage.  For the remainder of the COBRA eligibility period, Executive will be charged the normal COBRA premium.     f. Conditions of Severance.  Notwithstanding any other provision herein, any obligation of Horizon or any of its affiliates to Executive pursuant to this Section 3 shall be subject to the condition precedent that Executive shall have provided, upon or not later than five (5) days after the Separation Date, Horizon with a valid, executed Supplemental Release Agreement in the form attached hereto as Exhibit B (the “Supplemental Release Agreement”), and such Supplemental Release Agreement shall have not been revoked by Executive pursuant to any revocation rights afforded by applicable law.  In addition, if Executive breaches any of his obligations set forth in this Agreement at any time, from or remedy otherwise available to Horizon, Executive will no longer be entitled to, and Horizon will no longer be obligated to pay or provide any remaining unpaid benefit pursuant to this Section 3 provided that, if Executive provides the Supplemental Release Agreement contemplated by this Section 3(f), in no event shall Executive be entitled to aggregate benefits pursuant to this Section 3 of less than $5,000, which amount the parties agree is good and adequate consideration, in and of itself, for Executive’s release under the Supplemental Release Agreement.         4.           Agreement Inadmissible.  Neither this Agreement nor anything in this Agreement shall be construed to be or shall be admissible in any proceeding as evidence of or an admission by Horizon of any violation of its policies, procedures, state or federal laws or regulations.  This Agreement may be introduced, however, in any proceeding to enforce the Agreement.   5.           General Release and Covenant Not To Sue.  Except for those obligations created by or arising out of this Agreement, Executive on behalf of and discharges Horizon, and its parent, subsidiaries and affiliates, past and officers, agents, attorneys, insurers, employees, stockholders, representatives, together and collectively referred to as “Releasees,” with respect to and from the future hold as against said Releasees, including any claims arising out of or in any way connected with his employment relationship with Horizon, or his separation from the same, or any other transactions, occurrences, acts or Agreement including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964 (as amended), the Age Family and Medical Leave Act of 1993 (the “FMLA”), the Washington Law Against Discrimination, the Washington Age Discrimination Law, or any claim for health or medical insurance or any other fringe benefit.  This release does not, however, cover any claim that cannot be released as a matter of applicable law.  Executive acknowledges and agrees that he has received any and all leave and other benefits that he has been and is entitled to pursuant to FMLA.   6.           Release of Unknown Claims.  It is the intention of Executive in benefits conferred upon him by any law, statute, or legal doctrine that would otherwise prevent the release of unknown claims and expressly consents that this other claims, demands and causes of action hereinabove specified.   Executive time of executing this Agreement, may have materially affected this settlement.  Nevertheless, Executive hereby waives any right, claim or cause of action that might arise as a result of such different or         additional claims or facts.  Executive acknowledges that he understands the significance and consequence of such release and waiver.   7.           Federal Age Discrimination in Employment Act Waiver and Advisements.  Executive expressly acknowledges and agrees that, by entering into   a.           In return for this Agreement, he will receive compensation beyond Agreement;   b.           He was orally advised by Horizon and is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;   c.           He was given a copy of this Agreement on May 24, 2010, and informed that he had twenty one (21) days within which to consider this Agreement, and 21-day period, he should execute the Acknowledgment and Waiver attached as Exhibit C;   d.           He was informed that he has seven (7) days following the date of   8.           Confidential and Proprietary Information.  Executive acknowledges that by reason of his position with Horizon he is aware of and has been given access to concepts, designs, processes, technologies, trade secrets, customer lists, marketing plans, business plans, and other forms of confidential and proprietary information, whether or not developed by Executive.  Executive agrees promptly to return all related documents, data and other materials of whatever nature.  Executive further represents that he has held all such such information and relationships for any business (which term herein includes a partnership, firm, corporation or any other entity) without the prior written consent of Horizon.   9.           Non-Solicitation.  Executive shall not, during the Period of Employment and for a period of twelve (12) months following the Separation Date, directly or indirectly solicit, influence or entice, or attempt to solicit, influence or entice, any employee or consultant of Horizon to cease his or her relationship with Horizon or solicit, influence, entice or in any way divert any customer, distributor, partner, joint venture partner or supplier of Horizon to do business or in any way become associated with any Competitor (as defined below).   10.           Cooperation with Investigations.  Nothing in this Agreement limits, restricts or precludes either Horizon or Executive from cooperating with any governmental agency in the performance of its investigative or other lawful duties.  Further, Executive agrees to cooperate fully with Horizon, including but not limited to the prosecution or defense of any civil or criminal action or other legal proceedings in which Horizon determines that Executive has relevant information or knowledge.  Such cooperation shall include, without limitation, communicating with representatives (including attorneys) for Horizon, providing truthful         testimony in oral or written form, preparing for such testimony with attorneys for Horizon, and reviewing documents in connection with such communications or preparations; provided, however, that the foregoing shall not be deemed to require Executive to waive any Fifth Amendment or other privilege with respect to events that occurred during Executive’s tenure at Horizon.   11.           Full Payment of Compensation Due and Owing.  Executive agrees that the payments described in Sections 2 through 3 above are the sole and exclusive compensation to which he is entitled from Horizon or any other of the Releasees, and acknowledges that the payments described in said paragraphs fully satisfy any salary, wages, bonuses, accrued vacation, commissions, severance benefits, and any and all other benefits due to Executive.   12.           Non-Competition.  Executive agrees that he will not, directly or indirectly, during the Period of Employment and for a period of twelve (12) months after the Separation Date, be employed by, consult with or otherwise ownership, management, operation or control of or be connected with, in any manner, any Competitor. A “Competitor” shall include, Frontier Airline Holdings, Jet Blue Airways Corporation, Southwest Airlines Corporation, Allegiant Travel Company, Virgin America, West Jet, UAL Corporation, SkyWest, and any of their affiliates.   13.           No Assignments.  Executive warrants and represents that he has not any released matter or any part or portion thereof and shall defend, indemnify and hold harmless Releasees from and against any claim (including the payment of   14.           No Disparagement.  Executive agrees that he shall not make any disparaging, uncomplimentary or negative remarks about AAG, Alaska Airlines or Horizon, or the products, business affairs or employees of AAG, Alaska Airlines or Horizon.   15.           End of Employment Relationship.  Executive and Horizon acknowledge that any employment relationship between them shall terminate on the Separation Date, and that they will have no continuing contractual relationship except as expressly provided in this Agreement and the Consulting Agreement.  Executive acknowledges that the Change of Control Agreement between Executive and AAG dated February 14, 2008 shall terminate on the Effective Date.   16.           Taxes.  Executive agrees that he shall be exclusively liable for consideration received herein and hereby represents that he shall make payments on such taxes at the time and in the amount required of him.  In addition, Executive hereby agrees fully to defend, indemnify and hold harmless Releasees of the consideration set forth herein.   17.           Entire Agreement.  This instrument (including the attached exhibits) constitutes and contains the entire agreement and final understanding concerning Executive’s employment,         voluntary retirement from the same and the other subject matters addressed or oral, concerning the subject matters hereof.  Any representation, promise or   18.           Revocation.  Either Executive or Horizon may revoke this Agreement in its entirety during the seven (7) days following execution of the Agreement by Executive.  Any revocation of the Agreement must be in writing and hand-delivered during the revocation period.  This Agreement will become effective and enforceable seven (7) days following execution by Executive, unless it is revoked during the seven-day period.  If so revoked during such period, this Agreement shall be null and void in its entirety.   19.           Severability and Survivorship.  If any provision of this Agreement or the application thereof is held invalid, such invalidity shall not affect this Agreement are declared to be severable.  This agreement shall be binding upon a successor or assignor of Horizon in the event of a merger or acquisition.   20.           Washington Law Governs.  This Agreement shall be deemed to have been executed and delivered within the State of Washington, and the rights and accordance with, and governed by, the laws of the State of Washington without     22.           Binding Arbitration of Disputes.  Any dispute or controversy between Executive, on the one hand, and Horizon (or any other Releasee), on the Agreement or the subject matter thereof, or otherwise in any way arising out of, related to, or connected with Executive’s employment with Horizon or the conclusion of Executive’s employment with Horizon, shall be resolved through final and binding arbitration before an arbitrator in King County, Washington.  The arbitrator shall be selected by mutual agreement of the parties; if none, then by striking from a panel of seven arbitrators provided by the American Arbitration Association.  By entering into this agreement to arbitrate, the parties voluntarily waive any right to have covered disputes decided by a court of law and/or jury. In the event of such arbitration, the incurred by such party in connection therewith, including attorneys’ fees.  The nonprevailing party shall also be solely responsible for all costs of the and promptly shall reimburse the prevailing party for any portion of such costs previously paid by the prevailing party.  Any dispute as to the reasonableness of costs and expenses shall be determined by the arbitrator.         arbitration the contents of the pleadings, papers, orders, hearings, trials, or foregoing, to prevent or compel arbitration or to confirm, correct, vacate or   23.           Notice.  All notices given hereunder (except for notices of revocation pursuant to Section 7(d) or 18 above) shall be given in writing, shall specifically refer to this Agreement, and shall be personally delivered or sent by telecopy or other electronic facsimile transmission or by registered or                         If to Executive:                                Jeffrey D. Pinneo **** ****     If to Horizon:     19300 International Blvd.   Seattle, WA 98188     Fax: (206) 392-5807   if notice is personally delivered or sent by telecopy or other electronic facsimile transmission, it shall be effective upon receipt.   24.           Limitations on Waiver.  No waiver of any breach of any term or   25.           Legal Counsel.  Each party recognizes that this is a legally to consult with legal counsel of their choice.  Executive agrees and             a. interest imposed under Code Section 409A.  The provisions of this Agreement     b. To the extent that any benefits pursuant to Section 2 or Section 3 are taxable to Executive, any reimbursement payment due to Executive pursuant to any such incurred.  Any benefits and reimbursements pursuant to Section 2 or Section 3   consequences.     EXECUTED this 9th day of June, 2010, at King County, Washington.   /s/ Jeffrey D. Pinneo Jeffrey D. Pinneo       /s/ William S. Ayer By William S. Ayer       EXHIBIT A Date: __________________ William S. Ayer 19300 International Blvd. Seattle, Washington  98188 Dear Bill: This is to advise you that, effective January 31, 2011, I hereby retire from my position as Executive Vice President/Strategic Projects and any other capacity with Horizon Air Industries, Inc. and each of its affiliates. Sincerely, Jeffrey D. Pinneo       EXHIBIT B   SUPPLEMENTAL RELEASE 1.           Release.  Jeffrey D. Pinneo, (the “Executive”), on behalf of and discharges Horizon Air Industries, Inc. (“Horizon”), and its parent, held or may in the future hold as against said Releasees, including any claims arising out of or in any way connected with his employment relationship with Horizon, or his separation from the same, or any other transactions, date of this Agreement including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964 (as amended), the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993 (the “FMLA”), the Washington Law Against Discrimination, the Washington Age Discrimination Law, or insurance, health or medical insurance or any other fringe benefit; provided, however, that the foregoing release does not apply to any obligation of the Company and its subsidiaries to the Executive pursuant to any of the following: (1) the Agreement between the Executive and the Company dated as of June 9, 2010 (the “Retirement Agreement”) or the related Consulting Agreement between the Executive and the Company attached thereto; (2) any equity-based awards previously granted by the Company to the Executive, to the extent that such awards continue after the termination of the Executive’s employment with the indemnification that Executive may have pursuant to the Bylaws or Certificate of Incorporation of the Company or under any written indemnification agreement with the Company or under applicable state law with respect to any loss, damages or provided) that the Executive may in the future incur with respect to his service as an employee, officer or director of the Company; (4) with respect to any rights that the Executive may have to insurance coverage for such losses, damages or expenses under any directors and officers liability insurance policy of the Company; (5) any rights to continued medical or dental coverage that the Executive may have under the Consolidated Omnibus Budget Reconciliation Act; or (6) any rights to payment of the Executive’s accrued and vested benefits (if any) that Executive may have under a retirement plan sponsored or maintained by Revenue Code of 1986, as amended.  This release does not, however, cover any claim that cannot be released as a matter         of applicable law.  Executive acknowledges and agrees that he has received any FMLA.   2.           Release of Unknown Claims.  It is the intention of Executive in   3.           Federal Age Discrimination in Employment Act Waiver and   (a)           In return for this Agreement, the Executive will receive   (b)           The Executive is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;   (c)           The Executive has voluntarily chosen to enter into this Agreement   (d)           The Executive was given a copy of this Agreement on [____________] Agreement and that if he wished to execute this Agreement prior to expiration of hereto as Exhibit B-1;   (e)           Nothing in this Agreement prevents or precludes the Executive from   (f)           The Executive was informed that he has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if the Executive elects revocation during that time.  Any revocation must be in writing and must be received by the Company during the seven-day revocation period.  In   the event that the Executive exercises his right of revocation, neither the Company nor the Executive will have any obligations under this Agreement.   4.           No Transferred Claims.  The Executive warrants and represents that purported or claimed.   5.           Miscellaneous.  The following provisions shall apply for purposes of this Agreement:     of this Agreement.   (c)           The Executive’s or the Company’s failure to insist on strict   counterparts shall be deemed an original, but all of which together shall           laws of the State of Washington that the foregoing is true and correct. EXECUTED this 9th day of June 2010, at King County, Washington.            /s/ Jeffrey D. Pinneo                                                       Jeffrey D. Pinneo _____/s/ William S. Ayer     ________ By William S. Ayer,       EXHIBIT B-1 ACKNOWLEDGMENT AND WAIVER foregoing Supplemental Release Agreement and voluntarily chose to sign the Supplemental Release Agreement prior to the expiration of the 21-day period.     EXECUTED this ___ day of ____________ 20__, at ___________ County, _________.                                                                    Jeffrey D. Pinneo         EXHIBIT C   ACKNOWLEDGEMENT AND WAIVER I, ____________________, hereby acknowledge that I was given twenty one (21) days to consider the foregoing Agreement (the “Agreement”) and voluntarily chose            EXECUTED this _____ day of ________, 2010, at King County, Washington.   _____________________________ Jeffrey D. Pinneo          

Title: Can I be sued for revealing my rapists name? Answer #1: > My concern is- can I be somehow sued for slander? That would be a giant red YES. You can't prove it happened, and depending on your location, calling somebody a rapist may be defamation per se and they don't need to prove damages. Therapy is what you need here not a lawsuit.Answer #2: Can you? Sure, that's not hard. Can your rapist win? Probably not. His lawyer would almost certainly advise him not to try, too - there's nothing to recover from you if you're already broke, and the lawsuit itself would bring more attention to your statements and could put him in the media spotlight as an "alleged rapist." It's just plain bad strategy. It's more likely that he'd sue your friend, since she's the one posting about it, but the post is evidence that you made the statements, so there's at least a theory under which you could be sued as well. Basically, don't worry about it too hard. _If_ you're sued, worry about it then, but realize that the worst a lawsuit is likely to do is to create some debt for you, and to create an obligation not to repeat the statements any further. If you want to do some prep work, start looking at local abuse shelters and womens' shelters. Many have access to low-cost legal resources or can help you apply for legal aid.

Exhibit 10.2   RESTRICTED STOCK AGREEMENT   Nabors Industries Ltd. (“NIL” or the “Company”), and William Restrepo   RECITALS     RESTRICTED STOCK GRANT     Grant is 32,110.       Common Shares of         and conditions:   such shares.   Period.   final.   2     parties.   office.   the Grantee’s leave.     of the certificate:       3   above.   having jurisdiction.   subsidiaries.       Grantee.       4       between the parties.   fees.                 By:             GRANTEE               William Restrepo   5

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):December 19, 2012 GUANWEI RECYCLING CORP. (Exact name of registrant as specified in its charter) Nevada 000-53825 98-0669936 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) Rong Qiao Economic Zone Fuqing City Fujian Province People’s Republic of China (Address of principal executive offices) Registrant’s telephone number, including area code: (86-591) 8536-6197 (Former Name or Former Address if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 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 (17CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) Item 3.01.Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. On July 9, 2012, the Nasdaq Stock Market (“Nasdaq”) notified Guanwei Recycling Corp. (the “Company”) that it no longer complied with Nasdaq Rule 5550(a)(2) (the “Minimum Bid Price Rule”), as the closing bid price of the Company’s common stock, par value $0.001 (“Common Stock”), was below the minimum $1.00 per share for the 30 consecutive trading days prior to July 9, 2012. In accordance with Nasdaq Rule 5810(c)(3)(A), the Company was provided 180 calendar days, or until January 7, 2013, to regain compliance with the Minimum Bid Price Rule. The Company may regain compliance with the Minimum Bid Price Rule if the bid price of the Company’s Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to January 7, 2013. On December 19, 2012, the Company received notification from the Nasdaq that the Nasdaq has determined that for the last 10 consecutive business days, from December 5, 2012 to December 18, 2012, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2) and this matter is now closed. SIGNATURE PAGE 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. Date: December 26, 2012 GUANWEI RECYCLING CORP. By: /s/ Min Chen Name: Min Chen Title: Chief Executive Officer and Chairman of the Board of Directors

Exhibit 10.9   LICR REF LUD2240   8 June 2011   Attention: Mr David Pritchard KALOBIOS PHARMACEUTICALS INC a Delaware corporation, having an address at 260 East Grand Avenue, South San Francisco, CA 94040, USA (KaloBios)   FAX: 1 650 343 3260     CANCER RESEARCH LIMITED a Swiss not-for-profit corporation with its registered 666 Third Avenue, 28th Floor, New York, NY 10017, USA (LICR)   FAX: 1 212 450 1535   RE:                          Addition of Patent 5 to License Agreement Between Ludwig Institute for Cancer Research and KaloBios (LICR Ref: LUD2240)   The parties wish to formally incorporate new Joint Program Patent that has resulted from the Joint Program Research carried out under the Collaborative Research Agreement (LUD2259.2) to the Exhibit A of the License Agreement (LUD2240) between Ludwig Institute for Cancer Research Ltd and KaloBios Pharmaceuticals Inc (“the Agreement”).     Patent 5   (a)                                 Provisional patent application US61/356.522 filed on 18 June 2010 and entitled “Detection of EphA3 as a Marker of the Presence of a Solid Tumor”; patent applications; patents; and   please sign and date the acknowledgement at the end of this letter (“the Letter above.   1       Yours sincerely,     KALOBIOS PHARMACEUTICALS INC   LUDWIG INSTITUTE FOR CANCER RESEARCH [SEAL]       /s/ David W Pritchard     David W Pritchard     Chief Executive Officer   President           Witness: /s/ Consuela Alatoure   Witness: /s/ Karen Hyland           Karen Hyland                     Jonathan Skipper, PhD       Executive Director of Technology Development                 Witness:           Nadette Bulgin   2  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF Date of Report:(Date of earliest event reported) January 22, 2009 OLD REPUBLIC INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 001-10607 36-2678171 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 307 North Michigan Avenue, Chicago, Illinois 60601 (Address of principal executive offices) (Zip Code) (312) 346-8100 (Registrant’s telephone number, including area code) N/A (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2 below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 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 140.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 Item 2.02.Results ofOperations and Financial Condition On January 22, 2009, Old Republic International Corporation announced the results of its operations and its financial condition for the quarter ended December 31, 2008.The full text of the earnings release is included as Exhibit 99.1 hereto. Item 9.01.Financial Statements and Exhibits (c) Exhibits 99.1Earnings Release dated January 22, 2009. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OLD REPUBLIC INTERNATIONAL CORPORATION Registrant Date: January 22, 2009 By: /s/ Karl W. Mueller Karl W. Mueller Senior Vice President, Chief Financial Officer, and Chief Accounting Officer 3 INDEX TO EXHIBITS Exhibits 99.1 Earnings Release dated January 22, 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C.20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: May 31, 2011 Commission File Number 000-53121 ROSEWIND CORPORATION (Exact name of registrant as specified in its charter) COLORADO 47-0883144 (State or other jurisdiction ofincorporation or organization) (I.R.S. Employer Identification No.) 16, Loveland, Colorado (Address of principal executive offices) (Zip code) (970) 635-0346 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days.Yes þNO 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 definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12(b) of the Exchange Act. Large accelerated filer r Accelerated filer r Non-accelerated filer r Smaller Reporting Company

Certification by the Chief Financial Officer Pursuant to Section906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report of Enterra Energy Trust (the “Trust”) on Form 20-F for the year ended December31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Blaine Boerchers, Chief Financial Officer of the Trust, certify, pursuant to 18 U.S.C.

Exhibit 99.3 FOR IMMEDIATE RELEASE CONTACT: George J. Longo Carl Hymans Vice President, CFO G.S. Schwartz & Co. (215) 345-0919 (212) 725-4500 carlh@schwartz.com The Quigley Corporation Reports Fourth Quarter & 2007Annual Results - Increases Investment to $6.5 million in Pharmaceutical R&D in 2007- DOYLESTOWN, PA. – March 3, 2008 – The

EXHIBIT 10.1 EMPLOYMENT AGREEMENT THIS EMPLOYMENT CONTRACT made the 10th day of November, 1999, between CHEMUNG 14902, hereinafter sometimes referred to as the "Bank," and MELINDA A. SARTORI, residing at 807 Euclid Avenue, Elmira, New York 14905 hereinafter sometimes WITNESSETH THAT: its Senior Vice President, and WHEREAS, the Bank and the Employee have heretofore entered into an employment contract dated December 2, 1997, and WHEREAS, the Bank desires to terminate said employment contract and that the Employee continue in the employment of the Bank on the following terms and conditions and the Employee is willing to terminate said employment contract and to continue in the employment of the Bank on the following terms and conditions. NOW, THEREFORE, the Bank and the Employee mutually covenant and agree that said employment contract dated December 2, 1997, is hereby terminated and in the place and stead thereof mutually convenant and agree as follows: 1. The Bank hereby employs the Employee to perform the duties of her present perform such duties faithfully and to the best of her ability and agrees to devote her full working time and best efforts to performing such duties. of the Bank in Chemung, Schuyler, Tioga or Steuben and Broome Counties, New York, and that Employee shall not be obligated to perform her duties in any other location without the consent of the Employee. December 31, 2001. The Bank may extend the term of this agreement for an additional period of one (1) year or until Employee attains the age of 65 years, whichever is less on January 1, 2002, and on each subsequent January 1 by giving the Employee at least thirty (30) days written notice prior to the applicable 4. The Bank agrees to pay the Employee an annual salary of Sixty-Six Thousand Dollars ($66,000.00) or such greater annual salary as may be agreed upon from time to time by the parties. Employee shall also be eligible for such bonuses as the Board of Directors of the Bank may determine and declare from time to time. are currently being provided to her or which may hereafter generally be provided 6. If the Employee is unable to perform her services hereunder by reason of months, the Employee's salary less any payments received by the Employee under the Bank's disability fringe benefit program shall continue during such period. If the Employee is unable to return to full-time employment on or before the end of such twelve (12) month period, the Employee's salary hereunder shall cease and terminate, but the Employee shall thereafter be entitled to any disability payments provided by the Bank as a fringe benefit. shall pay to the Employee's estate the salary she would have received hereunder failure to perform her duties hereunder faithfully and to the best of her shall be entitled to any retirement or other benefits earned by her to the date of termination. the Employee shall receive her salary for the balance of the term of the thereunder, the Bank shall, at the time of each pension payment to the employee or her beneficiaries, pay to the Employee or her beneficiaries such an paid to her or her beneficiaries by the Bank at the times and in the manner elected by the Employee pursuant to the Bank's Pension Plan in amounts Bank's Pension Plan. substantially all its assets and shall be binding on the inure to the benefit of Employee has hereunto set her hand and seal both as of the day and year first above written. CHEMUNG CANAL TRUST COMPANY By_/s/ Jan P. Updegraff Its President and CEO /s/ Melinda A. Sartori L.S.

  Exhibit 10.2   TRANSFER AGENT SERVICING AGREEMENT   THIS AGREEMENT is made and entered into as of the last date on the signature block, by and Monroe Capital Income Plus Corporation, a Maryland corporation (the “Fund”), and U.S. Bancorp Fund Services, LLC, d/b/a/ U.S. Bank Global Fund Services, a Wisconsin limited liability company (“Fund Services”).   WHEREAS, the Fund is a closed-end management investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act” or the “Act”);   WHEREAS, the Fund is authorized to offer and sell common stock in the Fund   WHEREAS, Fund Services is, among other things, in the business of administering transfer agent functions for the benefit of its customers; and   WHEREAS, the Fund desires to retain Fund Services to provide transfer agent services.     1.Appointment of Fund Services as Transfer Agent   The Fund hereby appoints Fund Services as transfer agent of the Fund on the terms and conditions set forth in this Agreement, and Fund Services hereby in this Agreement. The services and duties of Fund Services shall be confined to or may be asserted against Fund Services hereunder.   2.Services and Duties of Fund Services   Fund Services shall provide the following transfer agent services to the Fund:   (1)Receive and process orders for the purchase of Shares in accordance with applicable rules under the 1940 Act and other applicable regulations, and as specified in the Fund’s registration statement.   (2)Process subscription agreements received from prospective holders of Shares (such holder of Shares, “Shareholders”).   (3)Process purchase orders with prompt delivery, where appropriate, of payment and supporting documentation to the Fund’s custodian(s), and issue the appropriate number of uncertificated Shares with such uncertificated Shares being held in the appropriate Shareholder account.         (4)Arrange for issuance of Shares obtained through transfers of funds from Shareholders’ accounts at financial institutions.   (5)Process tender offers and related repurchase requests received in good order and, where relevant, deliver appropriate documentation to the Fund.   (6)Pay monies upon receipt from the Fund where relevant, in accordance with the instructions of redeeming Shareholders.   (7)Process transfers of Shares in accordance with the Shareholder’s instructions and as permitted by the Fund’s registration statement.   (8)Prepare and transmit payments for distributions declared by the Fund, after regulations and in accordance with Shareholder instructions.   (9)Make changes to Shareholder records, including, but not limited to, address changes.   (10)Prepare ad-hoc reports as necessary at prevailing rates. Any such ad-hoc reporting to exceed $500 in cost to be explicitly approved by the Fund.   (11)Provide Shareholder account information upon Shareholder or Fund request and prepare and mail confirmations and statements of account to Shareholders for all purchases, redemptions, and other confirmable transactions as agreed upon with the Fund.   (12)Mail account statements and performance reports in a form approved by the Fund to Shareholders on a monthly basis and shareholder reports on annual basis.   (13)Prepare and file U.S. Treasury Department Forms 1099 and other appropriate information required with respect to dividends, distributions and repurchases for all shareholders.   (14)Reimburse the Fund each month for all material losses resulting from “as of” processing errors for which Fund Services is responsible in accordance with the   (16)Answer correspondence from shareholders, securities brokers and others relating to Fund Services duties hereunder within required time periods established by applicable regulation.   (17)Provide service and support to financial intermediaries including but not limited to trade placements, settlements and corrections.         (18)Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Fund in connection with any certification required of the Fund pursuant to the Sarbanes-Oxley Act of 2002 (“SOX Act”) or any rules or regulations promulgated by the U.S. Securities and Exchange Commission (“SEC”) thereunder, provided the herein.   (19)In order to assist the Fund in satisfying the requirements of Rule 38a-1 under the 1940 Act, Fund Services will provide the Fund’s Chief Compliance Officer with reasonable access to Fund Services’ Fund records relating to the services provided by it under this Agreement, and will provide quarterly compliance reports and related certifications regarding any Material Compliance Matter (as defined in the 1940 Act) involving Fund Services that affect or could affect the Fund.   3.Lost Shareholder Due Diligence Searches and Servicing   The Fund hereby acknowledges that Fund Services has an arrangement with an Costs associated with such searches will be passed through to the Fund as a miscellaneous expense in accordance with the fee schedule set forth in Exhibit B hereto. If a shareholder remains lost and the shareholder’s account unresolved with the lost shareholder (or such lost shareholder’s representative or shareholder before the shareholder’s assets escheat to the applicable state. The Fund hereby acknowledges that Fund Services is not a party to these arrangements arrangements. Furthermore, the Fund hereby acknowledges that vendor may receive locating the lost shareholder. Fund Services shall report, or arrange to have reported, to the Fund shareholder account information where such accounts or funds have been turned over to applicable state authorities.     comment upon the written procedures provided by Fund Services describing various tools used by Fund Services which are designed to promote the detection and reporting of potential money laundering activity and identity theft by monitoring certain aspects of shareholder activity as well as written procedures the Fund and Fund Services have determined that the Procedures, as part of the Fund’s overall anti-money laundering program and Red Flag Identity Theft Prevention program, are reasonably designed to: (i) prevent the Fund from being used for money laundering or the financing of terrorist activities; (ii) prevent identity theft; and (iii) to achieve compliance with the applicable provisions of the Bank Secrecy Act and the USA Patriot Act of 2001 and the implementing regulations thereunder.         Based on this determination, the Fund hereby instructs and directs Fund Services revised from time to time. It is contemplated that these Procedures will be laundering and identity theft responsibilities.   Fund Services agrees to provide to the Fund:   that Fund Services believes, based on the Procedures, evidence money laundering, activity that may warrant a suspicious activity report or identity theft   (b)Prompt written notification of any customer(s) that Fund Services reasonably believes, based upon the Procedures, to be engaged in money laundering, activity that may warrant a suspicious activity report or identity theft activities, provided that the Fund agrees not to communicate this information to such customer;   (c)Any reports received by Fund Services from any government agency or applicable industry self-regulatory organization pertaining to Fund Services anti-money laundering monitoring or the Red Flag Identity Theft Prevention Program on behalf of the Fund;     (e)Certified quarterly reports of its monitoring and customer identification activities on behalf of the Fund, including an annual certification that Fund Services has applied and followed the Procedures during the relevant reporting period;   The Fund hereby directs, and Fund Services acknowledges, that Fund Services maintained by Fund Services and relating to Fund Services implementation of the Procedures on behalf of the Fund, as it may request, and (ii) permit such federal regulators to inspect Fund Services implementation of the Procedures on behalf of the Fund.         5.Compensation   amended from time to time by consent of both parties to this agreement). Fund Services shall be compensated for such miscellaneous expenses as are reasonably incurred by Fund Services in performing its duties hereunder and as are described in Exhibit B hereto. Fund Services shall also be compensated for any reimbursable expenses within 30 calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute. The Fund shall notify Fund Services in writing within 30 calendar days following receipt shall pay such disputed amounts within thirty (30) calendar days of the day on Notwithstanding anything to the contrary, amounts owed by the Fund to Fund Services shall only be paid out of assets and property of the Fund involved.     A.The Fund hereby represents and warrants to Fund Services, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:   (1)The Fund is duly organized and existing under the laws of the jurisdiction of   in accordance with all requisite action and constitutes a valid and legally general application affecting the rights and remedies of creditors and secured parties; and     B.Fund Services hereby represents and warrants to the Fund, which           Services in accordance with all requisite action and constitutes a valid and legally binding obligation of Fund Services, enforceable in accordance with its secured parties;   property which would prohibit its execution or performance of this Agreement; and     7.          Standard of Care; Indemnification; Limitation of Liability   A.Fund Services shall exercise reasonable care in the performance of its duties under this Agreement. Fund Services shall not be liable for any error of with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond Fund this Agreement. Notwithstanding any other provision of this Agreement, if Fund Services has exercised reasonable care in the performance of its duties under this Agreement, the Fund shall indemnify and hold harmless Fund Services from any and every nature (including reasonable and documented attorneys' fees) that Fund Services may sustain or incur or that may be asserted against Fund Services performing the services hereunder (i) in accordance with the foregoing standards, (ii) in reliance upon any written or oral instruction provided to Fund Services by the Fund’s investment adviser or by any duly authorized officer of the Fund, as approved by the Board of Directors, except for any and all Agreement. As used in this paragraph, the term “Fund Services” shall include Fund Services’ directors, officers and employees.         Fund Services shall indemnify and hold the Fund harmless from and against any nature (including reasonable attorneys' fees) that the Fund may sustain or incur refusal or failure to comply with the terms of this Agreement, bad faith, Agreement. This indemnity shall be a continuing obligation of Fund Services, its successors and assigns, notwithstanding the termination of this Agreement. As officers and employees.   consequential, special or punitive damages under any provision of this Agreement.   minimize service interruptions for any period that such interruption continues. Fund Services shall as promptly as possible under the circumstances notify the Fund in the event of any service interruption that materially impacts Fund Services’ services under this Agreement. Fund Services will make every resulting from such a breakdown at the expense of Fund Services as soon as practicable. Fund Services agrees that it shall, at all times, have reasonable business continuity and disaster recovery contingency plans with appropriate Representatives of the Fund shall be entitled to inspect Fund Services’ premises and operating capabilities, books and records maintained on behalf of the Fund notice to Fund Services. Fund Services shall promptly notify the Fund upon discovery of any material administrative error, and shall consult with the Fund about the actions it intends to take to correct the error prior to taking such actions. A “material administrative error” means any error which the Fund’s management, including its Chief Compliance Officer, would reasonably need to know to oversee Fund compliance. Moreover, Fund Services shall obtain and reports rendered by independent accountants on the internal controls and procedures of Fund Services relating to the services provided by Fund Services under this Agreement.   Notwithstanding the above, Fund Services reserves the right to reprocess and correct administrative errors at its own expense.         B.In order that the indemnification provisions contained in this section shall promptly advised of all pertinent facts concerning the situation in question, notify the indemnitor promptly concerning any situation that presents or appears subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any to indemnify the indemnitee except with the indemnitor’s prior written consent.   C.The indemnity and defense provisions set forth in this Section 7 shall indefinitely survive the termination and/or assignment of this Agreement.   D.If Fund Services is acting in another capacity for the Fund pursuant to a any of its obligations in such other capacity.   8.Data Necessary to Perform Services   The Fund or its agent shall furnish to Fund Services the data necessary to agreed upon. For the avoidance of doubt, Fund Services agrees that, to the extent required in order to carry out any of its obligations hereunder, Fund Services will coordinate with all other service providers of the Fund as may be requested and authorized by the Fund, including each custodian of the Fund, as appropriate. If Fund Services is also acting in another capacity for the Fund, obligations in such capacity.         9.Proprietary and Confidential Information   employees to treat confidentially and as proprietary information of the Fund, potential shareholders of the Fund (and clients of said shareholders) including all shareholder trading information, and not to use such records and information for any purpose other than the performance of its responsibilities and duties constituted authorities provided that to the extent permitted by law, Fund Services shall provide the Fund notice prior to such disclosures, or (iii) when so requested by the Fund. Records and other information which have become known Fund Services prior to receipt thereof from the Fund or its agent, shall not be subject to this paragraph. Further, Fund Services will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm Leach Bliley Act, as may be modified from time to time. In this regard, Fund Services shall have in place and maintain physical, electronic and procedural safeguards reasonably the Fund and its shareholders. In addition, Fund Services has implemented and will maintain an effective information security program reasonably designed to protect information relating to Shareholders (such information, “Personal Information”), which program includes sufficient administrative, technical and physical safeguards and written policies and procedures reasonably designed to (a) insure the security and confidentiality of such Personal Information; (b) of such Personal Information, including identity theft; and (c) protect against unauthorized access to or use of such Personal Information that could result in substantial harm or inconvenience to the Fund or any Shareholder (the “Information Security Program”). The Information Security Program complies and shall comply with reasonable information security practices within the industry. Fund Services shall promptly notify the Fund in writing of any breach of security, misuse or misappropriation of, or unauthorized access to, (in each case, whether actual or alleged) any Personal Information (any or all of the foregoing referred to individually and collectively for purposes of this provision as a “Security Breach”). Fund Services shall promptly investigate and remedy, and bear the cost of the measures (including notification to any affected parties), if any, to address any Security Breach. Fund Services shall bear the cost of the Security Breach only if Fund Services is determined to be responsible for such Security Breach.   In addition to, and without limiting the foregoing, Fund Services will promptly cooperate with the Fund or any of their affiliates’ regulators at Fund Services expense (only if Fund Services is determined to be responsible for such Security Breach) to prevent, investigate, cease or mitigate any Security Breach, including but not limited to investigating, bringing claims or actions and giving information and testimony. Notwithstanding any other provision in this Agreement, the obligations set forth in this paragraph shall survive termination of this Agreement.   Fund Services will provide the Transfer Agent with certain copies of third party audit reports (e.g., SSAE 16 or SOC 1) through access to Fund Services CCO Portal (limited to two persons) to the extent such reports are available and related to services performed or made available by Fund Services under this Agreement. The Transfer Agent acknowledges and agrees that such reports are confidential and that it will not disclose such reports except to its employees and service providers who have a need to know and have agreed to obligations of confidentiality applicable to such reports.   Notwithstanding the foregoing, Fund Services will not share any nonpublic personal information concerning any of the Fund’s shareholders to any third party unless specifically directed by the Transfer Agent or allowed under one of the exceptions noted under the Gramm Leach Bliley Act.         10.Records   Fund Services shall keep records relating to the services to be performed regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. Fund Services agrees that all such performed by Fund Services hereunder are the property of the Fund and will be preserved, maintained, and made available in accordance with such applicable or their designee on and in accordance with its request. Fund Services agrees to provide any records necessary to the Fund to comply with the Fund’s disclosure controls and procedures and internal control over financial reporting adopted in accordance with the SOX Act. Without limiting the generality of the foregoing, Fund Services shall cooperate with the Transfer Agent and assist the Fund, as necessary, by providing information to enable the appropriate officers of the Fund to (i) execute any required certifications and (ii) provide a report of management on the Fund’s internal control over financial reporting (as defined in Sections 13a-15(f) or 15a-15(f) of the Exchange Act).     The Fund has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the Act, the Internal Revenue Code of 1986, the SOX Act, the USA Patriot Act of 2001 and the set forth in its registration statement. Fund Services’ services hereunder shall not relieve the Fund of its responsibilities for assuring such compliance and oversight responsibility with respect thereto.   The foregoing shall not affect Fund Services’ responsibilities for compliance and related matters delegated to Fund Services by the Fund as expressly provided herein. Fund Services shall comply with changes to all regulatory requirements affecting its services hereunder to the Fund and shall implement any necessary modifications to the services prior to the deadline imposed, or extensions authorized by, the regulatory or other governmental body having jurisdiction for such regulatory requirements.   12.Term of Agreement; Amendment   This Agreement shall become effective as of the date last written in the signature block and will continue in effect for a period of three (3) years. This Agreement may be terminated by either party upon giving ninety (90) days’ of this Agreement if such breach is not cured within fifteen (15) days of notice         13.Duties in the Event of Termination   Services’ duties or responsibilities hereunder is designated by the Fund by termination and, except in the case of a material breach by Fund Services, in which case all expenses shall be borne by Fund Services, at the expense of the and other data established or maintained by Fund Services under this Agreement in which Fund Services has maintained the same, the Fund shall pay any reasonable and documented expenses associated with transferring the data to such including provision for assistance from Fund Services’ personnel in the returned to the Fund.   14.Assignment   not be assignable by the Fund without the written consent of Fund Services, or by Fund Services without the written consent of the Fund accompanied by the authorization or approval of the Board of Directors.   15.Governing Law   New York, without regard to conflicts of law principles. To the extent that the conflict with the applicable provisions of the Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the Act or any rule or order of the SEC thereunder.   16.Services not Exclusive   Nothing in this Agreement shall limit or restrict Fund Services from providing services provided hereunder.   17.No Agency Relationship           18.Invalidity   Any provision of this Agreement which may be determined by competent authority   19.Notices   and confirmed received by facsimile transmission to the other party’s address set forth below:   Notice to Fund Services shall be sent to:   U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202   and notice to the Fund shall be sent to:   c/o Monroe Capital LLC 311 S. Wacker Drive, Suite 6400 Chicago, IL 60606 Telephone: (312) 523-2372 Fax: (312) 258-8350 Attention: Peter Gruszka, General Counsel & Managing Director PGruszka@monroecap.com and IR@monroecap.com   20.Multiple Originals     21.Entire Agreement   expressly referenced herein, constitutes the entire agreement of the parties arrangements and understandings, whether written or oral.           by a duly authorized officer on one or more counterparts as of the date last written below.   U.S. BANCORP FUND SERVICES, LLC         By:  /s/ Brett Melli       Name: Brett Melli       Title: Senior Vice President       Date: December 13, 2018       Name: Theodore M. Koenig         Title: President and CEO         Date: December 13, 2018           Exhibit A to the Transfer Agent Servicing Agreement   As Of Processing Policy   Fund Services will reimburse the Fund for any Net Material Loss that may exist on the Fund’s books and for which Fund Services is responsible, at the end of after netting losses against any gains, which impacts the Fund’s net asset value per share by at least ½ cent. Gains and losses will be reflected on the Fund’s a monthly basis. Fund Services will reset the as of ledger each calendar month not be carried forward to the next succeeding month. Fund Services will notify advisor may be held accountable. Fund Services will supply the Fund from time to time, as mutually agreed upon, reports summarizing the as-of transactions identified pursuant this policy.         Exhibit B to the Transfer Agent Servicing Agreement –   Investor Services/Stock Transfer Agency Fee Schedule at December 2018   Annual Service Charges to the Fund*   § Base Fee Per CUSIP (Annual Income Distributions) $20,000 per year § Base Fee Per CUSIP (Monthly/Quarterly Income Distributions)    $25,000 per year § Open Accounts $12.00 per open account § Closed Accounts $  3.00 per closed account   Private and Interval Funds*   § Base Fee Per CUSIP $40,000 per year (first 12 months $30,000 per year) § Open Accounts $13.00 per open account § Closed Accounts $  3.00 per closed account   CUSIP Setup   §CUSIP Fee – $5,000 per CUSIP   Miscellaneous Expenses All other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred: brokerage fees, telephone toll-free lines, inbound calls, mailing, sorting and postage, stationery, envelopes, service/data conversion, AML verification services, special reports, record retention, lost shareholder search, disaster recovery charges, Fed wire charges, shareholder/dealer print out (daily confirms, investor statements, tax, checks, and commissions), voice response (VRU) maintenance and development, data communication and implementation charges, return mail processing, travel, FATCA and other compliance mailings.   Additional Services Additional services not included above shall be mutually agreed upon and documented on the Additional Services fee schedule: Available but not included above are the following services- client Web data access, client dedicated line data access, programming charges, physical certificate processing, CUSIP setup and additional services mutually agreed upon.   In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).   *Subject to annual CPI increase – All Urban Consumers – U.S. City Average. Fees are calculated pro rata and billed monthly.   The monthly fee for an open account shall be charged in the month during which an account is opened through the month in which such account is closed. The month during which such account is closed.      

  Exhibit 10.8 Indemnification Agreement dated August 6, 2009   ZAP INDEMNIFICATION AGREEMENT   This Indemnification Agreement (this “Agreement”) is dated as of August 6, 2009 and is between ZAP, a California corporation (the “Company”), and Priscilla Lu   RECITALS   Company.             other amounts actually and reasonably incurred by Indemnitee in connection with the Proceeding if Indemnitee acted in good faith and in a manner Indemnitee           To the extent that Indemnitee has been successful on the merits in defense of any Proceeding referred to in Section 1 or 2 or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses actually and   is, by reason of his or her position as a director, officer, employee or agent of the Company, a witness in any action, suit or proceeding to which Indemnitee is not a party, he or she shall be indemnified to the extent permitted by applicable law against all costs and expenses actually and reasonably incurred   venture, trust or other enterprise. In the event of any change, after the date of a California corporation to indemnify a director, officer or other corporate agent beyond that currently permitted under this Agreement, the applicable Company’s obligations under this Agreement, subject to the restrictions expressly set forth herein or therein. In the event of any change in any applicable law, statute or rule that narrows the right of a California corporation to indemnify a directors, officer or other corporate agent, such changes, to the extent required by such law, statute or rule to be applied to this Agreement, shall have the effect on this Agreement and the parties’ rights and obligations hereunder as is required by such law, statute or rule.   6.   Partial Indemnification. If Indemnitee is entitled under this Agreement to fines, settlements or other amounts actually and reasonably incurred by Indemnitee in connection with any Proceeding, but not, however, for the total portion of such expenses, judgments, fines, settlements or other amounts to   7.   Exceptions. Notwithstanding any provision in this Agreement, the Company   - 2 -         law, (iii) required to be made under Section 10(e) or (iv) otherwise required by applicable law;   relieved of liability as set forth in the exception to Section 204(a)(10) of the California General Corporation Law or as to circumstances in which indemnity is expressly prohibited by Section 317 of the California General Corporation Law;   (d)   for an accounting or disgorgement of profits pursuant to Section 16(b) of   (e)   for any reimbursement of the Company by Indemnitee of any bonus or other arrangements); or   (f)   if otherwise prohibited by applicable law.   prohibited by law, all expenses incurred by Indemnitee in defending any Proceeding referenced in Section 1 or 2 prior to the final disposition of the upon receipt of a written request therefor. Advances shall be unsecured and by the Company as authorized hereby or by Section 317 of the California General Corporation Law. The advances to be made hereunder shall be made as soon as shall not be included with the invoice). This Section 8 shall not apply to any claim for which indemnity is not permitted under this Agreement or applicable law, but shall apply to any Proceeding referenced in Section 7(d) or 7(e) prior to a determination that Indemnitee is not entitled to be indemnified by the Company.     - 3 -     (a)   Notice. Indemnitee shall notify the Company in writing of any matter with expenses as soon as reasonably practicable following the receipt by Indemnitee hereunder or otherwise, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such     (c)   Selection of Counsel. The Company shall be entitled to participate in the Proceeding at its own expense. Indemnitee agrees to consult with the Company and to consider in good faith the advisability and appropriateness of joint representation in the event that either the Company or other indemnitees in addition to Indemnitee require representation in connection with any Proceeding.   reasonably appropriate.   (e)   Right to Settle Proceedings. The Company shall not settle any Proceeding (or any part thereof) without Indemnitee’s prior written consent.     (a)   Notice. To obtain indemnification, Indemnitee shall submit to the Company prejudicial.   indemnification pursuant to Section 10(a),  determination, if required by obtainable, by independent legal counsel in a written opinion; (iii) approval by the shareholders in accordance with Section 153 of the California General Corporation Law, with the shares owned by Indemnitee not being entitled to vote thereon; or (iv) the court in which the proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the Company. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 30 days after such determination. Indemnitee that   - 4 -   is reasonably available to Indemnitee and reasonably necessary to such   (c)   Disputes. Subject to Section 10(f), if (i) a determination is made that Indemnitee is not entitled to indemnification under this Agreement, (ii) no (iii) payment of indemnification pursuant to this Agreement is not made Sections 3 4 or 10(e) of this Agreement, within 30 days after receipt by the Company of a written request therefor, (iv) advancement of expenses is not or her entitlement to such indemnification or advancement of expenses. advancement of expenses, to be conducted by a single arbitrator pursuant to the   directors, any committee or subgroup of the board of directors, independent legal counsel or shareholders to have made a determination that indemnification independent legal counsel or shareholders that Indemnitee has not met the any judicial proceeding or arbitration commenced pursuant to Section 10(c)  the expenses, as the case may be.   (e)   Expenses Incurred to Enforce this Agreement. To the extent not prohibited by law, the Company shall indemnify Indemnitee against all expenses (including with any action to enforce or interpret any of the terms of this Agreement to the extent Indemnitee is successful in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable, but in any event no later than 30 days, after receipt by the Company of a written request therefor) advance such expenses to Indemnitee, subject to the provisions of Section 8.   (f)   Timing of Determination of Entitlement to Indemnification. Notwithstanding to indemnification shall be required to be made prior to the final disposition of the Proceeding.   11.   Primary Responsibility. The Company acknowledges that Indemnitee has Cathaya Funds and affiliates thereof (collectively,     - 5 -   the “Secondary Indemnitors”). The Company agrees that, as between the Company and the Secondary Indemnitors, the Company is primarily responsible for amounts required to be indemnified or advanced under the Company’s articles of incorporation or bylaws or this Agreement and any obligation of the Secondary Indemnitors to provide indemnification or advancement for the same amounts is secondary to those Company obligations. The Company waives any right of contribution or subrogation against the Secondary Indemnitors with respect to the liabilities for which the Company is primarily responsible under this Section 11. In the event of any payment by the Secondary Indemnitors of amounts Company’s articles of incorporation or bylaws or this Agreement, the Secondary rights of recovery of Indemnitee for indemnification or advancement of expenses under the Company’s articles of incorporation or bylaws or this Agreement or, to the extent such subrogation is unavailable and contribution is found to be the applicable remedy, shall have a right of contribution with respect to the amounts paid. The Secondary Indemnitors are express third-party beneficiaries of the terms of this Section 11.   12.   Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that Company from indemnifying its directors, officers and other corporate agents   incurred by Indemnitee, whether for expenses (including attorneys’ fees), judgments, fines or amounts paid or to be paid in settlement, in connection with Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding, and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions.       16.   Directors’ and Officers’ Liability Insurance. To the extent that the for directors, trustees, general partners, managing members, officers, employees, agents or fiduciaries of the Company or any other enterprise, position.   17.   Duration. This Agreement shall continue until and terminate upon the later of (i) ten years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, officer, employee or agent serving at     - 6 -   the request of the Company, as applicable; or (ii) one year after the final hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10(e) of this Agreement relating thereto.   18.   Services to the Company. This Agreement shall not be deemed an employment Indemnitee specifically acknowledges that any employment with the Company (or any of its subsidiaries or any other corporation, partnership, joint venture, trust or enterprise) is at will, and Indemnitee may be discharged at any time for any reason, with or without cause, with or without notice, except as may be between Indemnitee and the Company (or any of its subsidiaries or any other corporation, partnership, joint venture, trust or enterprise), any existing formal severance policies adopted by the Company’s board of directors or, with respect to service as a director or officer of the Company, the Company’s articles of incorporation or bylaws or the California General Corporation Law. No such document shall be subject to any oral modification thereof.   19.   Enforcement. The Company expressly confirms and agrees that it has entered   20.   Nonexclusivity. The rights of indemnification and to receive advancement rights to which Indemnitee may be entitled under the Company’s articles of disinterested directors, the California General Corporation Law or otherwise,     22.   Effectiveness of the Agreement. To the extent that the indemnification scope of the indemnification specifically provided for in the California General Company’s articles of incorporation duly authorize such additional rights of indemnification. In all other respects, the balance of this Agreement shall be effective as of the date set forth in the introductory sentence of this Agreement and may apply to acts or omissions of Indemnitee that occurred prior the Company, or was serving at the request of the Company   - 7 -   occurred.   23.   Construction of Certain Phrases.   (a)   For purposes of this Agreement, references to the “Company” shall also include, in addition to the resulting or surviving corporation, any constituent     24.   Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor by   25.   Notice. All notices and other communications required or permitted   or   95401 or at such other current address as the Company shall have furnished to Indemnitee.   confirmation of delivery.   - 8 -     26.   Choice of Law. This Agreement shall be governed by and its provisions within California.   27.   Consent to Jurisdiction. The Company and Indemnitee each hereby California.   28.   Amendment and Waiver. No amendment, modification, termination or   29.   Integration and Entire Agreement. This Agreement constitutes the entire     constitute an original.         - 9 -   the introductory sentence.       ZAP   By:   /s/ Steven Schneider   Name:   Steven Schneider Address:  501 4th Street         INDEMNITEE PRISCILLA LU /s/ Priscilla Lu (signature)        

Exhibit 99.1 For further information contact: Fern Lazar/David Carey Lazar Partners Ltd. 1-212-867-1768 flazar@lazarpartners.com/ dcarey@lazarpartners.com Inaugural International Colon Capsule Expert Meeting Developing Guidelines that Underscore Value of Colon Capsule Endoscopy Conference Endorsed by the European Society of Gastrointestinal Endoscopy and Sponsored by Given Imaging YOQNEAM, Israel, March 3, 2011– Given Imaging (NASDAQ: GIVN), a world leader in specialty GI products and pioneer of capsule endoscopy, today announced highlights from the inaugural International Colon Capsule Expert Meeting, which took place in Tarquinia, Italy, on February 17th and 18th, 2011. Twenty-eight leading gastroenterologists from Europe, Australia and Asia gathered to discuss the role of colon capsule endoscopy in clinical practice and to develop consensus guidelines around patient selection, procedure preparation, physician techniques and appropriate diagnostic work-up. The inaugural conference was endorsed by the European Society of Gastrointestinal Endoscopy (ESGE), sponsored by Given Imaging and co-chaired by Prof. Guido Costamagna, Rome, Prof. Jean Paul Galmiche, Nantes, and Prof. Horst Neuhaus, Düsseldorf, president of the ESGE Governing Board. “While physicians have examined the performance of colon capsule endoscopy in several large studies, how and when it is used in routine clinical practice is a topic that has not been broadly discussed,” said Prof. Guido Costamagna, MD, FACG, Director of Digestive Endoscopy Unit, Università Cattolica del Sacro Cuore (Catholic University), Policlinico "Agostino Gemelli", Rome, Italy, past president of the ESGE Governing Board, co-chair of the expert meeting.“We believe that the conclusions of this meeting will help to provide physicians with important practice guidelines around a standardized technique for the use of colon capsule endoscopy.” The aim of the event was to evaluate the state of the art on colon capsule endoscopy and to propose consensus guidelines on the most relevant issues for submission to a peer-reviewed journal. These guidelines would be the first published on colon capsule endoscopy using the new generation of the PillCam® COLON system and would address four key areas of colon capsule endoscopy use: indications and contraindications; preparation regimen; technical performance; and work-up after colon capsule endoscopy. Specific recommendations developed by the experts in attendance are focused on managing patients who have incomplete colonoscopy, inflammatory bowel disease (Crohn’s disease or ulcerative colitis) and irritable bowel syndrome. Several guidelines focus on clinical practice, addressing who can or should be involved in patient preparation, and reading capsule videos, as well as the importance of training and how to follow-up on positive findings. Within the next few months, ESGE members of the guideline scientific board will review the proposed guidelines for final approval and submission to Endoscopy, the ESGE-dedicated journal. About International Colon Capsule Expert Meeting The inaugural International Colon Capsule Expert Meeting assembled a panel of gastrointestinal experts from around the world to discuss and develop guidelines for colon capsule endoscopy in accordance with the methodology established by the European Society of Gastrointestinal Endoscopy. The event was held in Tarquinia, Italy on February 17 and 18, 2011, was announced and endorsed by the ESGE (www.ESGE.com) and sponsored by Given Imaging. About ESGE The European Society of Gastrointestinal Endoscopy (ESGE) represents national societies of endoscopy in Europe, the Mediterranean and North Africa. One society from any of these countries is eligible for membership, and one representative from each national member society may vote in the General Assembly which meets annually at the time of the United European Gastroenterology Week (UEGW). Currently the ESGE is comprised of 44 gastrointestinal societies (ESGE National Member Societies). As of January 1, 2007 the ESGE is also open to individual members. About Given Imaging Ltd. Since 2001, Given Imaging has advanced gastrointestinal visualization by developing innovative, patient-friendly tools based on its PillCam® Platform. PillCam® capsule endoscopy uses cutting-edge, wireless technology and advanced software to provide physicians with natural images of the small intestine via PillCam® SB, the esophagus through PillCam® ESO and the colon with PillCam® COLON [PillCam® COLON is not cleared for use in the USA]. The PillCam® capsules are miniature video cameras that patients ingest. Given Imaging's other capsule products include Agile™ patency capsule, to verify intestinal patency, and Bravo®, the only wireless, catheter-free, 48-hour pH test commercially available for pH testing to assess gastroesophageal reflux disease (GERD). In April, 2010, Given Imaging acquired Sierra Scientific Instruments, the leading provider of specialty GI diagnostic solutions and pioneer of high-resolution manometry for assessing gastrointestinal motility. Sierra Scientific is now a wholly-owned subsidiary of Given Imaging. Given Imaging's headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel, with operating subsidiaries in the United States, Germany, France, Japan, Australia and Singapore. For more information, please visit www.givenimaging.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "will," "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual events, results, performance, circumstances or achievements of the Company to be materially different from any future events, results, performance, circumstances or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) our ability to develop and bring to market new products, (2) our ability to successfully complete any necessary or required clinical studies with our products, (3) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (4) our success in implementing our sales, marketing and manufacturing plans, (5) the level of adoption of our products by medical practitioners, (6) the emergence of other products that may make our products obsolete, (7) lack of an appropriate bowel preparation materials to be used with our PillCam COLON capsule, (8) protection and validity of patents and other intellectual property rights, (9) the impact of currency exchange rates, (10) the effect of competition by other companies, (11) the outcome of significant litigation, (12) the availability of reimbursement or other forms of funding for our products from government and commercial payors, (13) quarterly variations in operating results, (14) the possibility of armed conflict or civil or military unrest in Israel, (15) the impact of global economic conditions, (16) our ability to successfully integrate acquired businesses, (17) changes and reforms in applicable healthcare laws and regulations, and (18) other risks and factors disclosed in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, risks and factors identified under such headings as "Risk Factors," "Cautionary Language Regarding Forward-Looking Statements" and "Operating Results and Financial Review and Prospects" in the Company's Annual Report on Form 20-F for the year ended December 31, 2009. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for the Company's ongoing obligations to disclose material information under the applicable securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. 2

Exhibit 10.33 UNSECURED PROMISSORY NOTE U.S. $2,200,000 Issuance Date: May 5, 2011 FOR VALUE RECEIVED, the undersigned VISTAGEN THERAPEUTICS, INC. a California corporation ("Maker"), hereby promises to pay to MORRISON & FOERSTER LLP ("Payee") at 755 Page Mill Road, Palo Alto, CA 94304, or at such other place or to such other party as Payee may from time to time designate, the principal sum of TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000.00), plus any amounts added to the Note in accordance to Section 7(a) below, plus interest from the date hereof, in lawful money of the United States of America and in immediately available funds on the terms and subject to the conditions set forth below. This Note is issued by Maker to Payee in full satisfaction of certain invoices for services rendered by Payee on behalf of Maker through March 31, 2011, which are listed on Schedule A attached hereto and in connection with the cancellation of Maker's unsecured promissory note to Payee issued March 15, 2010. 1.Maturity Date. Unless sooner paid in accordance with the terms hereof, the entire unpaid principal amount and all accrued interest shall become fully due and payable on the earliest of (i) March 31, 2016, (ii) the consummation of a Change of Control (as defined below) or (iii) the acceleration of the maturity of this Note by the Payee upon the occurrence and during the continuance of an Event of Default (such earlier date, the "Maturity Date"). The entire amount of unpaid principal and accrued but unpaid interest, if any, shall be due and payable on the Maturity Date. For purposes of this Note, "Change of Control" shall mean (A) the acquisition of Maker by another entity by means of any reorganization, merger or consolidation (but excluding any reorganization, merger or consolidation effected exclusively for the purpose of changing the domicile of Maker), (B) any transaction or series of related transactions in which Maker's shareholders of record as constituted immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions (by virtue of securities issued in such transaction or series of related transactions) fail to hold at least 50% of the voting power of the resulting or surviving corporation following such transaction or series of related transactions, or (C) a sale of all or substantially all of the assets of Maker by means of a transaction or series of related transactions. 2.Interest. Interest on the outstanding balance of this Note shall be computed from the Issuance Date at the per annum rate of seven and one-half percent (7.5%) (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less, at the highest rate of interest then permitted under applicable law, and shall continue to accrue until paid in full; provided, however, upon the occurrence of an Event of Default (as defined in Section 5 below), the outstanding balance of this Note shall accrue interest at the per annum rate of ten percent (10%) (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less, at the highest rate permitted under applicable law, and shall continue to accrue until paid in full. 3.Payment. (a)Form of Payment. All payments of interest and principal shall be in lawful money of the United States of America to Payee by wire transfer. All payments shall be applied first to accrued interest, and thereafter to principal. -1- (b)Principal and Interest Payments. Beginning on the Issuance Date, and on or before the last business day of each calendar month thereafter, Maker shall pay Payee Ten Thousand Dollars ($10,000) each month by wire transfer ("Monthly Payment") until June 1, 2011. Thereafter, the Monthly Payment shall increase to Fifteen Thousand Dollars ($15,000) per month through March 31, 2012. Beginning April 1, 2012 and continuing through March 31, 2013, the Monthly Payment shall increase to Twenty-Five Thousand Dollars per month ($25,000). From April 1, 2013 to the first to occur of March 31, 2016 and payment in full, the Monthly Payment shall be Fifty-Thousand Dollars ($50,000). In addition to the foregoing, within three (3) business days of the date of this Note, Maker shall pay Payee a lump sum equal to One Hundred Thousand Dollars ($100,000). Notwithstanding the foregoing, beginning on January 1, 2012 and continuing to the Maturity Date, Maker shall make interim cash payments to Payee equal to five percent (5.0%) of the net proceeds of any of equity financing by Maker during the term of this Note. All amounts paid under this Note shall be fully credited against the outstanding Note balance at the time each payment is made. If any amount remains unpaid as of March 31, 2016, such remaining amount shall be paid in full by the Maturity Date. 4.Prepayment. Maker reserves the right to prepay the outstanding balance under this Note in full or in part at any time during the term of this Note without notice and without premium or penalty. If Maker prepays the entire amount of unpaid principal and accrued but unpaid interest prior to December 31, 2012, the balance of principal and interest outstanding at the time of such prepayment shall be reduced by ten percent (10%), provided, however, that such prepayment discount shall not exceed one hundred thousand dollars ($100,000). 5.Events of Default; Remedies. Any one of the following occurrences shall constitute an "Event of Default" under this Note: (a)Maker fails to make a payment of any installment of principal or interest on this Note when and as the same becomes due and payable in accordance with the terms hereof, whether upon the Maturity Date or upon any date upon which a Monthly Payment is due or by acceleration or otherwise; (b)Maker fails to timely pay on any invoices issued after the closing of the Private Placement (as defined below) pursuant to Section 7(b); (c)Maker fails to perform any obligation under this Note; (d)Maker or any of its Subsidiaries shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up or dissolution), (ii) suspend its operations other than in the ordinary course of business or (iii) take any action to authorize any of the actions or events set forth above in this Section 5(d); (e)Any judgments or arbitration awards shall be entered against Maker or any of its Subsidiaries, or Maker or any of its Subsidiaries shall enter into any settlement agreements with respect to any litigation or arbitration, in the amount of One Hundred Thousand Dollars ($100,000) or more, and such judgment, award or agreement has not been satisfied, vacated, discharged or stayed or bonded pending appeal within thirty (30) days after the entry thereof; or Maker or any of its Subsidiaries shall be enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; -2- (f)Maker becomes insolvent or bankrupt, commits any act of bankruptcy, generally fails to pay its debts as they become due, becomes the subject of any proceedings or action of any regulatory agency or any court relating to insolvency, or makes an assignment for the benefit of its creditors, or enters into any agreement for the composition, extension, or readjustment of all or substantially all of his obligations; (g)The holder of any indebtedness of Maker accelerates any payment of any amount or amounts of principal or interest on any such indebtedness (the "Indebtedness") (other than with respect to this Note) prior to its stated maturity or payment date, the aggregate principal amount of which Indebtedness is in excess of $100,000, whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration has not been stayed, rescinded or annulled within fifteen (15) business days of such acceleration. For purposes of this Section 5, "Subsidiaries" shall mean any (i) Person of which more than fifty percent (50%) of the voting stock or other equity interest is owned directly or indirectly by any other Person or one or more of the other Subsidiaries of such other Person or a combination thereof, or (ii) any Person included in the financial statements of another Person on a consolidated basis. "Person" shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. 6.Consequences of Events of Default. Upon the occurrence of any Event of Default hereunder, Payee shall send a written notice of such default to Maker declaring the nature of the Event of Default. Maker shall have thirty (30) business days to cure any Event of Default, if such Event of Default may be cured within such time. If the Event of Default is not so cured, then Maker shall immediately (and in no event later than two (2) days thereafter) pay the entire outstanding balance under this Note to Payee. Failure to pay in full when this Note is due or upon the occurrence of an Event of Default shall result in a reinstatement of any of Payee's prior invoices that were forgiven upon execution of this Note and not otherwise paid under this Note. Maker agrees to pay Payee all out-of-pocket costs and expenses incurred by Payee in an effort to collect indebtedness under this Note, including attorneys' fees and to pay interest at the post-default interest rate as provided in Section 2 of this Note. 7.Fees for Future Services. (a)Amounts payable for services rendered by Payee on behalf of Maker from April 1,2011 through the closing of Maker's next private placement of equity securities with aggregate gross proceeds to Maker of at least Three Million Dollars ($3,000,000) (the "Private Placement") shall automatically be added to the outstanding principal balance of this Note upon delivery of an invoice for such services by Payee to Maker. Maker hereby authorizes Payee, without any further action by Maker, to update Schedule A to reflect such additional invoices for services rendered prior to the closing of the Private Placement and hereby agree to pay such amounts in accordance with the terms and conditions set forth in this Note. (b)For services rendered by Payee on behalf of Maker after the closing of the Private Placement, payment shall be made within thirty (30) days of the date Maker receives the invoice for such services from Payee. Failure to timely pay any invoices issued by Payee after the closing of the Private Placement shall be deemed an Event of Default under this Note. -3- 8.Independent Counsel; Terms of Transaction. Maker acknowledges and agrees (i) that the terms of this Note are fair and reasonable to Maker, (ii) that Payee has advised Maker of all terms of the transaction in writing and Maker has been urged to, and given the opportunity to, seek the advice of an independent counsel of Maker's choice, (iii) that Maker has had a reasonable opportunity to seek such advice from such independent counsel and (iv) that Maker consents to the terms of this Note and the actions contemplated hereby. 9.Miscellaneous. (a)Lost, Stolen, Destroyed or Mutilated Notes. In case any Note shall be mutilated, lost, stolen or destroyed, Maker shall have received an executed lost note affidavit attesting to the same, Maker shall issue a new Note of like date, tenor and denomination and deliver the same in exchange and substitution for and upon surrender and cancellation of any mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt of evidence satisfactory to Maker of the loss, theft or destruction of such Note. (b)Amendment and Waiver. Except as provided in Section 7(a) hereof, any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Maker and Payee. Any amendment or waiver effected in accordance with this Section shall be binding upon Maker and Payee. (c)Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Address of Payee: Morrison & Foerster LLP 755 Page Mill Road Palo Alto, CA 94304 Attention: Michael C. Phillips Tel. No.: (650) 813-5620 Fax No.: (650) 251-3844 Address of Maker: VistaGen Therapeutics, Inc. 384 Oyster Point Blvd., Suite #8 South San Francisco, CA 94080 Attention: Chief Executive Officer Tel. No.: (650) 244-9990 Fax No.: (650) 244-9991 (d)Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. (e)Remedies Cumulative; Failure or Indulgence Not a Waiver. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note. No failure or delay on the part of Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. -4- (f)Payments. Whenever any payment of cash is to be made by Maker to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America via wire transfer of immediately available funds to the account designated by Payee. (g)Waiver. Maker waives diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayment of this Note. No extension of time for the payment of this Note shall affect the original liability under this Note of Maker. The pleading of any statute of limitations as a defense to any demand against Maker is expressly waived by Maker to the full extent permitted by law. (h)Setoff. The obligation to pay Payee shall be absolute and unconditional and the rights of Payee shall not be subject to any defense, setoff, counterclaim or recoupment or by reason of any indebtedness or liability at any time owing by Payee to Maker. (i)Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. (j)Successors and Assigns. This Note shall inure to the benefit of Payee and its successors and assigns. The obligations of Maker hereunder shall not be assignable. (k)Excessive Interest. Notwithstanding any other provision herein to the contrary, this Note is hereby expressly limited so that the interest rate charged hereunder shall at no time exceed the maximum rate permitted by applicable law. If, for any circumstance whatsoever, the interest rate charged exceeds the maximum rate permitted by applicable law, the interest rate shall be reduced to the maximum rate permitted, and if Payee shall have received an amount that would cause the interest rate charged to be in excess of the maximum rate permitted, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal, such excess shall be refunded to Maker. [Signature page to follow] EST WITNESS WHEREOF, the undersigned has executed and delivered this Note as of the date first above written. "MAKER"

Exhibit 10.1 Transition Agreement This Transition Agreement made as of this 21st day of May 2007 (the “Effective Date”) by and between NitroMed, Inc. (“NitroMed” or “Company”) and L. Gordon Letts, Ph.D. (“Dr. Letts”). WHEREAS, Dr. Letts has served the Company as its Chief Scientific Officer and Senior Vice President, Research and Development since May 1997, and also served the Company as its Vice President, Research from December 1993 to May 1997; WHEREAS, Dr. Letts seeks to transition from the Company in order to pursue other opportunities unrelated to the Company’s business and operations; and WHEREAS, the Company requires Dr. Letts’ continued services and input for a period of time to allow for the timely completion of his current assignments, to allow for an appropriate transition of duties, and for him to assist with certain corporate initiatives. 1.     RESIGNATION FROM CURRENT POSITIONS AND CONTINUED PART-TIME EMPLOYMENT.  DR. LETTS WILL RESIGN FROM HIS CURRENT POSITIONS AND POSTINGS WITH THE COMPANY EFFECTIVE MAY 21, 2007 (THE “EFFECTIVE DATE”).  THEREAFTER, HE WILL CONTINUE FOR A PERIOD OF TWELVE (12) MONTHS AS AN AT-WILL, NON-EXECUTIVE, PART-TIME EMPLOYEE OF THE COMPANY IN THE CAPACITY OF SCIENTIFIC AND TECHNOLOGY ADVISOR REPORTING TO THE CHIEF EXECUTIVE OFFICER OF THE COMPANY AND HE WILL BE ASSIGNED CERTAIN STRATEGIC PROJECTS (THE “PART-TIME PERIOD”).  AS A PART-TIME, NON-EXECUTIVE EMPLOYEE, HE WILL RECEIVE AN ANNUALIZED SALARY OF $300,000.  AS A PART-TIME EMPLOYEE, DR. LETTS WILL BE ELIGIBLE TO RECEIVE COMPANY FRINGE BENEFITS IN ACCORDANCE WITH APPLICABLE COMPANY POLICIES, PRACTICES, AND PLAN DOCUMENTS.  AS OF THE EFFECTIVE DATE, DR. LETTS WILL NO LONGER BE AN EXECUTIVE OFFICER OF THE COMPANY AND WILL NO LONGER SERVE AS A MEMBER OF THE EXECUTIVE TEAM.  IN ADDITION, DR. LETTS WILL NOT BE ELIGIBLE TO PARTICIPATE IN THE COMPANY’S ANNUAL INCENTIVE PROGRAM AFTER THE EFFECTIVE DATE NOR SHALL HE BE ELIGIBLE TO PARTICIPATE IN THE COMPANY’S EXECUTIVE SEVERANCE BENEFIT PLAN.  AFTER THE EFFECTIVE DATE, DR. LETTS SHALL BE FREE TO PURSUE SUCH OTHER OPPORTUNITIES AS HE DESIRES, PROVIDED THAT SUCH ACTIVITIES DO NOT (A) COMPETE OR INTERFERE WITH THE COMPANY’S BUSINESS AND/OR (B) INTERFERE WITH DR. LETTS’ OBLIGATIONS PURSUANT TO THIS TRANSITION AGREEMENT AND/OR THE OTHER DOCUMENTS REFERENCED HEREIN (INCLUDING, WITHOUT LIMITATION, THE INVENTION AND NON-DISCLOSURE AGREEMENT). 2.     SEVERANCE BENEFITS.  IF THE PART-TIME PERIOD IS TERMINATED BY THE COMPANY WITHOUT “CAUSE” AS DEFINED HEREIN (EXCLUDING A TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL OF THE COMPANY, WHICH SHALL BE GOVERNED BY THE RETENTION AGREEMENT REFERENCED IN PARAGRAPH 3), AND PROVIDED THAT UPON THE CESSATION OF THE PART-TIME PERIOD (WHETHER BY EARLY TERMINATION BY THE COMPANY WITHOUT CAUSE OR IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT IN THE NORMAL COURSE) DR. LETTS EXECUTES AND DOES NOT REVOKE THE RELEASE OF CLAIMS ATTACHED HERETO AS EXHIBIT A, DR. LETTS SHALL BE ENTITLED TO RECEIVE: (I) IN THE CASE OF AN EARLY TERMINATION OF THE PART-TIME PERIOD BY THE COMPANY WITHOUT CAUSE, (X) THAT PORTION OF HIS ANNUAL SALARY   ($300,000), LESS APPLICABLE TAXES AND WITHHOLDING, THAT HAS NOT ALREADY BEEN PAID DURING THE PART-TIME PERIOD, AND (Y) THE SALARY AND COBRA BENEFIT DEFINED AND SET FORTH IN PARAGRAPH 2(II) (PROVIDED, HOWEVER, THAT IN NO CASE SHALL SUCH COBRA BENEFIT CONTINUE FOR A PERIOD LONGER THAN EIGHTEEN (18) MONTHS), AND (II) IN THE CASE OF THE CONCLUSION OF THE PART-TIME PERIOD IN THE NORMAL COURSE (I.E., TWELVE (12) MONTHS AFTER THE EFFECTIVE DATE), (A) CONTINUATION OF HIS THEN-CURRENT ANNUAL BASE SALARY ($300,000) FOR A PERIOD OF TWELVE (12) MONTHS AND (B) CONTRIBUTIONS TO THE COST OF COBRA (CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT) COVERAGE (THE “COBRA BENEFIT”), PROVIDED THAT IN THE CASE OF BOTH CLAUSE (A) AND CLAUSE (B) OF THIS PARAGRAPH 2(II), THE SALARY CONTINUATION AND COBRA BENEFIT SHALL ONLY CONTINUE FOR A PERIOD OF TWELVE (12) MONTHS FROM THE CONCLUSION OF THE PART-TIME PERIOD IN THE NORMAL COURSE.  FOR PURPOSES OF THIS AGREEMENT, “CAUSE” SHALL BE DETERMINED BY THE COMPANY IN ITS SOLE DISCRETION, AND CAN INCLUDE, BUT IS NOT LIMITED TO, (I) ANY ACT OR OMISSION BY DR. LETTS THAT MAY HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY’S BUSINESS OR ON HIS ABILITY TO PERFORM SERVICES FOR THE COMPANY, INCLUDING, WITHOUT LIMITATION, THE COMMISSION OF ANY CRIME (OTHER THAN ORDINARY TRAFFIC VIOLATIONS); OR (II) ANY WILLFUL MISCONDUCT OR GROSS NEGLECT OF DUTIES BY DR. LETTS IN CONNECTION WITH THE BUSINESS OR AFFAIRS OF THE COMPANY, INCLUDING, BUT NOT LIMITED TO, MISAPPROPRIATION OF COMPANY ASSETS, OR FAILURE TO PERFORM REASONABLE ASSIGNED DUTIES AS SCIENTIFIC AND TECHNOLOGY ADVISOR. 3.     RETENTION AGREEMENT.  DURING THE PART-TIME PERIOD, DR. LETTS WILL BE ELIGIBLE TO RECEIVE THE CHANGE OF CONTROL BENEFITS IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT EXECUTED BY HIM AND THE COMPANY DATED APRIL 5, 2006 (THE “RETENTION AGREEMENT”). 4.     TERMINATION OF BENEFITS.  EXCEPT WITH RESPECT TO THE COBRA BENEFIT, ALL BENEFITS, INCLUDING LIFE INSURANCE AND LONG-TERM DISABILITY, WILL END UPON THE TERMINATION OF THE PART-TIME PERIOD. 5.     OPTIONS VESTING AND EXERCISE PERIODS.   SIMULTANEOUSLY WITH THE EXECUTION OF THIS TRANSITION AGREEMENT, EACH OF DR. LETTS’ OUTSTANDING OPTION AGREEMENTS, ALL OF WHICH ARE LISTED ON EXHIBIT B HERETO (COLLECTIVELY, THE “AWARDS”), WILL BE MODIFIED TO PROVIDE THAT (A) UPON THE CONCLUSION OF THE PART-TIME PERIOD IN THE NORMAL COURSE (I.E., TWELVE (12) MONTHS AFTER THE EFFECTIVE DATE), THE PERIOD OF EXERCISABILITY OF THE VESTED PORTION OF SUCH OPTIONS SHALL BE TWO YEARS FOLLOWING SUCH CESSATION OF EMPLOYMENT AND (B) IN THE CASE OF AN EARLY TERMINATION OF THE PART-TIME PERIOD BY THE COMPANY WITHOUT CAUSE (EXCLUDING A TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL OF THE COMPANY, WHICH SHALL BE GOVERNED BY THE RETENTION AGREEMENT REFERENCED IN PARAGRAPH 3), (I) ANY OPTIONS COVERED BY THE AWARDS THAT WOULD HAVE VESTED DURING THE PART-TIME PERIOD BUT FOR THE EARLY TERMINATION OF THE PART-TIME PERIOD WILL VEST IMMEDIATELY AS OF THE DATE OF SUCH EARLY TERMINATION AND (II) THE PERIOD OF EXERCISABILITY OF THE VESTED PORTION OF SUCH OPTIONS SHALL EQUAL THE SUM OF (X) TWO YEARS AND (Y) THE NUMBER OF DAYS REMAINING IN THE PART-TIME PERIOD FOLLOWING THE DATE OF THE EARLY TERMINATION OF THE PART-TIME PERIOD.  ALL OTHER TERMS OF THE AWARDS SHALL REMAIN IN FULL FORCE AND EFFECT.  WHILE EMPLOYED, DR. LETTS MAY BE ELIGIBLE TO RECEIVE SUCH FUTURE STOCK OPTIONS GRANTS AS THE BOARD OF DIRECTORS OF THE COMPANY SHALL FROM TIME TO TIME DEEM APPROPRIATE AND HAVING SUCH TERMS AND CONDITIONS AS ARE DETERMINED SOLELY BY THE COMPANY’S BOARD OF DIRECTORS. 6.     SALE OF PROPERTY.  IF DURING THE PART-TIME PERIOD, THE COMPANY ENTERS INTO A DEFINITIVE AND BINDING AGREEMENT WITH A THIRD PARTY APPROVED BY THE COMPANY’S BOARD OF 2   DIRECTORS RELATING TO A TRANSACTION NEGOTIATED BY DR. LETTS EXCLUSIVELY FOR THE SALE, LICENSING OR CO-PROMOTION OF ANY INTELLECTUAL PROPERTY RIGHTS OF THE COMPANY (EXCLUDING BIDIL, BIDIL XR, NMI 3377 AND ANY AND ALL COMBINATION PRODUCTS THEREOF), THE COMPANY WILL PAY DR. LETTS AN AMOUNT EQUAL TO 1.5% OF ANY UPFRONT CASH PAYMENT(S) (I.E., NOT INCLUDING ANY MILESTONE, ROYALTY, EARN-OUT PAYMENTS OR ANY OTHER PAYMENTS NOT RECEIVED UPFRONT) MADE BY SUCH THIRD PARTY TO THE COMPANY LESS APPLICABLE TAXES AND WITHHOLDINGS, UPON EXECUTION OF A DEFINITIVE AND BINDING AGREEMENT PERTAINING TO SUCH SALE, LICENSE OR CO-PROMOTION ARRANGEMENT; PROVIDED, HOWEVER, THAT THE TERMS OF THIS PARAGRAPH SHALL NOT APPLY TO (A) ANY TRANSACTION (I) WHICH INVOLVES, AS PART OF THE TRANSACTION, THE SALE, LICENSING OR CO-PROMOTION OF BIDIL, BIDIL XR, NMI 3377 AND ANY AND ALL COMBINATION PRODUCTS THEREOF AND (II) THE DISCUSSION AND/OR NEGOTIATION OF WHICH BEGAN PRIOR TO THE EFFECTIVE DATE OR (B) A MERGER OF THE COMPANY OR THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS.  IN THE CASE OF CLAUSE (A) OF THIS PARAGRAPH 6, IN THE EVENT SUCH TRANSACTION OCCURS DURING THE PART-TIME PERIOD, THE COMPANY AND DR. LETTS WILL NEGOTIATE IN GOOD FAITH TO AGREE ON A REASONABLE SUM TO BE PAID TO DR. LETTS. 7.     SECTION 409A.  IT IS INTENDED THAT ALL PAYMENTS UNDER THIS TRANSITION AGREEMENT COME WITHIN EXCEPTIONS TO SECTION 409A OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“SECTION 409A”).  THE TRANSITION AGREEMENT AND ALL RELATED DOCUMENTS SHALL BE INTERPRETED AND ADMINISTERED IN ACCORDANCE WITH THAT INTENTION.  HOWEVER, IF ANY AMOUNT PAYABLE UNDER THIS TRANSITION AGREEMENT IS DETERMINED TO BE SUBJECT TO SECTION 409A THEN SUCH PAYMENTS SHALL BE ADMINISTERED IN ACCORDANCE WITH SECTION 409A; PROVIDED THAT THE COMPANY SHALL NOT BE LIABLE FOR ANY FAILURES UNDER THIS SECTION 5 THAT RESULT IN THE PAYMENT OF ANY TAXES OR OTHER AMOUNTS DUE UNDER THE TERMS OF SECTION 409A.  TO THE EXTENT ANY AMOUNT SUBJECT TO SECTION 409A IS TO BE PAID OR PROVIDED TO DR. LETTS IN CONNECTION WITH A SEPARATION FROM SERVICE AT A TIME WHEN HE IS CONSIDERED A SPECIFIED EMPLOYEE WITHIN THE MEANING OF SECTION 409A THEN SUCH PAYMENT SHALL NOT BE MADE UNTIL THE DATE THAT IS SIX MONTHS AND ONE DAY FOLLOWING SUCH SEPARATION FROM SERVICE, OR IN A LUMP SUM UPON HIS EARLIER DEATH. 8.     INVENTION AND NON-DISCLOSURE OBLIGATIONS.  IN CONSIDERATION OF THE BENEFITS PROVIDED HEREIN, DR. LETTS WILL EXECUTE THE COMPANY’S INVENTION AND NON-DISCLOSURE AGREEMENT, ATTACHED HERETO AS EXHIBIT C, PURSUANT TO WHICH DR. LETTS SHALL AGREE, AMONG OTHER THINGS, TO KEEP CONFIDENTIAL AND NOT DISCLOSE ANY AND ALL NON-PUBLIC INFORMATION CONCERNING THE COMPANY THAT HE ACQUIRED DURING THE COURSE OF HIS EMPLOYMENT WITH THE COMPANY, INCLUDING, BUT NOT LIMITED TO, ANY NON-PUBLIC INFORMATION CONCERNING THE COMPANY’S BUSINESS AFFAIRS, BUSINESS PROSPECTS AND FINANCIAL CONDITION. 9.     RETURN OF COMPANY PROPERTY.  UPON THE TERMINATION OF THE PART-TIME PERIOD, DR. LETTS WILL RETURN TO THE COMPANY ALL KEYS, FILES, RECORDS (AND COPIES THEREOF), EQUIPMENT (INCLUDING, BUT NOT LIMITED TO, SOFTWARE AND PRINTERS, WIRELESS HANDHELD DEVICES, CELLULAR PHONES, PAGERS, ETC.), COMPANY IDENTIFICATION, AND ANY OTHER COMPANY-OWNED PROPERTY IN HIS POSSESSION OR CONTROL, AND THAT HE WILL LEAVE INTACT ALL ELECTRONIC COMPANY DOCUMENTS, INCLUDING, BUT NOT LIMITED TO, THOSE WHICH HE DEVELOPED OR HELPED DEVELOP DURING HIS EMPLOYMENT.  DR. LETTS AGREES THAT IN THE EVENT THAT HE DISCOVERS ANY OTHER COMPANY OR PROPRIETARY MATERIALS IN HIS POSSESSION AFTER THE SEPARATION FROM EMPLOYMENT, HE WILL IMMEDIATELY RETURN SUCH MATERIALS TO THE COMPANY’S HUMAN RESOURCES DEPARTMENT.  DR. LETTS FURTHER CONFIRMS THAT HE WILL HAVE CANCELLED ALL ACCOUNTS FOR HIS BENEFIT, IF ANY, IN THE 3   COMPANY’S NAME, INCLUDING, BUT NOT LIMITED TO, CREDIT CARDS, TELEPHONE CHARGE CARDS, CELLULAR PHONE AND/OR PAGER ACCOUNTS AND COMPUTER ACCOUNTS. 10.   RELEASE OF CLAIMS.  IN CONSIDERATION OF THE BENEFITS PROVIDED FOR IN THIS TRANSITION AGREEMENT, WHICH DR. LETTS ACKNOWLEDGES HE WOULD NOT OTHERWISE BE ENTITLED TO RECEIVE, DR. LETTS HEREBY FULLY, FOREVER, IRREVOCABLY AND UNCONDITIONALLY RELEASES, REMISES AND DISCHARGES THE COMPANY, ITS OFFICERS, (INCLUDING ATTORNEYS’ FEES AND COSTS), OF EVERY KIND AND NATURE WHICH HE EVER HAD OR NOW HAS AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS ARISING OUT OF HIS EMPLOYMENT WITH AND/OR SEPARATION FROM THE COMPANY, INCLUDING, BUT NOT LIMITED TO, ALL EMPLOYMENT DISCRIMINATION CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, 42 U.S.C. § 2000E ET SEQ., THE AGE DISCRIMINATION IN EMPLOYMENT ACT, 29 U.S.C. § 621 ET SEQ., THE AMERICANS WITH DISABILITIES ACT OF 1990, 42 U.S.C. §12101 ET SEQ., THE FAMILY AND MEDICAL LEAVE ACT, 29 U.S.C. § 2601 ET SEQ., THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT (“WARN”), 29 U.S.C. § 2101 ET SEQ., SECTION 806 OF THE CORPORATE FRAUD ACCOUNTABILITY ACT OF 2002, 18 U.S.C. § 1514(A), THE REHABILITATION ACT OF 1973, 29 U.S.C. § 701 ET SEQ., EXECUTIVE ORDER 11216, EXECUTIVE ORDER 11141, ALL AS AMENDED; ALL CLAIMS ARISING OUT OF THE FAIR CREDIT REPORTING ACT, 15 U.S.C. §1681 ET SEQ., THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (“ERISA”), 29 U.S.C. §1001 ET SEQ., THE MASSACHUSETTS FAIR EMPLOYMENT PRACTICES ACT., M.G.L. C. 151B, § 1 ET SEQ., THE MASSACHUSETTS CIVIL RIGHTS ACT, M.G.L. C. 12, §§ 11H AND 11I, THE MASSACHUSETTS EQUAL RIGHTS ACT, M.G.L. C. 93, § 102 AND M.G.L. C. 214, § 1C, THE MASSACHUSETTS LABOR AND INDUSTRIES ACT, M.G.L. C. 149, § 1 ET SEQ., THE MASSACHUSETTS PRIVACY ACT, M.G.L. C. 214, § 1B, AND THE MASSACHUSETTS MATERNITY LEAVE ACT , M.G.L. C. 149, § 105(D), ALL AS AMENDED; ALL COMMON LAW CLAIMS INCLUDING, BUT NOT LIMITED TO, ACTIONS IN TORT, DEFAMATION AND BREACH OF CONTRACT; ALL CLAIMS TO ANY NON-VESTED OWNERSHIP INTEREST IN THE COMPANY, CONTRACTUAL OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, CLAIMS TO STOCK OR STOCK OPTIONS; AND ANY CLAIM OR DAMAGE ARISING OUT OF HIS EMPLOYMENT WITH OR SEPARATION FROM THE COMPANY (INCLUDING ANY CLAIM FOR RETALIATION) UNDER ANY COMMON LAW THEORY OR ANY FEDERAL, STATE OR LOCAL STATUTE OR ORDINANCE NOT EXPRESSLY REFERENCED ABOVE; PROVIDED, HOWEVER, THAT NOTHING IN THIS TRANSITION AGREEMENT PREVENTS HIM FROM FILING, COOPERATING WITH, OR PARTICIPATING IN ANY PROCEEDING BEFORE THE EEOC OR A STATE FAIR EMPLOYMENT PRACTICES AGENCY (EXCEPT THAT HE ACKNOWLEDGES THAT HE MAY NOT BE ABLE TO RECOVER ANY MONETARY BENEFITS IN CONNECTION WITH ANY SUCH CLAIM, CHARGE OR PROCEEDING). 11.   ACKNOWLEDGMENT.  DR. LETTS ACKNOWLEDGES THAT HE HAS BEEN GIVEN AT LEAST TWENTY-ONE (21) DAYS TO CONSIDER THIS TRANSITION AGREEMENT AND THE RELEASE OF CLAIMS AT EXHIBIT A, AND THAT THE COMPANY ADVISES HIM TO CONSULT WITH AN ATTORNEY OF HIS OWN CHOOSING PRIOR TO SIGNING THIS TRANSITION AGREEMENT AND EXHIBIT A.  DR. LETTS IS ADVISED THAT HE MAY REVOKE HIS AGREEMENT FOR A PERIOD OF SEVEN (7) DAYS AFTER HE SIGNS IT, AND THE RELEASE PROVIDED ABOVE SHALL NOT BE EFFECTIVE OR ENFORCEABLE UNTIL THE EXPIRATION OF SUCH SEVEN (7) DAY REVOCATION PERIOD.  DR. LETTS IS ADVISED AND HE UNDERSTANDS AND AGREES THAT BY ENTERING INTO THIS AGREEMENT AND SIGNING IT AND THE RELEASES OF CLAIMS HE IS WAIVING ANY AND ALL RIGHTS OR CLAIMS HE MIGHT HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED BY 4   THE OLDER WORKERS BENEFIT PROTECTION ACT, AND THAT HE HAS RECEIVED CONSIDERATION BEYOND THAT TO WHICH HE WAS PREVIOUSLY ENTITLED. 12.   AMENDMENT.  THIS TRANSITION AGREEMENT SHALL BE BINDING UPON THE PARTIES AND MAY NOT BE MODIFIED IN ANY MANNER, EXCEPT BY AN INSTRUMENT IN WRITING OF CONCURRENT OR SUBSEQUENT DATE SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF THE PARTIES HERETO.  THIS TRANSITION AGREEMENT IS BINDING UPON AND SHALL INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE AGENTS, ASSIGNS, HEIRS, EXECUTORS, SUCCESSORS AND ADMINISTRATORS. 13.   NO WAIVER.   NO DELAY OR OMISSION BY EITHER PARTY IN EXERCISING ANY RIGHT UNDER THIS TRANSITION AGREEMENT SHALL OPERATE AS A WAIVER OF THAT OR ANY OTHER RIGHT.  A WAIVER OR CONSENT GIVEN BY A PARTY ON ANY ONE OCCASION SHALL BE 14.   VALIDITY.  SHOULD ANY PROVISION OF THIS TRANSITION AGREEMENT BE DECLARED OR BE DETERMINED BY ANY COURT OF COMPETENT JURISDICTION TO BE ILLEGAL OR INVALID, THE VALIDITY OF THE REMAINING PARTS, TERMS OR PROVISIONS SHALL NOT BE AFFECTED THEREBY AND SAID ILLEGAL AND/OR INVALID PART, TERM OR PROVISION SHALL BE DEEMED NOT TO BE A PART OF THIS TRANSITION AGREEMENT. 15.   COOPERATION.  DR. LETTS AGREES TO COOPERATE WITH THE COMPANY IN THE INVESTIGATION, DEFENSE OR PROSECUTION OF ANY CLAIMS OR ACTIONS NOW IN EXISTENCE OR WHICH MAY BE BROUGHT IN THE FUTURE AGAINST OR ON BEHALF OF THE COMPANY.  HIS COOPERATION IN CONNECTION WITH SUCH CLAIMS OR ACTIONS SHALL INCLUDE, BUT NOT BE LIMITED TO, BEING AVAILABLE TO MEET WITH THE COMPANY’S COUNSEL TO PREPARE FOR DISCOVERY OR ANY MEDIATION, ARBITRATION, TRIAL, ADMINISTRATIVE HEARING OR OTHER PROCEEDING OR TO ACT AS A WITNESS WHEN REASONABLY REQUESTED BY THE COMPANY AT MUTUALLY AGREEABLE TIMES AND AT LOCATIONS MUTUALLY CONVENIENT TO YOU AND THE COMPANY. 16.   VOLUNTARY ASSENT.  DR. LETTS AFFIRMS THAT NO OTHER PROMISES OR AGREEMENTS OF ANY KIND HAVE BEEN MADE TO OR WITH HIM BY ANY PERSON OR ENTITY WHATSOEVER TO CAUSE HIM TO SIGN THIS TRANSITION AGREEMENT, AND THAT HE FULLY UNDERSTAND THE MEANING AND INTENT OF THIS AGREEMENT.  DR. LETTS STATES AND REPRESENTS THAT HE HAS HAD AN OPPORTUNITY TO FULLY DISCUSS AND REVIEW THE TERMS OF THIS TRANSITION AGREEMENT AND EXHIBIT A WITH AN ATTORNEY.  DR. LETTS FURTHER STATES AND REPRESENTS THAT HE HAS CAREFULLY READ THIS TRANSITION AGREEMENT, INCLUDING EXHIBIT A HERETO, UNDERSTAND THE CONTENTS THEREIN, FREELY AND VOLUNTARILY ASSENT TO ALL OF THE TERMS AND CONDITIONS HEREOF, AND SIGNS HIS NAME OF HIS OWN FREE ACT. CONSTRUED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS.  THE PARTIES HEREBY IRREVOCABLY SUBMIT TO AND ACKNOWLEDGE AND RECOGNIZE THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, OR IF APPROPRIATE, A FEDERAL COURT LOCATED IN MASSACHUSETTS (WHICH COURTS, FOR PURPOSES OF THIS TRANSITION AGREEMENT, ARE THE ONLY COURTS OF COMPETENT JURISDICTION), OVER ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS TRANSITION AGREEMENT OR THE SUBJECT MATTER HEREOF. 18.   ENTIRE AGREEMENT.  THIS TRANSITION AGREEMENT, TOGETHER WITH EXHIBIT A, CONTAINS AND CONSTITUTES THE ENTIRE UNDERSTANDING AND AGREEMENT BETWEEN THE PARTIES HERETO AND CANCELS ALL PREVIOUS ORAL AND WRITTEN NEGOTIATIONS, AGREEMENTS, COMMITMENTS AND WRITINGS IN 5   CONNECTION THEREWITH.  NOTHING IN THIS PARAGRAPH, HOWEVER, SHALL MODIFY, CANCEL OR SUPERSEDE DR. LETTS’S OBLIGATIONS SET FORTH IN PARAGRAPHS 10 AND 11 ABOVE. NITROMED, INC.   L. GORDON LETTS, Ph.D.             By:     /s/ L. Gordon Letts, Ph.D.   Name: Kenneth M. Bate               Date: 5/21/07     Date:     6 EXHIBIT A RELEASE OF CLAIMS “Transition Agreement”) dated as of                            by and among L. Gordon Letts (“Dr. Letts”), and NitroMed, Inc. (collectively, the “Company”). 1.   Dr. Letts’s Release of Claims — In consideration of the payment of the benefits set forth in paragraph 2 of the Transition Agreement, which Dr. Letts acknowledges he would not otherwise be entitled to receive, he hereby fully, forever, irrevocably and unconditionally releases, remises and discharges the and nature which he ever had or now has against the Released Parties, including, but not limited to, any claims arising out of his employment with and/or of the Corporate Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11216, Executive Order 11141, all as amended; all claims arising out of the Fair Credit out of his employment with or separation from the Company (including any claim nothing in this Release of Claims prevents him from filing, cooperating with, or Practices Agency (except that he acknowledges that he may not be able to recover 2.  Company Release — The Company hereby fully, forever, irrevocably, and unconditionally releases, remises, and discharges Dr. Letts from any and all debts, contracts, agreements, promises, damages, liabilities, and expenses of any kind or nature, known or unknown, which the 7   Company ever had or has against him arising out of his employment with or separation from the Company.  Nothing herein shall be deemed to waive or release claims by the Company for any acts of dishonesty, moral turpitude, fraud, misappropriation, embezzlement or any knowing or willful violation of any 3.  Acknowledgement — Dr. Letts hereby acknowledges that he has been given at least twenty-one (21) days to consider the Transition Agreement, as well as this Exhibit A, and that the Company advises him to consult with any attorney of his own choosing prior to signing the Transition Agreement and this Exhibit A.  Dr. Letts is advised that he may revoke his acceptance of this Exhibit A during the period of seven (7) days after the execution of it, and this Exhibit A shall not become effective or enforceable, and no severance payments will be made pursuant to Paragraph 2 of the Transition Agreement, until this seven (7) day period has expired.  Dr. Letts is advised and he understands and agrees that by entering into this agreement and signing it and the Release of Claims he is waiving any and all rights or claims he might have under The Age Discrimination in he has received consideration beyond that to which he was previously entitled. 4.  Non-Disparagement  — Dr. Letts understands and agrees that as a condition for payment to him of the consideration herein described, he shall not make any financial condition. 5.  Applicable Law — This Release of Claims shall be interpreted and construed laws provisions.  Dr. Letts hereby irrevocably submits to and acknowledges and NitroMed, Inc.                         Name:     Title:     Date:       Date:       8 EXHIBIT B The following table sets forth certain information concerning all outstanding equity awards held by Dr. Letts as of May 21, 2007. Option Grant Date   Number of Securities Underlying Option (Execrcisable)   Number of Securities Underlying Option (Unexecrcisable)   Option Exercise Price ($)   Option Expiration Date   06/16/1999   3,465   0   1.30       24,660   0   2.00       65,000   0   2.00   03/12/2012     41,250   13,750   2.00     12/01/2003   56,250   18,750   7.98   12/01/2013   05/18/2004   18,750   6,250   7.55   05/18/2014   07/19/2004   31,250   31,250   10.21   07/19/2014   05/16/2005   42,500   42,500   14.99   05/16/2015   01/19/2006   8,600   25,800   12.02     03/30/2006   43,000   0   8.06   03/30/2016   08/16/2006   0   40,000   2.84   08/16/2016     0   35,000   2.17       9 EXHIBIT C This Agreement is made between NitroMed, Inc., a Delaware corporation In consideration of the employment of the continued employment of the Employee by the Company, the Company and the Employee agree as follows: inventions, products, presses, methods, techniques, formulas, compositions Company) without written approval by an officer of the company, either during or company to be used by the Employee only in the performance of his/her duties for the company.  All such materials or copies thereof and all tangible property of the company in the custody or possession of the Employee shall be delivered to the Company, upon the earlier of (I) a request by the Company, or (ii) the company or to the Employee. 10 2.               Developments. (a)   Inventions, improvements, discoveries, methods, developments, software, jointly with others during his/her employment by the Company, whether or not collectively referred to in this Agreement as “Developments”. planned business or research and development of the company and which are made in any Developments. after his/her employment with the Company, with respect to the procurement, Developments.  The Employee shall sign all papers, including, without and interest in any development.  The Employee further agrees that if the Employee, and the Employee hereby irrevocably designates and appoints each his/her employment with the Company or refrain from competing, directly or Agreement wand as an employee of the Company does not and will not breach any other agreement to which the Employee is a party including but not limited to acquired by the Employee in confidence or in trust prior to his/her employment with the Company, and the Employee will not disclose to the company or induce the Company to use any confidential or proprietary information or material 11   4.               United States Government Obligations. agreements. 5.               No Employment Contract. The Employee understands that this Agreement does not constitute a contract of employment and does not imply that his/her employment will continue for any period of time. 6.               Miscellaneous. shall not affect the validity or enforceability of any provision of this Agreement. except by an agreement in writing signed by the Employee and the Company.  The and assigns. Agreement will operate as a waiver of that or any right.  A waiver or consent protection of the business and goodwill of the company and are considered by the entitled to specific performance and other injunctive relief, and employee law exists. under and in accordance with the laws of the Commonwealth of Massachusetts.  Any action, suit, 12   or other legal proceeding which is commenced to resolve any matter arising under or relating to any provisions of this Agreement shall be commenced only in a (h)   Employee shall disclose the existence of the terms of this Agreement to any employer or other person that Employee may work for or be engaged by after the termination of his or her employment or engagement at the Company.  Employee agrees that the Company may, after notification to Employee, provide a copy of this Agreement to any business or enterprise (i) which Employee may directly or the Employee may be connected with as an officer, director, employee, partner, principal, agent, representative, consultant or other wise, or in connection with which Employee may use or permit Employee’s name to be used.  Employee to provide the names and addresses of any such persons or entities as the company Signed By:             ___________________________ Printed Name:       ___________________________ Date:                       ___________________________   13

  EMPLOYERS MUTUAL CASUALTY COMPANY   Non-Employee Directors’ Post-Service Benefits Plan (the “Plan”) is to enable Employers Mutual Casualty Company (“EMCC” or “Company”) to attract and retain Company.     SECTION 2. DEFINITIONS   “Annual Retainer” for any given year shall mean the cash retainer which was or with such individual’s service as a director, but shall not include any meeting committee meetings.       the Effective Date, and who is not concurrently an employee of the Company.   “Post-Service Benefit(s)” means the retirement and/or survivorship income provided to Eligible Directors and/or their spouses in accordance with the provisions of Sections 5 and 14 of this Plan.   “Severance Date” means the date on which an Eligible Director’s service on the   “Vested Director” means an Eligible Director who has completed a minimum of five   “Vesting Date” means the date upon which an Eligible Director completes five (5) Director.   “Years of Contemporaneous Marriage Cap” means the total number of years a surviving spouse was legally married to an individual (who was a member of the Board on or after the Effective Date) while such individual was actually serving as a member of the Board. This number will always be less than or equal to the Years of Service Cap (as hereinafter defined).   “Year(s) of Service” means a period of twelve (12) consecutive months of service as an Eligible Director, measured from the date of such individual’s election to     Post-Service Benefit upon completing five (5) Years of Service as an Eligible Director.     1                      SECTION 4.        PAYMENT OF POST-SERVICE BENEFITS. The Company shall pay a Vested Director who has attained the age of 65 years an annual Post-Service Benefit, in an amount calculated pursuant to Section 5 hereof, commencing on the first business day of the month immediately following the month in which the Vested Director’s Severance Date occurs, and continuing thereafter on each anniversary date of the initial payment of a Post-Service Post-Service Benefit shall occur on the first business day of the month in which the Vested Director’s 65th birthday occurs, with annual payments thereafter continuing on the anniversary date(s) of such payment.   shall terminate upon the death of the Vested Director; provided, however, that if the Vested Director has elected the joint and survivor retirement benefits option pursuant to Section 14 hereof, and if such election remains valid, then the right to receive Post-Service Benefits shall terminate upon the death of the Vested Director or his or her spouse, whichever occurs later, unless either the Years of Service Cap or, in the case of a surviving spouse, the Years of Contemporaneous Marriage Cap (as more fully described in Section 14 hereof) is first reached, in which case the right to receive Post-Service Benefits shall cease when either of such limitations is first reached.   Benefit shall be an amount equal to 100% of the average amount of the Annual Retainer paid to each Eligible Director during the three (3) years immediately prior to the recipient director’s Severance Date. Notwithstanding the foregoing, however, the Post-Service Benefit shall be reduced by ten percent (10%) of such calculated amount for each year, if any, by which the total number of Years of Service accrued as of the recipient director’s Severance Date is less than ten.   SECTION 6.        ADMINISTRATION. The general administration of this Plan shall be the responsibility of the Administrative Department of the Company. Senior management of the Company may, in their discretion, designate one or more individuals as administrators for the day to day operations of the Plan.   at any time, and may amend or modify this Plan at any time or from time to time, and in any respect; provided, however, that no such amendment, modification or (i) any former director (or such director’s spouse, if joint and survivor benefits have been elected) then currently receiving Post-Service Benefits, or (ii) any Vested Director who has attained the age of 65.   this Plan nor any of the provisions of the Plan shall constitute or be evidence retain or re-elect an Eligible Director for any period of time, or at any   Plan may be assigned, pledged, mortgaged or hypothecated or shall be subject to legal process or attachment for the payment of claims of any creditor of an Eligible Director, of a Vested Director, or of the surviving spouse of such a director (if the joint and survivor benefit payment option has been elected by such director).   Post-Service Benefits payable hereunder shall be paid by the Company out of its general assets. The Company may make such arrangements for its own benefit as it desires to provide for the payment of any benefits hereunder, and no person shall have any claim against a particular fund or asset owned by the Company or in which it has an interest to secure the payment of the Company’s obligations hereunder. A Vested Director (or such director’s surviving spouse, if the joint and survivor benefit payment option has been elected by the director) entitled to a Post-Service Benefit under this Plan shall have no greater rights than those of an unsecured general creditor of the Company. Notwithstanding the foregoing, however, the Company shall establish an appropriate reserve on its books for this liability as soon as practicable following approval of this Plan (or any amendments thereto) by the Board, in order to satisfy the requirements of the Financial Accounting Standards Board (FASB).     2       the Employers Mutual Casualty Company Non-Employee Directors’ Retirement Plan) became effective as of the Effective Date. The amended Plan, which provides for joint and survivor benefits, together with certain other changes to the original Plan, shall become effective, with respect to such changes, as of January 1, 2000, provided that it is subsequently approved by the policyholders of EMCC within twelve (12) months of such date.     State of Iowa.   SECTION 14.      PAYMENT OF JOINT AND SURVIVOR POST-SERVICE BENEFITS. Notwithstanding any other provision of this Plan, at any time following the Vesting Date of a Vested Director, such Vested Director, as long as he or she is then currently serving on the Board, may file an election with the administrator(s) of the Plan (as designated pursuant to Section 6 hereof) to have his or her Post-Service Benefits (as calculated pursuant to Section 5 hereof) paid on a joint and survivor basis to the Vested Director and his or her spouse. If the joint and survivor option is elected, there shall be no reduction in the amount of the Post-Service Benefit to be paid annually to the recipient director or his or her spouse.   The ability to elect the joint and survivor benefits option may be exercised by a Vested Director more than once, in the event the electing director is divorced subsequent to his or her initial election, or in the event such director’s spouse predeceases the Vested Director subsequent to the director’s election of this option, but may only be exercised in favor of an individual to whom such Vested Director is legally married at the time of such election. However, subsequent to a Vested Director’s Severance Date, remarriage by the Vested Director shall not entitle such director to make a new election. A Vested Director’s divorce, or the death of such director’s spouse, shall automatically terminate any election previously made by that Vested Director in favor of such former spouse.   In the event the joint and survivor benefits option is elected by a Vested Director, the number of annual payments of the Post-Service Benefit to which such director and his or her spouse are entitled shall be calculated as follows:     A. Once payments to a director have commenced pursuant to Section 4 hereof, the recipient director shall continue to receive annual payments of the Post-Service Benefit so long as such director is living, provided that the total number of such annual payments may not exceed the Years of Service Cap.   B. If the spouse of the recipient director predeceases the director, annual payments shall end upon the earlier of (i) the director’s death or (2) attainment of the Years of Service Cap.   C. If the recipient director predeceases his or her spouse before the Years of Service Cap has been reached, and if such spouse has been designated by the director to receive joint and survivor Post-Service Benefits, then such annual payments shall commence for, and continue to, the surviving spouse until the earlier of (1) the spouse’s death, (2) attainment of the Years of Service Cap (to be calculated by adding together the number of payments received by the director and by the surviving spouse, respectively, and comparing such sum to the total number of years served by the director as a member of the Board), or (3) attainment of the Years of Contemporaneous Marriage Cap. A surviving spouse may receive no greater number of annual payments under the joint and survivorship provisions of the Plan than the number of years such surviving spouse was legally married to the former director while that director was actually serving as a member of the Board.   In the event an electing director is divorced subsequent to the commencement of annual payments of a Post-Service Benefit, such Post-Service Benefit for that director shall be paid as if no election under this Section 14 had been made (unless otherwise ordered by a court of competent jurisdiction).   The election of the joint and survivor benefit option under this Section 14 shall not extend or increase the amount or the maximum number of annual payments of the Post-Service Benefit which a Vested Director may receive, nor accelerate the date when an annual Post-Service Benefit is first paid to such director, as calculated pursuant to Sections 4 and 5 hereof.     3      

ITEMID: 001-69753 LANGUAGEISOCODE: ENG RESPONDENT: BGR BRANCH: ADMISSIBILITY DATE: 2005 DOCNAME: CHOBAN v. BULGARIA IMPORTANCE: 4 CONCLUSION: Inadmissible JUDGES: Christos Rozakis TEXT: The applicant, Mr Roman Nikolaevich Choban, is a Ukrainian national who was born in 1958 and lives in Mamaevtsi, the Chernivtsi Region, Ukraine. The applicant is represented by Mr S. Goncharenko, a lawyer practising in Kiev, Ukraine. The Bulgarian Government are represented by Ms M. Kotzeva, coagent, of the Ministry of Justice. The Ukrainian Government, who participate in the proceedings as a third party (Article 36 § 1 of the Convention and Rule 44 of the Rules of Court), are represented by their Agent, Ms Z. Bortnovska. At about 6 a.m. on 10 January 1995 the applicant, Mr Vasilii Savchuk and Mr Viktor Savchuk, Ukrainian nationals on their way from Ukraine to Turkey, crossed the Bulgarian border at Rouse, on the Danube river. They were carrying large amounts of cash, because they intended to purchase goods in Istanbul and resell them in Ukraine. The applicant submits that they declared the money to the customs authorities as follows: Mr Vasilii Savchuk – 29,500 United States dollars (USD), the applicant – USD 13,017, and Mr Viktor Savchuk – nil. However, it seems that later only one customs declaration was found, in which Mr Vasilii Savchuk had declared USD 29,500. The applicant further submits that after the three got out of the customs he gave USD 2,460 to Mr Vasilii Savchuk as prepayment for the transportation costs of the goods they intended to buy in Turkey and USD 1,240 to Mr Viktor Savchuk as prepayment for his help for the purchasing of the goods. After that the three hid all the money in the minibus in which they were travelling. Two hours later, at about 8 a.m., when the three were approximately eighty kilometres south of Rouse, near Veliko Tarnovo, an armed gang, some of which were dressed as police officers, stopped the minibus, pretending to carry out a routine police check. They hit Mr Vasilii Savchuk several times in the head and, after he tried to run, shot him dead. Mr Viktor Savchuk was also hit several times in the head. The applicant was shot in the thigh and later hit in the head. The applicant submits that the robbers pulled a bag hanging around his neck and took it away. According to him, his copy of the customs declaration in which he had declared the USD 13,017 at the Rouse Customs was in that bag. The robbers were not able to find the money hidden in the minibus and left the scene. The police arrived approximately half an hour later and the applicant and Mr Viktor Savchuk were taken to a hospital. Later they returned to Ukraine. A criminal investigation was opened into the incident. On 12 January 1995 an investigator searched the minibus in the presence of the applicant, an expert and two certifying witnesses, and seized the money which was hidden there as evidence in the pending criminal proceedings against the alleged robbers. The total amount found was USD 42,517. According to the declarations of the applicant and Mr Viktor Savchuk, it broke down as follows: USD 31,960 belonging to the deceased Mr Vasilii Savchuk, USD 1,240 belonging to Mr Viktor Savchuk, and USD 9,317 belonging to the applicant. The investigator drew up a record which was signed by himself, the applicant, Mr Viktor Savchuk and two certifying witnesses. The applicant submits that when he was released from hospital several weeks later, he requested the investigator to return the money. However, the investigator refused, stating that applicant had imported the money into Bulgaria without declaring them at the border, because the applicant's customs declaration was missing. On an unspecified date in February or March 1995 the applicant, Mr Viktor Savchuk and Mr Vasilii Savchuk's widow requested from the Veliko Tarnovo Regional Prosecutor's Office, which was supervising the investigation, to return the money seized as evidence. In a decree of 29 March 1995 that Office refused. Their lawyer appealed to the Chief Prosecutor's Office. In a decree of 31 March 1995 the Chief Prosecutor's Office ordered that USD 29,500 be handed over to Mr Vasilii Savchuk's widow, because there was no doubt about their owner and about the fact that they had been duly declared upon Mr Vasilii Savchuk's entry in Bulgaria. It found that the remaining USD 13,017 could not be returned, because the money had been hidden in the minibus and there was no declaration for its importing. On the one hand, this made it impossible to determine who was its owner, and, on the other, whether it had been declared upon entry in Bulgaria, as required by the Regulation on Importing and Exporting of Currency Valuables of 1994, which made it an administrative offence to not declare currency at the border. The prosecution authorities were not competent to rule on this matter and therefore the currency was to be turned over to the Rouse Customs. A copy of the decree was sent to the lawyer who was representing the applicant and Mr Vasilii Savchuk's widow in the criminal proceedings against the alleged robbers. From the applicant's submissions it transpires that he was made aware of that decree. Pursuant to that decree, in August 1995 the Regional Investigation Service in Veliko Tarnovo turned the money over to the Rouse Customs. Apparently thereafter the customs authorities opened proceedings against the applicant for having failed to declare the money at the border, as required by section 36 of the Currency Transactions and Currency Control Act of 1969 (“the CTCCA”), and as a result the money was forfeited by a decision of 19 February 1996. It is unclear whether the applicant was notified about the proceedings. He did not seek judicial review of the decision of 19 February 1996. The file containing all documents relating to these proceedings was destroyed on 21 October 2003, because of the expiry of the timelimit for its archiving at the Rouse Customs. Approximately ten days after the incident of 10 February 1995 most of the alleged attackers who had robbed the applicant, Mr Vasilii Savchuk and Mr Viktor Savchuk were identified and arrested. They were charged with having committed numerous armed robberies during the period 199495. The investigation was completed in August 1995 and in October 1995 an indictment was submitted to the Veliko Tarnovo Regional Court against twelve persons. The Veliko Tarnovo Regional Court held hearings on 11 December 1995, 3-10 January, 3-5 June and 2-12 September 1996. The applicant did not appear in person, but was represented by a lawyer retained by him and Mr Viktor Savchuk. Numerous witnesses and expert witnesses were heard and other evidence admitted. On an unspecified date during the preliminary investigation or at the first hearing on 11 December 1995 the applicant made a civil claim against the accused, claiming nonpecuniary damages. In a judgment of 12 September 1996 the Veliko Tarnovo Regional Court found all twelve accused guilty of numerous robberies and related offences and sentenced them to various terms of imprisonment. It rejected the applicant's claim. The prosecution appealed to the Supreme Court. So did all but one of the accused. On 19 September 1996 the applicant's and Mr Viktor Savchuk's lawyer also appealed, arguing, inter alia, that the applicant's claim had been improperly rejected. The Supreme Court held hearings on 14 February, 25 April and 27 June 1997. In 1998 the judicial system in Bulgaria was reformed. As a result, on 1 April 1998 the case was transferred to the newly created Veliko Tarnovo Court of Appeals, which had henceforth jurisdiction to hear appeals against judgments of the Veliko Tarnovo Regional Court. A hearing listed for 11 January 1999 failed to take place, because the applicant and Mr Viktor Savchuk had not been duly summoned. A hearing took place on 8 February 1999. The applicant, who had been duly summoned for it by letter rogatory, did not show up. He notified the court by telex that he did not wish to pursue the appeal. Accordingly, the court discontinued the proceedings relating to the applicant's civil claim. Its decision was not subject to appeal. On 9 February 1999 the Veliko Tarnovo Court of Appeals quashed the Veliko Tarnovo Regional Court's judgment, noting that two of the accused had been represented at the preliminary investigation stage by the same lawyer despite an obvious conflict of interest. In the court's view, that fact had vitiated the entire procedure and warranted the remitting the case to the preliminary investigation stage. The proceedings are still pending. For a more detailed account of their unfolding after 9 February 1999 see Vasilev v. Bulgaria ((dec.), no. 59913/00, 14 December 2004). The applicant avers that in 199599 he wrote letters requesting the returning of the money to the Rouse Customs, the Veliko Tarnovo Regional Court, the Veliko Tarnovo Regional Prosecutor's Office and the Supreme Court. He further avers that he received no reply. However, he does not provide any evidence to corroborate these averments. The applicant submits that in 199596 he travelled seven times to Bulgaria to give evidence in the criminal proceedings against the alleged robbers. It does not seem that on any of these occasions he inquired about what had become of the money at the Rouse Customs. On 24 April and 23 September 1997 and 19 November 1998 the Ministry of Justice of Ukraine, acting pursuant to requests by the applicant, sent letters to the Ministry of Justice of Bulgaria, inquiring why the applicant's money had not been returned to him. In a letter of 4 March 1998, which was sent to the Ministry of Justice of Bulgaria and apparently later transmitted to the Ukrainian authorities, the Bulgarian Supreme Court of Cassation stated, inter alia, that the USD 13,017 had not been returned to the applicant by the authorities dealing with the criminal case, because it was unclear who its owner was, and because it had not been declared upon the applicant's entry in Bulgaria and could have been the object of a customs offence. This was apparent from the Chief Prosecutor's Office's decree of 31 March 1995. A copy of the decree was enclosed. The applicant avers that he also contacted various other bodies in Ukraine. In particular, he addressed the Ministry of Foreign Affairs, which in turn contacted the Bulgarian embassy in Kiev. However, he does not provide any evidence to corroborate this averment. Article 108 § 1 of the Code of Criminal Procedure provides that a piece of physical evidence seized in the context of criminal proceedings is held by the authorities until the conclusion of the proceedings. Paragraph 2 of that Article provides that items seized as evidence may be returned to their owners prior to the conclusion of the proceedings only if this would not hamper the elucidation of the facts of the case. Section 36 of the CTCCA, as in force at the material time, provided that the importing and exporting of foreign currency was to be effected in a manner specified by the Council of Ministers and the Bulgarian National Bank. Section 7 of the Regulation on the Importing and Exporting of Currency Valuables of 1994, made by the Council of Ministers and the Bulgarian National Bank pursuant to section 36 of the CTCCA, as in force at the relevant time, provided that foreign currency, whose value was above USD 1,000 and which was carried by persons crossing the border, had to be declared to the customs authorities. Any failure of abide by the provisions of the Regulation constituted an administrative offence (section 11 of the Regulation and section 37 of the CTCCA). The Administrative Offences and Penalties Act of 1969 (“the AOPA”) defines administrative offences and penalties and governs the procedure for punishing such offences. The possible penalties are a reprimand, a fine, or occupational disbarment (section 13 of the AOPA). In addition, the things which constitute the object of an offence may be forfeited if they belong to the offender and if the respective statute so provides (section 20(3) of the AOPA). The authority competent to impose an administrative penalty is the administrative body which is responsible for the enforcement of the statute or the statutory instrument defining the offence, or the administrative body expressly authorised to do so under the respective statute or statutory instrument (section 47(1) and (2) of the AOPA). The proceedings start with the drawing up of a report, a copy of which has to be served on the alleged offender, who has the right to comment on it (sections 43(4), 44(1) and 52(2) of the AOPA). A copy of the decision imposing an administrative penalty must likewise be served on the offender (section 58(1) of the AOPA). If the offender cannot be found at the address specified by him and his new address is unknown, a note to this effect is made on the decision and it is deemed served as of the date of the note (section 58(2) of the AOPA). The decision is subject to appeal before the competent district court (section 59(1) of the AOPA) within seven days after it has been served on the offender (section 59(2) of the AOPA). The court may affirm, vary or quash the decision (section 63(1) of the AOPA).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [] Check the appropriate box: []Preliminary Proxy Statement []Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement []Definitive Additional Materials []Soliciting Material Pursuant to §240.14a-12. ALL AMERICAN PET COMPANY, INC. (Name of Registrant as Specified in Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X]No fee required. []Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1)Title of each class of securities to which transaction applies: 2)Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (set forth the amount on which the filing fee is calculated and state how it was determined): 4)Proposed maximum aggregate value of transaction: 5)Total fee paid: []Fee paid previously with preliminary materials. [] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1)Amount Previously Paid: (2)Form, Schedule or Registration Statement No.: (3)Filing Party: (4)Date Filed: ALL AMERICAN PET COMPANY, INC. 9601 Wilshire Blvd., Suite M200 Beverly Hills, California 90210 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held on October 13, 2009 Dear All American Pet Company, Inc. Stockholders: You are cordially invited to attend the Annual Meeting of stockholders of All American Pet Company, Inc., a Maryland corporation, (“All American Pet”) to be held on October 13, 2009, at 10:00 a.m., local time, at 402 W. Broadway, Suite 690, San Diego, California, 92101.At the Annual Meeting, you will be asked to consider and vote on the following proposals: 1. To elect a new Board of Directors for All American Pet to hold office until the next annual meeting, (the current nominations are for Barry Schwartz, Lisa Bershan and Victor Hollander); 2. To reaffirm the appointment of Hawkins Accounting as All American Pet’s independent auditors for the next year; and 3. To consider and act upon any other matters that may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on September 23, 2009 as the record date for the purpose of determining the stockholders who are entitled to receive notice of and to vote at the Annual Meeting or any adjournment thereof.A list of such stockholders will be available for examination by a stockholder for any purpose germane to the meeting during normal business hours at All American Pet’s Executive offices at 9601 Wilshire Blvd., Suite M200, Beverly Hills, California 90210 for 10 days prior to the Annual Meeting. By Order of the Board of Directors /S/ Barry Schwartz Barry Schwartz Chief Executive Officer Beverly Hills California September 25, 2009 IMPORTANT Whether or not you expect to attend the Annual Meeting in person, we urge you to please vote your shares at your earliest convenience.This will ensure the presence of a quorum at the meeting.Promptly voting your shares by signing, dating and mailing the enclosed proxy will save All American Pet the expenses and extra work of additional solicitation.Submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so, as your proxy is revocable at your option. ALL AMERICAN PET COMPANY, INC. 9601 Wilshire Blvd., Suite M200 Beverly Hills, California 90210 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS October 13, 2009 This statement is furnished in connection with the solicitation by the Board of Directors of All American Pet Company, Inc. (hereinafter “All American Pet” or the “Company”) of proxies in the accompanying form for the Annual Meeting of Stockholders to be held on October 13, 2009 at 10:00 a.m. and at any adjournment thereof. This proxy statement and the enclosed form of proxy were first sent to stockholders on or about October 1, 2009. If the form of proxy enclosed herewith is executed and returned as requested, it may nevertheless be revoked at any time prior to exercise by filing an instrument revoking it or a duly executed proxy bearing a later date. Solicitation of proxies will be made by mail and by All American Pet’s Chairman, Barry Schwartz.All American Pet will reimburse brokerage firms, banks, trustees and others for their actual out-of-pocket expenses in forwarding proxy material to the beneficial owners of its common stock. As of the close of business on September 23, 2009, the record date for the Annual Meeting, All American Pet had outstanding and entitled to vote 39,489,376 shares of Common Stock.Each share of Common Stock is entitled to one vote per share on all matters submitted to a vote of All American Pet’s stockholders.Only stockholders of record at the close of business on September 23, 2009 are entitled to vote at the Annual Meeting or at any adjournment thereof. The presence at the meeting, in person or by proxy, of the holders of Common Stock holding in the aggregate a majority of the voting power of All American Pet’s stock entitled to vote shall constitute a quorum for the transaction of business.A majority of the votes properly cast upon any question by the stockholders attending the meeting, in person or by proxy, shall decide the question.Abstentions and broker non-votes will count for purposes of establishing a quorum, but will not count as votes cast for the election of Directors or any other proposal and accordingly will have no effect. Stockholders who send in proxies but attend the meeting in person may vote directly if they prefer and withdraw their proxies or may allow their proxies to be voted with the similar proxies sent in by other stockholders. PROPOSAL 1.ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION At the 2008 Annual Meeting of Stockholders, a Board of Directors consisting of three members will be elected, each director to hold office until their term expires, or a successor is elected and qualified, or until the director resigns, is removed or becomes disqualified. All American Pet’s Board of Directors has nominated for election the two current members of the Board of Directors plus an additional individual: Name Age Barry Schwartz 63 Lisa Bershan 52 Victor Hollander 76 The nominees have consented to their nomination to the Board of Directors, and will serve if elected.However, if the nominees should become unavailable for election, the accompanying proxy will be voted in favor of holding a vacancy to be filled by our current Directors.All American Pet has no reason to believe that Mr. Schwartz, Ms. Bershan and Mr. Hollander will be unavailable to serve as Directors. 1 The following information is provided regarding the nominees for election to the Board of Directors. Barry Schwartz, age 63, Chief Executive Officer and a Director of the Company since its inception in 2003. Mr. Schwartz is a senior retail and operations executive with more than 30years of experience in consumer durables and food.

Exhibit 99.2 MANAGEMENT’S DISCUSSION AND ANALYSIS For the three and six months ended March 31, 2011 TABLE OF CONTENTS INTRODUCTION 3 BUSINESS PROFILE AND STRATEGY 3 OVERALL FINANCIAL PERFORMANCE 5 Second Quarter and Year-to-Date Highlights 5 SELECTED FINANCIAL INFORMATION 8 FINANCIAL ANALYSIS 8 Branch Count 9 Revenue 9 Same Branch Revenues 11 Branch Operating Income and Operating Income 11 Expenses (excluding retention payments) 12 Retention Payments 12 Depreciation and Amortization 12 Income Taxes 13 LIQUIDITY AND CAPITAL RESOURCES 13 RISK FACTORS AFFECTING PERFORMANCE 13 Consumer Protection Regulations 13 Legal Proceedings 15 Third Party Lenders/Retention Payments 16 CONTROLS AND PROCEDURES 16 OUTSTANDING SHARE DATA 17 DIVIDENDS 17 RECENT ACCOUNTING PRONOUCEMENTS NOT YET ADOPTED 17 International Financial Reporting Standards (IFRS) 17 SUMMARY OF QUARTERLY RESULTS 18 OTHER 18 Cautionary Statement Regarding Forward-looking Information 18 Non-GAAP Measures 19 EBITDA Reconciliation 19 - 2 - INTRODUCTION The following management’s discussion and analysis (“MD&A”) should be read in conjunction with The Cash Store Financial Services Inc.’s (“Cash Store Financial” or the “Company”) unaudited consolidated interim financial statements for the three and six months ended March 31, 2011, and the audited consolidated financial statements and MD&A for the fifteen months ended September 30, 2010, both of which are available at SEDAR (www.sedar.com) and at the United States Securities and Exchange Commission website (www.sec.gov). All figures are presented in Canadian dollars and are reported in accordance with Canadian generally accepted accounting principles. This MD&A is dated as of April 27, 2011. BUSINESS PROFILE AND STRATEGY This section contains forward-looking statements.See Cautionary Statement Regarding Forward-Looking Information located at the end of this MD&A. Cash Store Financial is an alternative to traditional banks, providing short-term advances and other financial services, to serve the needs of everyday people in Canada through our two branch banners: Cash Store Financial and Instaloans. Cash Store Financial and Instaloans act as brokers to facilitate short-term advances and to provide other financial services to income-earning consumers.We also provide a range of financial products that are not supplied by traditional financial institutions. At March 31, 2011, we owned and operated 579 branches in nine Canadian provinces, two Canadian territories and the United Kingdom.Our workforce is dynamic and we operate within a performance-based culture.We employ approximately 2,300 associates across Canada and the United Kingdom. Cash Store Financial is the only broker of short-term advances and provider of other financial services in Canada that is publicly traded on the Toronto and New York Stock Exchanges. Cash Store Financial trades under the symbol “CSF” on the Toronto Stock Exchange and under the symbol “CSFS” on the New York Stock Exchange. Our business is based on the recognition that the needs of a segment of the Canadian population are not being properly serviced by traditional financial institutions. Our strategic objective is to establish Cash Store Financial and Instaloans as the provider of choice, in Canadian jurisdictions in which we operate, for short-term advances and other financial services by offering a wide range of products, a high level of customer service, and convenient locations and hours of operation. In addition to meeting our customers’ needs by providing small, short-term loans which can be accessed quickly, we also offer financial product insurance, cheque cashing products, bank accounts, money transfers, pre-paid master cards, debit cards, term loans, and prepaid phone cards. A key component of our long-term business strategy has been product diversification.This strategy has and should continue to assist us in offsetting the Company from revenue and earnings compression resulting from provincially regulated rate caps on payday loans.In the third quarter of 2010, through an agency agreement with DC Bank, a federally regulated Canadian Schedule 1 bank, we introduced a basic deposit account product. A new premium bank account product that features unlimited free cheque cashing and free on-line bill payments was introduced in late February 2011. Both types of account are insured by the Canada Deposit Insurance Corporation. On a national basis, consumer acceptance of both products has been high. - 3 - Cash Store Financial’s strategic priorities are: Operational: Operational strategic priorities can be broken down into four main strategic priorities namely: 1) Driving market penetration • Maximizing the potential of our expanding branch network; • Continued focus on improving Branch Operating Income (“BOI”) margins for all our branches; • Continuing to educate, motivate and improve the performance of our associates through an integrated communication and training strategy that includes Cash Store Financial College, Cash Store Financial TV and our annual President’s Forum with every branch manager; and • Providing strong leadership through in-the-field, hands-on involvement of senior management and getting back to the basics throughout the company. 2) Growing existing product lines and implementation of new product initiatives • Providing superior service in relation to existing product offerings; and • Accelerating revenue growth through further new product initiatives. 3) New branch openings • Further expanding our leading position in the Canadian alternative financial services industry through aggressive organic growth into underserved communities based on new branch profitability or via the acquisition of existing operators at attractive valuations. 4) International expansion • Further expanding our network in the United Kingdom (UK); • Continued ownership of an 18% interest in The Cash Store Australia Holdings Inc. (“AUC”) which acts as a broker to facilitate short-term advances and other financial services to income earning consumers in Australia.AUC owns and operates 80 branches in Australia; and • Continued ownership of a 16% interest in RTF Financial Holdings Inc. (“RTF”) which is in the business of short-term lending by utilizing highly automated mobile technology (SMS text message lending).RTF currently operates in Finland, Sweden, Denmark, the Netherlands and the UK with expansion plans to other European countries. Financial • Maximizing shareholder value by growing our earnings per share; • Further investing in business intelligence; • Reducing our cost of capital; and • Controlling or reducing costs through a strong focus on operational excellence and by taking advantage of our growing buying power. - 4 - Cash Store Financial has recognized its corporate responsibility to contribute to the communities in which we do business. In 2008, we partnered with the Alberta Diabetes Foundation to raise $7.5 million for research to be undertaken at the Alberta Diabetes Institute, a globally-recognized centre of research excellence. In 2010 the Company was one of 16 companies recognized with a “Roll of Honour” award by the Alberta Association of Fund Raising Executives. The “Roll of Honour” award celebrates extraordinary commitment and contributions to the non-profit sector from corporate citizens and individuals around Alberta. In Calendar 2011, Cash Store Financial will host 33 “freedom” runs across Canada. OVERALL FINANCIAL PERFORMANCE Second Quarter and Year-to-Date Highlights This section contains forward-looking statements.See “Cautionary Statement Regarding Forward-Looking Information”. Thousands of dollars, except for per share amounts Three Months Ended Six Months Ended Consolidated results March 31 March 31 March 31 March 31 Revenue $ Branch operating income Net income Earnings before interest, taxes, depreciation and amortization Diluted earnings per share Net income and comprehensive income $ Net income and comprehensive income for the second quarter was $2.5 million (after removing class action settlement costs and related taxes was the same), compared to $2.2 million (after removing class action settlement costs and related taxes was $4.0 million) for the same quarter last year. For the six months ended March 31, 2011, net income was $5.9 million (after removing class action settlement costs and related taxes was the same), compared to $7.7 million (after removing class action settlement costs and related taxes was $9.5 million) in the same period last year. Diluted earnings per share were $0.14 in the quarter, compared to $0.13 ($0.23 after removing class action settlement costs and related taxes) for the same quarter last year, and $0.33 for the six months ended March 31, 2011, compared to $0.45 ($0.55 after removing class action settlement costs and related taxes) for the same period last year. Despite the compression on earnings resulting from rate caps and additional expenditures in regulated provinces, earnings for the quarter were in line with expectations. Significant factors impacting second quarter and six months results include: • Strong growth in overall revenue of 15.7% for the three months ending March 31, 2011, compared to the same period last year, and an increase of 16.3% for the six months ending March 31, 2011 compared to the same period last year; • Loan fees were relatively flat for the three months ending March 31, 2011, at $31.4 million compared to $31.3 million in the same quarter last year as a result of 90 additional branches offset by the effect of rate compression in the regulated provinces.For the six months ended March 31, 2011, loan fees were $67.0 million compared to $65.5 million for the same period last year; - 5 - • Accelerated growth in other revenues of 68.1% to a record $15.8 million for the three month period ending March 31, 2011 when compared to the same period last year, and an increase of 67.6% to $29.5 million for the six month period ending March 31, 2011 when compared to the same period last year, reflecting a successful execution of our product diversification strategy; • An increase in loan volumes, relative to the same period last year, resulting from the addition of 90 new branches and maturation of existing branches offset by a reduction in loan fees as a result of rate caps in regulated provinces. Loan volumes for the three months ending March 31, 2011 were up 11.1 % to $198.8 million and for the six months ending March 31, 2011, loan volumes were up 18.3% to $415.1 million; • Increased drag on earnings of $1.2 million and $2.4 million for the six months resulting from new branch openings.With only nine new branches opened in the quarter; this level of drag should dissipate in future periods; • Increased retention payments of $1.3 million for the three months ending March 31, 2011 compared to the same period last year and $3.5 million for the six months ending March 31, 2011 when compared to the same period last year. Due to rate compression, this expenditure category is up when measured as a percentage offees andvolume; • Provision for loan losses for on-balance sheet lending increased $568,000 for the 3 month period ending March 31, 2011 compared to the same quarter last year, and $1.2 million for the six months ending March 31, 2011 compared to the same period last year; • Increased selling, general and administration (“SG&A”) costs related to new regulatory process, professional and legal fees related to class action matters and trade mark infringement issues of $1.0 million for the three month period ending March 31, 2011 compared to the same quarter last year, and $2.6 million for the six months ending March 31, 2011 compared to the same period last year; and • Lower revenues in Manitoba of $180,000 in the quarter and $1.3 million for the six months as a result of the implementation of regulations. Our EBITDA was $6.3 million for the quarter, compared to $5.3 million for the same quarter last year and was $13.8 million for six months ended March 31, 2011, compared to $15.9 million for the same period last year.This increase in the current quarter is due to the absence of class action expenses in the current year, increased other revenues offset by higher branch expenses, increased regional and corporate infrastructure and information system support and marketing expenses compared to the same quarter last year. EBITDA, adjusted to remove class action settlements, was $6.3 million, compared to $8.0 million in the same quarter last year and was $13.8 million for the six months ended March 31, 2011, and $18.7 million in the same period last year. The implementation of provincial industry rate regulations commenced in August 2009 and continued through until March 2010.We have successfully complied with the implementation of regulations in British Columbia, Alberta, Ontario, Manitoba and Nova Scotia, representing markets in which 91% of our branches are located. Although we have experienced a decrease in our margins as a result of provincial rate caps, we continue to view regulation as positive for the industry and critical to our long-term growth. Product and revenue diversification initiatives continue to generate positive results. Revenue from other services (including fees from bank accounts, financial product insurance, pre-paid master cards, debit cards, money transfers, term loans, cheque cashing and prepaid phone cards) increased to a record $15.8 million in the second quarter, up from $9.4 million in the same quarter last year.We have made significant improvements in products and services which complement our existing product lines.We will continue to progress towards our objectives of diversifying our revenue stream with products which enhance and complement our core products, and increasing the value generated from our existing suite of products. - 6 - In the second quarter, the President and Chief Operating Officer conducted his annual tour to meet individually with each manager in our national branch network. This is a critical component of our long-term growth program. The President learns first-hand of the challenges and opportunities facing our front-line staff. In response to this year’s tour, particular emphasis has been placed on the implementation of new training programs to address common areas of concern raised by our associates.We are confident in our associates’ abilities to address and proactively react to a changing industry. In addition, there has been a significant realignment of the senior management structure of our operations group.In concert with our new training initiatives, we expect that these changes will lead to strong growth in future periods. - 7 - SELECTED FINANCIAL INFORMATION Thousands of dollars, except for per share amounts and branch figures Three Months Ended Six Months Ended Consolidated results March 31 March 31 March 31 March 31 No. of branches Canada United Kingdom 6 - 6 - Loan volumes Loan fees included $ Revenue Loan fees $ Other income Branch expenses Salaries and benefits Retention payments Selling, general and administrative Rent Advertising and promotion Provision for loan losses 86 Depreciation of property and equipment Branch operating income Regional expenses Corporate expenses Other depreciation and amortization Income before income taxes and class action settlements Class action settlements - - EBITDA * Net income and comprehensive income $ Weighted average number of shares outstanding - basic Basic earnings per share Income before class action settlement costs $ Net income and comprehensive income $ Diluted earnings per share Income before class action settlement costs $ Net income and comprehensive income $ Consolidated Balance Sheet Information Working capital $ Total assets Total long-term liabilities Total liabilities Shareholders' equity $ FINANCIAL ANALYSIS This analysis provides an overview of our financial results for the second quarter ended March 31, 2011, compared to the same quarter last year and the first six months of fiscal 2011 compared to the same period last year. - 8 - Branch Count This section contains forward-looking statements.See “Cautionary Statement Regarding Forward-Looking Information”. At the end of the second quarter, a total of 579 branches were in operation, an increase of 90 branches, compared to 489 branches at the end of the same quarter last year. During the quarter, nine new branches were opened. Branch performance continues to be monitored and branch consolidations will occur when efficiencies can be achieved. Jun 30-02 Jun 30-03 Jun 30-04 Jun 30-05 Jun 30-06 Jun 30-07 Jun 30-08 Jun 30-09 Sep 30-10 Mar 31-11 Opening 5 20 57 Organic 15 37 51 67 61 20 37 31 36 Accquired 0 0 0 6 0 0 18 22 1 Consolidations 0 0 0 0 0 Closing 20 57 We increased our number of branches by nine over the quarter, as compared to 20 in the same quarter last year. We did not consolidate any underperforming branches in the current quarter or the same quarter last year.For the six month period ended March 31, 2011 we consolidated two branches compared to one branch for the same six month period last year.Branch performance continues to be monitored and consolidations will occur when efficiencies can be achieved. We anticipate adding four to five branches over the next quarter in Canada and reaching 15 to 20 branches in the UK by the end of fiscal 2011. Material factors that determine the number of branch openings include availability of suitable locations with suitable lease terms, performance and favorable market rates. Revenue In the three months ended March 31, 2011 revenue increased 15.7% to $47.2 million from $40.8 million in the same period last year.For the six months ended March 31, 2011, revenues were $96.5 million, up 16.3% compared to $83.0 million for the same period last year.Loan volumes were $198.8 million in the quarter, up 11.1% from $178.8 million for the same period last year. Loan volumes for the six months ended March 31, 2011 were up 18.3% to $415.1 million from $350.9 million for the same period last year.Loan fees for the quarter were $31.4 million compared to $31.3 million for the same period last year.For the six months ended March 31, 2011 loan fees were $67.0 million up from $65.5 million for the same period last year.The loan fees were flat as a result of legislated rate caps. - 9 - Revenue growth was due to: • Positive contributions from our new product initiatives, including bank accounts, which resulted in record revenue from other sources; and • Marginal increases in loan fee revenue as a result of 90 additional branches and the maturing of existing branches offset by the effects of rate compression in the regulated provinces. The table below illustrates consistent growth in all branch age categories contributing to the overall growth in revenue. (Thousands of dollars, except branch figures) Revenues Average Revenue per Branch per Month Year Opened Number of Branches March 31 March 31 % Change March 31 March 31 2001* 94 -3% 13 -7% 40 43 35 -1% 37 37 52 2% 34 33 66 3% 31 31 51 0% 30 30 2007** 37 55% 27 17 34 2% 26 25 48 11% 21 19 138% 20 8 37 - 100% 11 - 16% Consolidation of branches - Other Continuing operations * Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001. ** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007. The following table depicts the split between brokerage fees and other revenues: (thousands of dollars) Three months ended Six months ended March March March March Revenues Loan fees $ Other Interest income 7 1 13 6 $ Loan fees for the three months ended March 31, 2011 increased to $31.4 million relatively flat from $31.3 million in the same quarter last year, as a result of 90 additional branches, offset by the effect of rate compression in the regulated provinces.For the six months ended March 31, 2011, loan fees were $67.0 million compared to $65.5 million for the same period last year. - 10 - Revenue from other services (including fees from bank accounts, financial product insurance, pre-paid master cards, debit cards, money transfers, term loans, cheque cashing and prepaid phone cards) in the three months ended March 31, 2011, increased 68.1% to a record $15.8 million or 33.5% of revenue, up from $9.4 million or 23.0% of revenue in the same quarter last year.Other revenues have increased significantly as a result of the introduction of new products and other product enhancements. These new products and enhancements are part of our long-term strategy to diversify revenue streams by providing our customers with a broader suite of financial services and products.For the six months ended March 31, 2011, other revenue was $29.5 million, up 67.6% from $17.6 million for the same period last year. In the three months ended March 31, 2011, the average loan size was $473 compared to $431 per loan in the same quarter last year. Due to the seasonal nature of our business, we anticipate revenues will increase next quarter as compared to the current quarter. Same Branch Revenues Same branch revenues for the 465 locations open since the beginning of the same quarter of fiscal 2010 increased by 1.6% compared to the same quarter last year, with same branch revenues averaging $88,100 in the second quarter compared to $86,700 in the same quarter last year. Same branch revenues for the 447 locations open since the beginning of the six month period ended March 31, 2010 increased by 1.5% compared to the same period last year, with same branch revenues averaging $184,000 in the six months ended March 31, 2011 compared to $181,300 in the same period last year. Same branch revenues increased through the introduction of new ancillary products. Also, same branch revenue, as it relates to the brokering of loans, was down 12.0% (10.4% for the six months ended March 31, 2011) as a result of loan fee rate compression in regulated provinces coupled with loan volumes. Although this has had a negative impact on our revenues over the past year, we believe the long-term effects of a well-defined and effective regulatory environment will be positive for us. During the quarter, our new VP of Marketing and Training, a former associate of a major Canadian retailer, initiated the implementation of a focused marketing strategy targeted at improving loan volumes and increasing other revenues. Branch Operating Income and Operating Income Branch operating income for the three months ended March 31, 2011 was $12.4 million (26.3% of revenue) compared to $13.0 million (31.9% of revenue) in the same period as last year.Branch operating income in the six months ended March 31, 2011 was $26.1 million (27.0% of revenue), compared to $28.8 million (34.7% of revenue) for the same period last year. BOI was down as a percentage of revenue as a result of lower rate caps, increases in SG&A related to new regulatory processes, increased expenses due to the opening of 90 new branches adding to the drag on earnings, increased retention payments and provision for loan losses. The decreased margins and increased expenses have been offset primarily by record revenues from other services. - 11 - BOI, by maturity level is outlined below: (Thousands of dollars, except branch figures) BOI (Loss) BOI % of Revenues Year Opened Number of Branches March 31 March 31 March 31 March 31 2001* 94 39.5% 39.8% 13 43.8% 40.7% 35 46.5% 42.7% 52 40.6% 37.1% 66 35.6% 34.7% 51 36.0% 34.7% 2007** 37 35.6% 35.6% 34 36.4% 31.6% 48 4.5% 9.2% -14.6% -9.8% 37 - -40.0% - Branches not yet open Consolidation of branches - Other 45 Branch Operating Income * Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001. ** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007. Expenses (excluding retention payments) Expenses for the three months ended March 31, 2011 totalled $34.6 million, an increase from $27.7 million in the same quarter last year. Expenses in the six months ended March 31, 2011 have increased to $69.5 million, compared to $54.5 million for the same period last year. The increase is primarily due to the addition of 90 new branches, increased SG&A related to new regulatory processes, professional fees and provision for loan losses for on-balance sheet lending. Retention Payments Third-party lender retention payments for the three months ended March 31, 2011 totalled $6.6 million (3.3% of loans brokered), compared to $5.3 million (3.0% of loans brokered) in the same quarter last year.As a percentage of loan fees, retention payments have increased to 20.9% in the three months ended March 31, 2011, compared to 16.9% in the same quarter last year.The increases as a percentage of loan fees and loans brokered are as a result of rate compression and collections not meeting expectations. Retention payments in the six months ended March 31, 2011 totalled $13.8 million (3.3% of loans brokered), compared to $10.3 million (2.9% of loans brokered) for the same period last year. Lower expected returns are anticipated in future periods. During the most recently completed quarter we hired a new VP of Credit and Collections whose mandate is to help improve collections both internally and externally. Depreciation and Amortization Depreciation of property and equipment and amortization of intangible assets for the three months ended March 31, 2011 totalled $2.2 million, compared to $1.7 million in the same period last year. Depreciation of property and equipment and amortization of intangible assets for the six month ended March 31, 2011 was $4.4 million, compared to $3.8 million for the six months ended March 31, 2010. The increase reflects the addition of 90 new branches and a large scale refresh program for our mature branches. - 12 - Income Taxes Our effective tax rate was 34.0% in the three months ended March 31, 2011, compared to 35.1% for the same period last year. Our effective tax rate was 33.9% for the six months ended March 31, 2011, compared to 34.4% for the same period last year. LIQUIDITY AND CAPITAL RESOURCES Our cash decreased to $15.4 million in the three months ended March 31, 2011, compared to $19.6 million at September 30, 2010. Significant items impacting cash in the three and six months ended March 31, 2011 included: • Cash generated from operating activities, before non-cash operating items, of $8.9 million during the three months ended March 31, 2011 and $5.2 million in the six months ended March 31, 2011; • Property and equipment and intangible asset expenditures of $1.9 million during the three months ended March 31, 2011 and $6.5 million in the six months ended March 31, 2011; • Cash required for on balance sheet lending of $424,000 during the three months ended March 31, 2011 and $1.6 million in the six months ended March 31, 2011; • Dividend payments of $2.1 million during the three months ended March 31, 2011 and $3.8 million in the six months ended March 31, 2011; and • Issuance of common shares for proceeds from exercised options of $327,000 during the three months ended March 31, 2011 and $667,000 in the six months ended March 31, 2011. At March 31, 2011, our working capital position totalled $15.2 million compared to $15.3 million as at September 30, 2010. RISK FACTORS AFFECTING PERFORMANCE Our financial and operational performance is potentially affected by a number of factors including, but not limited to, changing consumer protection regulations, industry and company specific class action lawsuits, access to third-party lenders and other issues described in our most recent Annual Information Form (“AIF”).As a company we identify risks in four main categories: 1) operational; 2) financial; 3) legal and regulatory; and 4) strategic.A more detailed discussion of our risk factors is presented in our most recent AIF filed with the securities regulatory authorities on SEDAR (www.sedar.com). Our Risk Management department works continually to assess and mitigate the impact of potential risks to our stakeholders. Consumer Protection Regulations The following rate caps are currently in effect: Nova Scotia - $25 per hundred dollars loaned; British Columbia - $23 per hundred dollars loaned; Ontario - $21 per hundred dollars loaned; Manitoba - $17 per hundred dollars loaned; and Alberta - $23 per hundred dollars loaned. Newfoundland has announced that it does not intend to enact local legislation. Saskatchewan has applied for a federal designation that will facilitate implementation of new consumer protection measures, including a rate cap of $23 per hundred dollars loaned. We anticipate that these measures will be implemented in Saskatchewan within the fiscal year. While at this stage it remains difficult to specify expected rates for the remaining provinces, all Canadian jurisdictions appear committed to facilitating a competitive industry. Below is a summary of rate caps per province: - 13 - Rate per $100 Date enacted or anticipated Nova Scotia 25 April 1, 2011 British Columbia 23 November 18, 2009 Ontario 21 December 15, 2009 Alberta 23 March 1, 2010 Manitoba 17 October 18, 2010 Saskatchewan 23 Within fiscal 2011 In the first quarter of fiscal 2011, the Nova Scotia Utility and Review Board conducted administrative hearings to review the current rate cap of $31 per hundred dollars loaned that is in force in that province. As of April 1, 2011 the new rate cap in Nova Scotia is $25 per hundred dollars loaned. On November 9, 2010, Consumer Protection BC issued a compliance order requiring Cash Store Financial to: (i) reimburse all borrowers with loan agreements negotiated with Cash Store Financial and its subsidiaries between November 1, 2009, and November 9, 2010, the amount charged, required or accepted for on in relation to the issuance of a cash card; (ii) provide the option to any borrower negotiating a loan agreement with Cash Store Financial and its subsidiaries, of receiving a cheque, cash or some other financial instrument which provides the loan proceeds to the borrower at the time the loan agreement is negotiated; and, (iii) make a payment of $4,005.90 in respect of costs. The Company has disputed certain findings upon which this compliance order was based on December 9, 2010, filed a Request for Redetermination. The basis of our request is that Cash Store Financial does not issue and has never issued cash cards to its customers. Rather, customers are issued cash cards by Direct Cash Bank (“DC Bank”) or Direct Cash Management Inc. DC Bank is a federally regulated Canadian schedule I bank. Cash Store Financial is not a party to any agreements in respect of cash cards. All contracts in respect of cash cards are directly between individuals and DC Bank or Direct Cash Management Inc. Through agreements with DC Bank, Cash Store Financial’s customers are given the option, following the completion of a loan agreement with the Cash Store Financial, of receiving a cash card and related services from DC Bank or Direct Cash Management Inc. All fees associated with the issuance of these cash cards accrue directly to DC Bank or Direct Cash Management Inc. Cash Store Financial is not a related party to DC bank or to Direct Cash Management Inc. On the basis of our legal position we anticipate no material impact from the determination. Consumer Protection BC has advised us they will reconsider and there is no definite time frame for a conclusion on the matter. - 14 - Legal Proceedings British Columbia On March 5, 2004, an action under the Class Proceedings Act was commenced in the Supreme Court of British Columbia by Andrew Bodnar and others proposing that a class action be certified on his own behalf and on behalf of all persons who have borrowed money from the defendants: The Cash Store Inc. (Canada), Cash Store Financial and All Trans Credit Union Ltd. The action stems from the allegations that all payday loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada. On May 25, 2006, the claim in British Columbia was affirmed as a certified class proceeding of Canada by the B.C. Court of Appeal. In fiscal 2007, the plaintiffs in the British Columbia action brought forward an application to have certain of our customers’ third-party lenders added to the claim.On March 18, 2008, another action commenced in the Supreme Court of British Columbia by David Wournell and others against Cash Store Financial, Instaloans Inc., and others in respect of the business carried out under the name Instaloans since April 2005. Collectively, these actions are referred to as the “British Columbia Related Actions”. On May 12, 2009, we settled the British Columbia Related Actions in principle.The settlement has been approved by the Court. The settlement does not constitute any admission of liability by us. Under the terms of the court approved settlement, the Company is to pay to the eligible class members who were advanced funds under a loan agreement and who repaid the payday loan plus brokerage fees and interest in full, or who met certain other eligibility criteria, a maximum estimated amount of $9,400 in cash and $9,400 in credit vouchers. Thus, the estimated maximum exposure with respect to this settlement is approximately $18.8 million including approved legal expenses.The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are not transferable and have no expiry date. In addition, the Company is to pay the legal fees and costs of the class.Based on the Company’s estimate of the rate of take-up of the available cash and credit vouchers, an expense of $7,715 to date has been recorded to cover the estimated costs of the settlement, including legal fees of the Class and costs to administer the settlement fund. It is possible that additional settlement costs could be required. As at March 31, 2011, the remaining accrual is $833. Alberta We have been served in prior fiscal periods with a Statement of Claim issued in Alberta alleging that we are in breach of s. 347 of the Criminal Code of Canada (the interest rate provision) and certain provincial consumer protection statutes. The certification motion has been pending since fiscal 2006 and has not yet been heard.On January 19, 2010, the plaintiffs in the Alberta action brought forward an application to have a related subsidiary, certain of our customers’ third-party lenders, directors and officers added to the Claim. We believe that we conduct our business in accordance with applicable laws and are defending the action vigorously. However, the likelihood of loss, if any, is not determinable. Manitoba On April 23, 2010, an action under the Manitoba Class Proceedings Act was commenced in the Manitoba Court of Queen’s Bench by Scott Meeking against The Cash Store (Canada), Instaloans, and Cash Store Financial proposing that a class action be certified on his own behalf and on behalf of all persons in Manitoba and others outside the province who elect to claim in Manitoba and who obtained a payday loan from the Cash Store Financial or Instaloans. The action stems from the allegations that all payday loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada. - 15 - We believe that we conducted our business in accordance with applicable laws and are defending the action vigorously. Further it will be maintained that most of the proposed class members are bound by the judgment in the settlement of the Ontario class action, as approved by the Ontario Superior Court of Justice and that accordingly the action should be dismissed.However, the likelihood of loss, if any, is not determinable. Other We are also involved in other claims related to the normal course of operations.Management believes that it has adequately provided for these claims. Third Party Lenders/Retention Payments Most funding of short-term advances is currently provided by independent third party lenders.As a result, our business is highly dependent on third party lenders who are willing to make significant funds available for lending to our customers. There are no assurances that the existing or new third party lenders will continue to make funds available. Any reduction or withdrawal of funds could have a significant material adverse impact on our results of operations and financial condition. To facilitate the short-term advance business, we have entered into written agreements with a number of third party lenders who are prepared to consider lending to our customers. Pursuant to these agreements, we provide services to the lenders related to the collection of documents and information as well as loan collection services. The agreements also provide that the third party lenders are responsible for losses suffered on account of uncollectible loans provided we have properly performed our duties under the terms of the agreements. In the event we do not properly perform our duties and the lenders make a claim as required under the agreement, we may be liable to the lenders for losses they have incurred. A liability is recorded when it is determined that we have a liability under the agreement. Our board of directors regularly approves a resolution which authorizes us to pay a maximum amount of retention payments per quarter to third-party lenders as consideration to those lenders who continue to be willing to fund advances to our customers. While the third-party lenders have not been guaranteed a return, the decision has been made to voluntarily make retention payments to the lenders to deflect the impact of the loan losses they experienced.Retention payments are recorded in the period in which a commitment is made to a lender pursuant to the resolution approved by the board of directors. CONTROLS AND PROCEDURES Management has evaluated whether there were changes in our internal controls over financial reporting during the most recent interim period ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. No such changes were identified. - 16 - OUTSTANDING SHARE DATA As at April 27, 2011, we had 17,367,214 common shares outstanding.There were also options to purchase 872,835 common shares, which if exercised, would provide us with proceeds of approximately $7.5 million. DIVIDENDS Prior to August 31, 2007, we had not declared or paid a dividend on the common shares.We declared our first dividend on August 31, 2007, in the amount of $.025 cents per common share.In total, dividends of $3.6 million were paid to holders of common shares in fiscal 2008, $5.3 million in fiscal 2009, $9.1 million in the fifteen months of fiscal 2010 and $3.8 million in the first six months of fiscal 2011. On April 27, 2011, we declared a quarterly dividend of $0.12 per common share. The dividend is payable on May 24, 2011, to shareholders of record on May 9, 2011. Our current dividend policy is to declare and pay quarterly cash dividends at the discretion of our board of directors, as circumstances permit, in an aggregate annual amount equal to approximately 30% of the prior year’s net income. Our dividend policy and practice will be reviewed quarterly in the context of our earnings, financial condition, the need to retain earnings to fund future growth of our business, and other relevant factors. The declaration of a dividend will always be at the discretion of our board of directors. RECENT ACCOUNTING PRONOUCEMENTS NOT YET ADOPTED International Financial Reporting Standards (IFRS) The Accounting Standards Board of the Canadian Institute of Chartered Accountants previously announced its decision to require all publicly accountable enterprises to report under International Financial Reporting Standards (“IFRS”) for years beginning on or after January 1, 2011. However, National Instrument 52-107 allows Securities and Exchange Commission (“SEC”) registrants, such as the Company, to file financial statements with Canadian securities regulators that are prepared in accordance with U.S. GAAP. The Company intends to adopt U.S. GAAP instead of IFRS as its primary basis of financial reporting commencing in fiscal 2012. The intention to adopt U.S. GAAP was also made to enhance communication with shareholders and improve the comparability of financial information reported with its competitors and peer group. - 17 - SUMMARY OF QUARTERLY RESULTS The financial results for each of the last eight quarters are summarized in the following table. The results demonstrate a continued emphasis on growth compared to prior quarters, with an equal emphasis on management programs for underperforming branches. (thousands of dollars, except for per share amounts and branch figures) Q2 Q1 Q5 Q4 Q3 Q2 Q1 Q4 Consolidated Results No. of branches Canada United Kingdom 6 4 2 2 - Loan volumes Loan fees included $ Regulated definition (excluding loan fee upon regulation) Loan fees excluded in regulated provinces $ Loan fees $ Other income Branch expenses Salaries and benefits Retention payments Selling, general and administrative Rent Advertising and promotion Provision for loan losses 86 16 32 24 Depreciation of property and equipment Branch operating income Regional expenses Corporate expenses Other depreciation and amortization 13 Net income before income taxes and class action settlements Class action settlements - EBITDA* Net income and comprehensive income $ Basic earnings per share Net income and comprehensive income $ Diluted earnings per share Net income and comprehensive income $ *EBITDA – earnings from operations before interest, income taxes, stock-based compensation, depreciation of property and equipment and amortization of intangible assets OTHER Cash Store Financial is a Canadian corporation that is not affiliated with Cottonwood Financial Ltd. or the outlets Cottonwood Financial Ltd.operates in the United States under the name "Cash Store." Cash Store Financial does not do business under the name "Cash Store" in the United States and does notprovide any consumer lending services in the United States. Cautionary Statement Regarding Forward-looking Information This MD&A contains “forward-looking information” within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with but not limited to, market conditions, the availability of alternative transactions, shareholder, legal, regulatory and court approvals and third party consents, and other factors described in the our latest Annual Information Form filed on SEDAR at www.sedar.com under the heading “Risk Factors”. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws. - 18 - Non-GAAP Measures This MD&A refers to certain financial measures that are not determined in accordance with GAAP in Canada.These measures do not have standardized meanings and may not be comparable to similar measures presented by other companies.Although a measure such as ‘Earnings Before Interest, Income Taxes, Stock-based Compensation, Depreciation of Property and Equipment and Amortization of Intangible Assets’ (EBITDA) does not have a standardized meaning prescribed by GAAP, this measure is used herein or can be determined by reference to our financial statements.“Same branch revenues” is a non-GAAP measure tracked and reported by us and is generally used to compare the average revenue for a particular group of branches in a current period to that same particular group of branches in a prior period. This non-GAAP measure is a way to gauge the performance of a particular group of branches and is directly related to, and helps explain, changes in total revenue.Average revenue is defined as revenue for the period divided by the number of branches. “BOI” is a non-GAAP measure tracked and reported by us and is generally used to compare the performance at branch level and includes expenses which primarily relate to the operations of the branch network. “Operating income” (OI) is a non-GAAP measure tracked and reported by us and is generally used to compare the income before income taxes and other non-recurring items which primarily relates to the overall operations of the branch, regional and corporate network.“Regional expenses” is a non-GAAP measure which is used to gauge expenditures at the regional and divisional level and includes compensation of associates including centralized regional departments, Regional Managers, Divisional Vice Presidents and President, as well as other expenses related to the functions of these groups. “Corporate expenses” is a non-GAAP measure which is used to gauge expenditures at the corporate level and includes compensation of associates and related expenses at the corporate office level. These measures are discussed because management believes that they facilitate the understanding of our results as it relates to our operational and financial position. The following table provides a reconciliation of net income in accordance with GAAP to EBITDA for the past eight quarters. EBITDA Reconciliation (thousands of dollars) Q2 Q1 Q5 Q4 Q3 Q2 Q1 Q4 Consolidated Results Net income and comprehensive income $ Interest 36 43 51 44 29 29 27 41 Income tax Stock-based compensation Depreciation of property and equipment and amortization of intangible assets EBITDA $ EBITDA adjusted for class action settlements $ - 19 -

Exhibit 10.1 H&R Block, Inc. (the “Company”), a Missouri corporation, hereby establishes and adopts the following 2018 Long Term Incentive Plan (as amended from time to time, the “Plan”). success and to achieve long-term objectives that will benefit shareholders of 2. DEFINITIONS Share Award, Restricted Share Unit Award, Other Share-Based Award, Performance electronic medium. time to time. each of whom is (a) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, (b) an “outside director” within the meaning of Section 162(m) of the Code, and (c) an “independent director” for purpose of the rules traded, to the extent required by such rules. such person (a) renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital‑raising transaction, (b) does not directly or indirectly promote or maintain a market for the Company’s securities, and (c) otherwise qualifies as a consultant under the registration statement. the Code. amended. (a) the closing price of the Shares as reported on the principal U.S. national which such a closing price was reported, (b) if the Shares are not listed on any such date, then on the last preceding date on which a sale was reported, or (c) property other than Shares shall mean the market value of such property time by the Committee. Notwithstanding the foregoing, if the Committee determines in its discretion that an alternative definition of Fair Market Value should be used in connection with the grant, exercise, vesting, settlement, or payout of any Award, it may specify such alternative definition in the Award Agreement applicable to the Award. Such alternative definition may include a of a Share on the principal U.S. national securities exchange on which the Shares are listed and traded on the given date, the trading date preceding the trading days. the Code. Section 8.1. Performance Share Units or Performance Units granted pursuant to Section 9. 2 2.20.    “Performance Share Unit” shall mean any grant pursuant to Section 9 of Committee shall establish. establish. 2.23.    “Prior Plans” shall mean, collectively, the Company’s 2003 Long-Term Executive Compensation Plan, 2008 Deferred Stock Unit Plan for Outside Directors and 2013 Long Term Incentive Plan. 2.24.    “Restricted Share” shall mean any Share issued with the restriction in installments or otherwise, as the Committee may deem appropriate. 2.25.    “Restricted Share Award” shall have the meaning set forth in Section 7.1. 2.26    “Restricted Share Unit” means an Award that is valued by reference to a 2.27    “Restricted Share Unit Award” shall have the meaning set forth in Section 7.1. par value. limited liability company, partnership, or other form of business entity in an unbroken chain of such entities beginning with the Company if, at the relevant time each of the entities other than the last entity in 3 the unbroken chain owns stock or other similar ownership interests possessing similar ownership interests in one of the other entities in the chain. any Subsidiary combines. Committee or Board during which vesting restrictions for an Award are applicable. a total of 15,000,000 Shares shall be authorized for Awards granted under the Plan less one (1) Share for every one (1) Share subject to an award granted under any Prior Plan after June 30, 2017. After the effective date of the Plan portion of the Shares subject to such Award, such Shares shall, to the extent of be available for grant under the Plan, or (ii) after June 30, 2017, any Shares subject to an award under the Prior Plans are forfeited, an award under the Prior Plans expires or otherwise terminates without issuance of such Shares, or an award under the Prior Plans is settled for cash (in whole or in part), or subject to such award, then in each such case the Shares subject to the Award or award under the Prior Plans shall, to the extent of such forfeiture, expiration, the Plan on a one-for-one basis. (c)    In the event that any withholding tax liabilities arising from the issuance or vesting of Shares in connection with a “full-value” Award (i.e., an Award other than an Option or Stock Appreciation Right or similar appreciation award) are satisfied by the tendering or withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall again be available for grant under the Plan and be added back to the number of Shares available for issuance on a one-for-one basis. In the event that after June 30, 2017 any withholding tax liabilities arising from the issuance or vesting of Shares in connection with a full-value award granted under the Prior Plans, are satisfied by the tendering or withholding of Shares by the Company, then in each such case the Shares so tendered or withheld shall again be available for grant under the Plan and be added back to the number of Shares available for issuance on a one-for-one basis. (d)    Notwithstanding anything to the contrary contained herein, the following of this Section: (i) Shares tendered by the Participant or withheld by the Company in payment of the purchase price of an Option or, after June 30, 2017, an option under any Prior Plan, (ii) Shares tendered by the 4 with respect to Options or Stock Appreciation Rights or, after June 30, 2017, options or stock appreciation rights under any Prior Plan, (iii) Shares subject to a Stock Appreciation Right or, after June 30, 2017, a stock appreciation right under any Prior Plan that are not issued in connection with its stock open market or otherwise using cash proceeds from the exercise of Options or, after June 30, 2017, options under any Prior Plan. the Plan or the applicable limitations for grant to a Participant under Section Awards under the Plan as provided in Sections 3.1(b) and (d) above. payable to the holders of common stock of the entities that are parties to such 4.2.    Administration. (a) Except with respect to any authority, duties or responsibilities that the Committee is permitted and elects to delegate hereunder, the Plan shall be administered by the Committee. The Committee shall granted hereunder (including, without limitation, the exercise price, the time criteria), any vesting acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Awards or the Shares relating thereto) shall determine; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, 5 Appreciation Right, will include Dividend Equivalents subject to Section 12.5; (c)    To the extent not inconsistent with applicable law (including without limitation applicable state laws), Section 162(m) of the Code with respect to Awards intended to comply with the performance-based compensation exception under Section 162(m), and the rules and regulations of the principal U.S. national securities exchange on which the Shares are traded, the Committee may (i) delegate to a committee of one or more Directors of the Company, or such higher number as may be required under applicable law, any of the authority of Awards, (ii) delegate to one or more executive officers the Committee’s authority, duties and responsibilities relating to the Company’s right to prevent, enforce or remedy affirmative or restrictive covenants contained in any Award, as set forth in Section 13.5(b), including the authority for such executive officer(s) to further delegate such authority, duties and responsibilities to any other individual or entity, whether or not such person or entity is employed by, an officer of, or affiliated with the Company and (iii) authorize one or more executive officers to do one or more of the following with respect to Employees who are not directors or executive officers of the Company to the extent permissible under applicable law: (A) designate Employees to be recipients of Awards, (B) determine the number of Shares subject to designate himself or herself as the recipient of an Award. 4.3.    Director Compensation Limit. The maximum number of Shares subject to Awards granted under the Plan or otherwise during any one fiscal year to any Director, taken together with any cash fees paid by the Company to such Director during such fiscal year for service as Director, will not exceed $750,000 in fair value of such Awards for financial reporting purposes), excluding, for this purpose, the value of any Dividend Equivalents paid during such fiscal year . For purposes of the foregoing limitation, any deferred stock units or other deferred shares granted under the Plan shall count against the limit only during the fiscal year in which the Awards are initially granted and not in the fiscal year in which any deferred stock units or deferred Shares are ultimately settled and issued. 6 The limitation set forth in this Section 4.3 will not apply to Awards granted to a Director solely in his or her capacity as non-executive chairman of the Board, provided that the non-executive chairman receiving such additional compensation 5.     OPTIONS 5.1.    Grant. Options may be granted hereunder to Participants either alone or to the terms and conditions of this Section 5 and to such additional terms and shall deem desirable. in such form and containing such terms and conditions as the Committee or Board Option pursuant to this Section 5 may hold more than one Option granted pursuant the Company’s shareholders (a) lower the option price per Share of an Option exceeds the Fair Market Value of one Share in exchange for cash, another Award or other consideration (other than in connection with a Change in Control as principal U.S. national securities exchange on which the Shares are listed. event that on the last business day of the term of an Option (a) the exercise of law or (b) Shares may not be purchased or sold by certain Employees or Directors undertaken in connection 7 with an issuance of securities by the Company, the term shall be extended for a period or lock-up agreement. 5.5.    Vesting of Options.    The Award Agreement shall specify when Options vest and become exercisable. Except for Substitute Awards, the death, disability or retirement of the Participant, or special circumstances determined by the Committee, Options shall have a Vesting Period of not less than (a) twenty-four (24) months from date of grant (but permitting pro rata vesting over such time) if subject only to continued service with the Company or a Subsidiary and (b) one year from the date of grant if subject to the achievement of performance objectives, subject in either case to accelerated vesting in the Committee’s discretion in the event of a Change in Control (as defined in Section 11.3) if the Options are not assumed, substituted for or continued as provided in Section 11.2. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to (x) grants to new hires to replace forfeited awards from a prior employer or (y) grants in payment of Performance Awards and other earned cash-based incentive compensation. The minimum Vesting Period requirements of this Section shall not apply to Options granted to Directors or Consultants. 5.6.    Exercise of Options. (a) Vested Options granted under the Plan shall be exercised by the Participant or by a Permitted Assignee thereof (or the requirements consistent with the provisions of the Plan as the Committee, or any representative authorized by the Committee, may prescribe from time to time. of exercise, accompanied by such payment, shall be delivered to the Company or its designated agent at its principal business office or such other office as (c) Notwithstanding the foregoing, an Award Agreement may provide that if, on the last day of the term of an Option, the Fair Market Value of one Share such day with payment made by withholding Shares otherwise issuable in deliver to the 8 5.7.    Form of Settlement. In its sole discretion, the Committee may provide Restricted Shares or other similar securities. 5.8.    Incentive Stock Options. The Committee may grant Incentive Stock Options to any Employee, subject to the requirements of Section 422 of the Code. Solely shall be 15,000,000 Shares, subject to adjustment as provided in Section 12.2. 6.1.    Grant and Vesting. (a)    The Committee may grant Stock Appreciation Rights (i) in tandem with all the term of such Option, (ii) in tandem with all or part of any Award (other of such Award, or (iii) without regard to any Option or other Award in each case discretion. (b)    The Award Agreement shall specify when Stock Appreciation Rights vest and become exercisable. Except for Substitute Awards, the death, disability or retirement of the Participant, or special circumstances determined by the Committee, Stock Appreciation Rights shall have a Vesting Period of not less than (i) twenty-four (24) months from date of grant (but permitting pro rata vesting over such time) if subject only to continued service with the Company or a Subsidiary and (ii) one year from the date of grant if subject to the achievement of performance objectives, subject in either case to accelerated vesting in the Committee’s discretion in the event of a Change in Control (as defined in Section 11.3) if the Stock Appreciation Rights are not assumed, substituted for or continued as provided in Section 11.2. Notwithstanding the (x) grants to new hires to replace forfeited awards from a prior employer or (y) grants in payment of Performance Awards and other earned cash-based incentive compensation. The minimum Vesting Period requirements of this Section shall not apply to Stock Appreciation Rights granted to Directors or Consultants. date of exercise (or such 9 grant price of the Stock Appreciation Right.   (b)The Committee shall determine in its sole discretion whether payment on =   (d)The Committee may impose such other terms and conditions on the exercise of not be purchased or sold by certain Employees or Directors due to the “black-out (e)An Award Agreement may provide that if, on the last day of the term of a Stock Appreciation Right, the Fair Market Value of one Share exceeds the grant (f)Without the approval of the Company’s shareholders, other than pursuant to Appreciation Right after the date of grant, (ii) cancel any Stock Appreciation in exchange for cash, another Award or other consideration (other than in any other action with respect to a Stock Appreciation Right that would be national securities exchange on which the Shares are listed.   10 7. 7.1.    Grants. Awards of Restricted Shares and of Restricted Share Units may be granted under the Plan (a “Restricted Share Award” or “Restricted Share Unit Award” respectively), and such Restricted Share Awards and Restricted Share Unit of Restricted Shares or Restricted Share Units, subject to such minimum 7.2.    Award Agreements. The terms of any Restricted Share Award or Restricted Share Unit Award granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee or Board and not inconsistent with the Plan. The terms of Restricted Share Awards and Restricted Share Unit Awards need not be the same with respect to each Participant. 7.3.    Rights of Holders of Restricted Shares and Restricted Share Units. (a)    Unless otherwise provided in the Award Agreement, beginning on the date of grant of the Restricted Share Award and subject to execution of the Award rights of a shareholder, including the right to vote such Shares and the right (b)    A Participant who holds a Restricted Share Unit Award shall only have those rights specifically provided for in the Award Agreement; provided, such Award. (c)    A Participant shall have those rights to dividends, distributions or Dividend Equivalents as set forth in Section 12.5. 7.4.    Vesting Period. The Award Agreement shall specify the Vesting Period for Restricted Share Awards or Restricted Share Unit Awards. Except for Substitute Awards, the death, disability or retirement of the Participant, or special circumstances determined by the Committee, Restricted Share Awards and Restricted Share Unit Awards shall have a Vesting Period of not less than (a) such time) if subject only to continued service with the Company or a Subsidiary and (b) one year from the date of grant if subject to the achievement of performance objectives, subject in either case to accelerated vesting in the Committee’s discretion in the event of a Change in Control (as defined in Section 11.3) if the Restricted Share Awards or Restricted Share Unit Awards are not assumed, substituted for or continued as provided in Section 11.2. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to (x) grants to new hires to replace forfeited awards from a prior employer or (y) grants in payment of Performance Awards and other earned cash-based 11 incentive compensation. The minimum Vesting Period requirements of this Section shall not apply to Restricted Share Awards or Restricted Share Unit Awards granted to Directors or Consultants. 7.5    Issuance of Shares. Any Restricted Shares granted under the Plan may be applicable to such Restricted Shares. 8. compensation. determined by the Committee and that are not inconsistent with the Plan. The terms of such Awards need not be the same with respect to each Participant. An Other Share-Based Award may entitle a Participant to dividends, distributions or 8.3.    Vesting Period. The Award Agreement shall specify the Vesting Period for Other Share-Based Awards. Except for Substitute Awards, the death, disability or Committee, Other Share-Based Awards shall have a Vesting Period of not less than (a) twenty-four (24) months from date of grant (but permitting pro rata vesting Subsidiary and (b) one year from the date of grant if subject to the achievement of performance objectives, subject in either case to accelerated vesting in the Section 11.3) if the Other Share-Based Awards are not assumed, substituted for or continued as provided in Section 11.2. Notwithstanding the foregoing, the restrictions in the preceding sentence shall not be applicable to (x) grants to new hires to replace forfeited awards from a prior employer or (y) grants of Other Share-Based Awards in payment of Performance Awards and other earned cash-based incentive compensation. The minimum Vesting Period requirements of this Section shall not apply to Other Share-Based Awards granted to Directors or Consultants. 12 9.    PERFORMANCE AWARDS Share Units or Performance Units, as determined by the Committee in its sole determined by the Committee or Board and may be based upon the criteria set its discretion. determined by the Committee or Board and that are not inconsistent with the Plan, including whether such Awards shall have Dividend Equivalents in accordance with Section 12.5. The terms of Performance Awards need not be the by the Committee or Board upon the grant of each Performance Award; provided, however, that a Performance Period shall not be shorter than one year unless the Award is not payable in Shares. The amount of the Award to be distributed shall be conclusively determined by the Committee or Board. 9.4.    Payment. Except as provided in Section 11, as provided by the Committee or Board or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance in the sole discretion of the Committee or Board. Performance Awards may be paid or, in accordance with procedures established by the Committee or Board, on a the Committee determines at the time a Restricted Share Award, a Restricted Share Unit Award, a Performance Award or an Other Share-Based Award is granted to a Participant who is, or may be, as of the end of the tax year in which the such Award. 10.2.    Performance Criteria. (a)    If the Committee determines that a Restricted Share Award, a Restricted Share Unit, a Performance Award, an Other Share-Based Award or any other Award is intended to be subject to this Section 10, the lapsing of restrictions attainment 13 (including average return on equity); total shareholder return (or any element of shareholder return); return on assets or net assets; the price of the Shares or any other publicly-traded securities of the Company; total number of clients; number of new clients; client retention; total tax returns prepared; market earnings or losses margin percentage or net earnings or losses margin percentage; economic value-added models or equivalent metrics; comparisons with including cash, inventory and accounts receivable; general and administrative cash; cash margin; debt reduction; shareholders equity; operating efficiencies; cost reductions or savings; market share; customer satisfaction; customer growth; customer retention; employee satisfaction; productivity or productivity ratios; regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents); strategic partnerships or transactions organizations, distributors and other vendors); co-development, co-marketing, level; year-end cash position; book value; factoring transactions; competitive Company’s assets, including its intellectual property, whether in a particular royalty income; implementation, completion or attainment of measurable and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; factoring transactions; and recruiting and maintaining personnel. Any performance goals that are financial metrics may be Principles (“GAAP”) or may be adjusted when established (or to the extent or exclude any items otherwise includable or excludable under GAAP. (b)    The performance goals specified in Section 10.2(a) also may be based solely by reference to the Company’s consolidated performance, performance of the Company’s continuing operations, or the performance of a Subsidiary, division, business segment or business unit of the 14 Company, or based upon the performance of the Company relative to performance of other companies or upon comparisons of any of the indicators of Company performance relative to performance of other companies. (c)    When determining the specific metrics applicable to the performance goals specified in Section 10.2(a), and calculating the actual results related thereto, the Committee may include or exclude the impact of an event or occurrence which the Committee determines should appropriately be included or excluded, including without limitation (i) restructurings, performance attributable to discontinued operations, extraordinary items, and other unusual, infrequently occurring, or non-recurring charges, (ii) any event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, (iii) acquisitions and divestitures, (iv) any reorganization or change in the corporate structure or capital structure of the Company, (v) foreign exchange gains or losses or (vi) the cumulative effects of tax or principles. (d)    Such performance goals shall be set by the Committee within the time Section 11), with respect to any Restricted Share Award, Restricted Share Unit of the applicable performance goals except to the extent permitted by Section 162(m) of the Code and the regulations thereunder without causing the Award to cease to be performance-based. Code. as provided in Section 12.2, no Participant may be granted during any calendar year (a) Options or Stock Appreciation Rights with respect to more than 5,000,000 Shares, or (b) Restricted Share Awards, Restricted Share Unit Awards, Performance Awards and/or Other Share-Based Awards with respect to more than 1,000,000 shares, ignoring for purposes of the limitation in this clause (b), any Restricted Share Awards, Restricted Share Unit Awards, Performance Awards and/or Other Share-Based Awards that are (i) not intended to comply with the performance-based exception under Code Section 162(m), or (ii) denominated in cash. During any calendar year, no Participant may be granted Performance Awards Section 162(m) and are denominated in cash under which more than $3,000,000 may be earned for each twelve (12) months in the Performance Period. Each of the limitations in this section shall be multiplied by two (2) with respect to Participant commences employment with the Company and its Subsidiaries. If an 15 applicable limitation in this section. 11.1.    Impact on Certain Awards. The Committee may, in Award Agreements or otherwise, provide that in the event of a Change in Control of the Company (as defined in Section 11.3) (a) Options and Stock Appreciation Rights outstanding Change in Control is less than the per Share Option exercise price or Stock Appreciation Right grant price, and (b) all Performance Awards shall be (i) considered to be earned and payable based on achievement of performance goals or based on target performance (either in full or pro rata based on the portion of limitations or other restrictions shall lapse and such Performance Awards shall be immediately settled or distributed or (ii) converted into Restricted Share or Restricted Share Unit Awards based on achievement of performance goals or based Stock Appreciation Right, Restricted Share Award, Restricted Share Unit Award or Award Agreement, including prior to the Change in Control if applicable) and under the circumstances specified in the Award Agreement (i) Options and Stock restrictions, limitations and other conditions applicable to Restricted Shares and Restricted Share Units outstanding as of the date of such termination of employment shall lapse and the Restricted Shares and Restricted Share Units restrictions, limitations and conditions and become fully vested and Section 11.2, an Option, Stock Appreciation Right, Restricted Share Award, Restricted Share Unit Award or Other Share-Based Award shall be considered Appreciation Right, Restricted Share Award, Restricted Share Unit Award or Other not solely common stock of the successor company, the 16 of the successor company with a fair market value substantially equal to the per constituting a Change in Control. The determination of whether fair market value is substantially equal shall be made by the Committee in its sole discretion and substitute for an Option, Stock Appreciation Right, Restricted Share Award, Restricted Share Unit Award or Other Share-Based Award (or in which the Company applicable to Restricted Share and Restricted Share Units that are not assumed or substituted for (or continued) shall lapse and the Restricted Share and Restricted Share Units shall become free of all restrictions, limitations and occurrence of such Change in Control over the exercise price per Share of such following events: 17 however, that the event described in this Section 11.3(b) shall not be deemed to the Company or any Subsidiary; (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (iii) by any securities; or (iv) pursuant to a Non-Qualifying Transaction, as defined in Section 11.3(c); (d)    The consummation of a sale of 50% or more of the total gross fair market value of the Company’s assets, other than to an entity (or, if applicable, the of 100% of the voting securities eligible to elect directors of such entity) (i) in which 50% or more of the Voting Securities is represented by Company Voting Securities that were outstanding immediately prior to such sale or (ii) of which the Company directly or indirectly owns 50% or more of the Voting Securities. Notwithstanding anything contained in this Section 11.3, a Change in Control ownership of more than 35% of the Company Voting Securities as a result of the additional Company 18 approval of the Company’s shareholders, amend the Plan to (a) increase the shareholder approval, (e) increase the maximum permissible term of any Option shareholders, take any action with respect to an Option or Stock Appreciation Right that would, if such action were taken by the Committee, violate section 5.3 or 6.2(f). In addition, no amendments to, or termination of, the Plan shall issued pursuant to Incentive Stock Options, in the aggregate or to any the Committee may determine to be appropriate, and the performance goals subject to any Award shall always be a whole number, unless the Committee determines otherwise. 19 by the Committee, a Participant may assign or transfer an Award without consideration (each transferee thereof, a “Permitted Assignee”) (a) to the children or grandchildren), parents, grandparents or siblings, (b) to a trust clause (a), (c) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (a) are the only partners, members or shareholders, or (d) for charitable donations; provided however, that such Permitted Assignee shall be bound by and subject to all of 12.4.    Termination of Employment or Services. The Committee shall determine and set forth in each Award Agreement whether any Awards granted in such Award 12.5.    Deferral; Dividends and Dividend Equivalents. (a) The Committee shall may be deferred in accordance with Section 13.15. (b)     Unless otherwise expressly provided in the applicable Restricted Share Award Agreement, Restricted Share Awards shall be entitled to receive Shares or any other property distributed as a dividends or otherwise relating to the underlying Shares; provided, however, in no event may any such distributed property or dividends be distributed or paid to the Participant and with respect to a Restricted Share before such Restricted Share has become vested and all such distributions and dividends shall be subject to the same restrictions and risk of forfeiture to the same extent as the Restricted Share and shall be paid, if at all, at the time(s) such restrictions and risk of forfeiture lapse. The and at what rate. (c)    The recipient of an Award other than an Option, Stock Appreciation Right or Restricted Share Award may, if so determined by the Committee, be entitled to other property, paid as dividends on Shares (“Dividend Equivalents”) with respect to the number of Shares covered by the Award; provided, however, (i) in no event will any such Dividend Equivalents be distributed to the Participant before the underlying Shares covered by the Award to which the Dividend Equivalents relate become vested or issued, (ii) any such Dividend Equivalents shall be subject to the same restrictions and risk of forfeiture as underlying Shares subject to the Award, and shall be paid, if at all, at the time such restrictions and risk of forfeiture lapse. Subject to the provisions of the Plan and to the extent expressly provided in the applicable Award Agreement, the Committee shall have 20 that is subject to such restrictions shall earn interest and at what rate or whether Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested or deemed reinvested in additional Shares. 13.    MISCELLANEOUS in a form approved by the Committee or Board and executed by the Company by an form approved by the Committee or Board and recorded by the Company (or its as established by the Committee or Board consistent with the provisions of the Plan. The Award Agreement may be amended by agreement of the Company and the recipient, to the extent approved by the Committee or Board. event occurring pursuant to the Plan. The Company or any Subsidiary shall have withholding taxes. If the Participant (or Permitted Assignee) shall fail to make election by Participants (or Permitted Assignees) to satisfy such obligation for directing the Company to retain Shares otherwise deliverable in connection with the Award at such rate as will not cause an adverse accounting consequence or cost and is permitted under applicable withholding rules. employment or other relationship. No Employee, Director 21 or Consultant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees, Directors or Consultants under the Plan. the contrary contained herein, an Award Agreement may provide that (a)    In the event of an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws, the Committee shall have the right to review any Award, the amount, payment or vesting of which was directly or indirectly based on an entry in the financial statements that are the subject of the restatement. If the Committee determines that (i) based on the results of the restatement or (ii) due to inaccurate financial data used to determine the payment or vesting of an Award, that a lesser amount or portion of an Award should have been paid, vested or realized (including as a result of the impact of the restatement or inaccurate data on the Fair Market Value of Shares as determined by the Committee in its discretion), it may (x) cancel all or any portion of any outstanding Awards and (y) require the Participant or other person to whom any payment has been made or shares or other property have been transferred in connection with the Award to preceding the date of the restatement and ending with the date of Committee action pursuant to this section of the Plan. In applying this section, the by or providing services to the Company or any Subsidiary or after termination non-disclosure covenant or agreement, as determined by the Committee in its sole portion of the Award may, at the Committee’s discretion, be canceled and (ii) the Committee, in its discretion, may require the Participant or other person to whom any payment has been made, or Shares or other property have been transferred in connection with the Award, to forfeit and pay over to the realized upon the exercise of any Option or Stock Appreciation Right and the Award during the time period specified in the Award Agreement. Except with respect to officers who are designated as executive officers by the Company’s Board of Directors under Section 16 of the Securities Act of 1934, the Committee shall have the power to delegate all or a portion of the Committee’s authority, duties and responsibilities under this Section 13.5(b) to one or more executive officers of the Company, including the authority for such executive officer(s) to further delegate such authority, duties and responsibilities to any other individual or entity, whether or not such person or entity is employed by, an officer of, or affiliated with the Company. Any delegation, including any delegation made by an executive officer, may be rescinded by the Committee at any time. 22 13.6.    Stop Transfer Orders. All Shares delivered under the Plan pursuant to any Award shall be subject to such stop transfer orders and other restrictions requirements of the SEC, any stock exchange upon which the Shares are then may cause a legend or notation to be put on any certificates or book entries to Subsidiary, division or business unit of the Company or a Subsidiary. Any income or gain realized pursuant to Awards under the Plan constitutes a special required by the terms of such plan or determined by the Committee or by the Board or board of directors of the applicable Subsidiary. extent that it would not be unlawful, invalid, unenforceable or impermissible, limitation.” 23 United States, shall be governed by the laws of the State of Missouri, without effective one (1) business day following the date of the approval of the Plan by shareholders of the Company. The Plan shall be null and void and of no effect if the Plan; provided, however, in no event may an Incentive Stock Option be granted more than ten (10) years after the earlier of (a) the date of the adoption of the Plan by the Board or (b) the effective date of the Plan as provided in the first sentence of this Section. Such outstanding Awards shall 13.15.    Compliance with Section 409A of the Code. It is intended that Awards shall not result in, and that this Plan and Awards shall be administered in a manner that does not result in, the imposition of any taxes, interest or penalties as a result of Section 409A of the Code and regulations and other guidance issued with respect thereto (any such taxes, interest or penalties shall be a “409A Penalty”) and this Plan and Awards shall be construed and the Award shall be granted, paid, settled or deferred in a manner that will not result in a 409A Penalty, except as otherwise determined by the Committee. Any settlement or deferral thereof to result in a 409A Penalty shall be amended so as not to result in or to minimize a 409A Penalty on a timely basis, which may guidance issued under Section 409A of the Code. Notwithstanding the requirements of this Section, in no event will the Company or any affiliate thereof (including the Committee) have any liability to any Participant with respect to any 409A Penalty even if there is a failure on the part of the Company or Committee to avoid or minimize a 409A Penalty. 24 Award are not registered with any governmental body or organization (including, required to settle its obligations, if any, under this Plan in cash. 13.17.    Data Privacy. As a condition of acceptance of an Award, the representative. 13.18. Indemnity. To the extent allowable pursuant to applicable law, each delegated any of its authority 25 under the Plan shall be indemnified and held harmless by the Company from any harmless. 13.19.    Whistleblower Protections. Nothing contained herein, in any Award Agreement, or otherwise prohibits the Participant from: (a) reporting possible the U.S. Department of Justice, the SEC, the U.S. Congress, or any agency Inspector General; (b) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (c) otherwise fully participating in any federal whistleblower programs, including but not limited to any such programs managed by the SEC and/or the Occupational Safety and Health Administration. The Participant does not need prior authorization from the Company to make any such reports or disclosures, and is not required to notify the Company about such disclosures. 13.20. Captions. The captions in the Plan are for convenience of reference only, 26

EXHIBIT 10.3 To:   International Game Technology 6355 South Buffalo Drive Las Vegas, Nevada 89113-s   From:   BNP Paribas 787 Seventh Avenue     Re:   Capped Accelerated Stock Buyback   Ref. No:     Date: November 7, 2013 This master confirmation (this "Master Confirmation"), dated as of November 7, 2013 is intended to set forth certain terms and provisions of certain Transactions (each, a "Transaction") entered into from time to time between BNP Paribas ("Dealer") and International Game Technology ("Counterparty").  This Confirmation in the form of Schedule A hereto (a "Supplemental Confirmation"), form of Schedule B hereto (a "Trade Notification"), which shall reference the constitute a "Confirmation" as referred to in the Agreement specified below. Counterparty and Dealer as to the subject matter and terms of each Transaction "Agreement") as if Dealer and Counterparty had executed the Agreement on the Obligations Law) as the governing law and US Dollars ("USD") as the Termination apply to the Transactions, (iii) the replacement of the word "third" in the last line of Section 5(a)(i) with the word "first" and (iv) the election that the and Dealer, in each case with a "Threshold Amount" of 3% of stockholder's equity of Counterparty or Dealer, as applicable, and with the deletion of the phrase ", or becoming capable at such time of being declared," in the seventh line of Section 5(a)(vi)). Master Agreement. Confirmation. Agreement. General Terms:       Trade Date:     Buyer:   Counterparty   Seller:   Dealer   Shares:     Exchange:   New York Stock Exchange     All Exchanges.     Applicable   Prepayment Amount:     Prepayment Date:     Valuation:       Hedge Period:     Hedge Completion Date:   Exchange Business Day on which Dealer finishes establishing its initial Hedge Positions in respect of such Transaction, as determined by Dealer in its sole     subject to postponement as provided in "Valuation Disruption" below.     subject to "Valuation Disruption" below.   VWAP Price:   For any Exchange Business Day, the New York 10b‑18 Volume Weighted Average Price Exchange Business Day, on Bloomberg page "IGT.N <Equity> AQR_SEC" (or any Business Day for any reason or is, in the Calculation Agent's reasonable during which Counterparty could purchase its own shares under Rule 10b‑18(b)(2) and are effected pursuant to the conditions of Rule 10b‑18(b)(3), each under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (such trades, "Rule 10b‑18 eligible transactions").   Forward Price:   As of any Exchange Business Day during the Calculation Period, the average of the VWAP Prices for the Exchange Business Days in the Calculation Period occurring prior to, and including, such Exchange Business Day, subject to "Valuation Disruption" below.       Calculation Period:   the Termination Date.     For each Transaction, as set forth in the related Supplemental Confirmation, to be the first Scheduled Trading Day immediately following the Trade Date.   Termination Date:   The Scheduled Termination Date; provided that Dealer shall have the right to be the Termination Date (the "Accelerated Termination Date") by delivering Accelerated Termination Date. In the case of  any acceleration of the Termination Date in part (a "Partial Acceleration"), (a) Dealer shall specify in its written notice to Counterparty accelerating the Termination Date the corresponding percentage of the Prepayment Amount that is subject to valuation on the related Valuation Date, (b) such portion of the Prepayment Amount that is subject to valuation on the related Valuation Date shall not be less than USD 50 million (provided that if after any Partial Acceleration the remaining portion of the Transaction corresponding to the Prepayment Amount would be less than USD 50 million, Dealer may only accelerate the Transaction with respect to such full amount) and (c) Calculation Agent shall adjust the terms of the Transaction to reflect the occurrence of such Partial Acceleration and a corresponding reduction to relevant terms of the Transaction (including cumulative adjustments to take into account multiple Partial Accelerations that occur during the term of the Transaction). Not more than four Partial Accelerations shall be permitted during the term of the Transaction.   Scheduled Termination Date:     First Acceleration Date:     Valuation Disruption:   Definitions is hereby amended by deleting the words "at any time during the Knock‑in Valuation Time or Knock-out Valuation Time, as the case may be" and inserting the words "at any time on any Scheduled Trading Day during the Hedge Period, Calculation Period or Settlement Valuation Period" after the word "material," in the third line thereof.       remainder of the provision following the term "Scheduled Closing Time" in the fourth line thereof.       shall, acting in good faith and in a commercially reasonable manner, determine determined by the Calculation Agent based on Rule 10b‑18 eligible transactions of the relevant Market Disruption Event, and the weighting of the VWAP Price for the relevant Exchange Business Days during the Hedge Period, the Calculation in a commercially reasonable manner by the Calculation Agent for purposes of         Settlement Terms:       Physical Settlement:   Applicable; provided that Dealer does not, and shall not, make the agreement or Shares delivered by Dealer to Counterparty under any Transaction.     the Initial Share Delivery and the Minimum Share Delivery described below.  Notwithstanding Section 9.2 of the Equity Definitions, the Number of Shares to be Delivered shall be rounded down to the nearest whole number of Shares and no Fractional Share Amounts shall be delivered.   Divisor Amount:     Excess Dividend Amount:     Settlement Date:   Date.   Settlement Currency:   USD   Initial Share Delivery:   Dealer shall deliver a number of Shares equal to the Initial Shares to "Settlement Date" for purposes of such Section 9.4.       Initial Shares:     Minimum Share Delivery:   Dealer shall deliver a number of Shares equal to the excess, if any, of the Delivery Date deemed to be a "Settlement Date" for purposes of such Section 9.4.       Minimum Shares:     Share Adjustments:       Potential Adjustment Event:   additional stock options in the ordinary course pursuant to Counterparty's   Extraordinary Dividend:   ex‑dividend date occurring during such calendar quarter (other than any dividend Section 11.2(e)(ii)(A) of the Equity Definitions) (a "Dividend") the amount or previous Dividends with ex‑dividend dates occurring in the same calendar   Ordinary Dividend Amount:     Method of Adjustment:   Calculation Agent Adjustment     If an ex‑dividend date for any Dividend that is not an Extraordinary Dividend Relevant Period (as defined below) and is prior to the Scheduled Ex‑Dividend   Scheduled Ex‑Dividend Dates:   Supplemental Confirmation.   Extraordinary Events:               Modified Calculation Agent Adjustment     Cancellation and Payment     Component Adjustment   Tender Offer:   Applicable           election of Dealer     election of Dealer     election of Dealer     immediately re‑listed, re‑traded or re‑quoted on any of the New York Stock immediately re‑listed, re‑traded or re‑quoted on any such exchange or quotation   Additional Disruption Events:       Change in Law:   hereby amended by (i) replacing the phrase "the interpretation" in the third line thereof with the phrase ", or public announcement of, the formal or informal interpretation" and (ii) by replacing the word "Shares" where it appears in clause (X) thereof with the words "its Hedge Position"; provided constitutes a "Change in Law" shall be made without regard to Section 739 of the after the word "regulation" in the second line thereof with the words existing statute)".   Failure to Deliver:   Applicable   Insolvency Filing:   Applicable     Applicable       Hedging Party:   Dealer     Applicable       Hedging Party:   Dealer   Determining Party:   Dealer     The declaration by the Issuer of any Extraordinary Dividend, the ex‑dividend Transactions.   Relevant Dividend Period:       the Termination Date.     Applicable   Transfer:   of Dealer whose obligations are guaranteed by BNP Paribas without the consent of Counterparty.   Dealer Payment Instructions:   ABA: 026007689 Swift Code: BNPAUS3N Favor: BNP Paribas Paris (swift code: BNPAFRPP) A/C: 020019409300136   Counterparty's Contact Details for Purpose of Giving Notice:   International Game Technology 6355 South Buffalo Drive Attention:  Corporate Secretary Telephone:  702-669‑7777 Facsimile:  702-669‑7058   Dealer's Contact Details for Purpose of Giving Notice:   BNP Paribas Attention:  Damir Tanovic Telephone:  212-841-2504 Email:  damir.tanovic@us.bnpparibas.com               2.            Calculation Agent.                                                      Dealer that: (a)            Eligible Contract Participant.  It is an "eligible contract participant", as defined in the U.S. Commodity Exchange Act (as amended), and is party. the Securities Act of 1933, as amended (the "Securities Act"), by virtue of investment, (ii) it is an "accredited investor" as that term is defined under state securities laws. the Agreement, Counterparty represents, warrants and covenants to Dealer that: contemplated hereby will not violate Rule 13e‑1 or Rule 13e‑4 under the Exchange Act. disclosed Share buy-back program approved by its Board of Directors. Equity and ASC 815‑40, Derivatives and Hedging – Contracts in Entity's Own Equity. be, subject to a "restricted period" (as defined in Regulation M promulgated immediately preceding the first day of such "restricted period"; Counterparty "Regulation M Period" means, for any Transaction, (i) the Relevant Period (as Transaction. "Relevant Period" means, for any Transaction, the period commencing Termination Date for such Transaction, or such earlier day as elected by Dealer "Special Provisions for Acquisition Transaction Announcements" below). (h)            As of the Prepayment Date, Counterparty is not "insolvent" (as of the United States Code) (the "Bankruptcy Code")) and Counterparty would be in compliance with the laws of the jurisdiction of Counterparty's incorporation. (j)            Counterparty (A) is capable of evaluating investment risks hereof. regulatory or self-regulatory requirements, for it to refrain from or decrease any market activity on any Scheduled Trading Day or Days during the Hedge Period, the Calculation Period or, if applicable, the Settlement Valuation Day or Days. 6.            10b5‑1 Plan.  Counterparty represents, warrants and covenants to Dealer that: the prohibitions of Rule 10b5‑1 under the Exchange Act ("Rule 10b5‑1") or any with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5‑1 and each comply with the requirements of Rule 10b5‑1(c). (b)            Counterparty will not seek to control or influence Dealer's decision to make any "purchases or sales" (within the meaning of Confirmation, including, without limitation, Dealer's decision to enter into any each Trade Notification under Rule 10b5‑1. with the requirements for the amendment or termination of a "plan" as defined in Rule 10b5‑1(c).  Without limiting the generality of the foregoing, any such not as part of a plan or scheme to evade the prohibitions of Rule 10b‑5, and no Shares. 7.            Counterparty Purchases.  Counterparty (or any "affiliated purchaser" as defined in Rule 10b‑18 under the Exchange Act ("Rule 10b‑18")) shall not, without the prior written consent of Dealer, directly or indirectly or exercisable for Shares (including, without limitation, any Rule 10b‑18 purchases of blocks (as defined in Rule 10b‑18)) during any Relevant Period or, if applicable, Settlement Valuation Period, except through Dealer (i) will not during the period commencing on the Trade Date through the end of the Transaction make, or permit to be made (to the extent within Counterparty's "Public Announcement") unless such Public Announcement is made prior to the the Shares; (ii) trading session on the Exchange) notify Dealer following any such Public (iii) (i) Counterparty's average daily Rule 10b‑18 Purchases (as defined in Rule 10b‑18) during the three full calendar months immediately preceding the (b)            Counterparty acknowledges that a Public Announcement may cause terminated; accordingly, Counterparty acknowledges that in making any Public Announcement, it must comply with the standards set forth in Section 6 above. Counterparty or a third party), Dealer may elect that either (i) the Calculation of any Transaction, including, the Scheduled Termination Date and/or the Forward Price Adjustment Amount, to account for the economic effect of the Public Announcement on the theoretical value of the Transaction (including without limitation any change in volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction) or (ii) Dealer may treat the occurrence of such Public Announcement as an Additional Termination Event with Counterparty as taking into account the fact that the Calculation Period or Settlement Valuation Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated. "Merger Transaction" means any merger, acquisition or similar transaction Exchange Act. limitation and for the avoidance of doubt, adjustments to the Minimum Shares and for changes in volatility, expected dividends, stock loan rate and liquidity the Counterparty Settlement Provisions in Annex A shall apply. (b)            "Acquisition Transaction Announcement" means (i) the announcement announcement by Counterparty of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction or (iv) any announcement of any change or amendment to third party. (c)            "Acquisition Transaction" means (i) any Merger Event (for the references therein to "100%" being replaced by "15%" and to "50%" by "75%" and without reference to the clause beginning immediately following the any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 15% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or shareholders in respect of such transaction (whether pursuant to Rule 14e‑2 (i) each Transaction to be a "securities contract" as defined in Section 741(7) of the Bankruptcy Code, a "swap agreement" as defined in Section 101(53B) of the Bankruptcy Code and a "forward contract" as defined in Section 101(25) of the (ii) the Agreement to be a "master netting agreement" as defined in Section 101(38A) (iii) a party's right to liquidate, terminate or accelerate any Transaction, net out "contractual right" (as defined in the Bankruptcy Code); and (iv) Amount) and the transfer of such Shares to constitute "settlement payments" and "transfers" (as defined in the Bankruptcy Code). (i) during the term of any Transaction, Dealer and its affiliates may buy or sell (ii) (iii) any hedging or market activities in Counterparty's securities shall be conducted (iv) any market activities of Dealer and its affiliates with respect to the Shares (v) 12.            Delivery of Shares.  Notwithstanding anything to the contrary herein, Dealer may, by prior notice to Counterparty substantially in the form of securities on any date due (an "Original Delivery Date") by making separate on such Original Delivery Date.  If Dealer delivers more than the Number of delivered by Dealer pursuant to Section 6(d)(ii) of the Agreement (any such amount, a "Payment Amount"), then, in lieu of any payment of such Payment Amount, Counterparty may, is terminated, elect to deliver or for Dealer to deliver, as the case may be, to such unit, an "Alternative Delivery Unit" and, the securities or property comprising such unit, "Alternative Delivery Property")) with a value equal to Dealer, the prices at which Dealer purchases Shares or Alternative Delivery Property to fulfill its delivery obligations under this Section 13). If such delivery is made by Counterparty, paragraphs 2 through 7 of Annex A shall apply 14.            Calculations and Payment Date upon Early Termination.  The the Agreement Dealer may (but need not) determine losses without reference to accordance with Section 13, such Shares or Alternative Delivery Property shall 15.            Automatic Termination Provisions.  Notwithstanding anything to the contrary in Section 6 of the Agreement, if a Termination Price is specified in any Supplemental Confirmation, then an Additional Termination Event with occur without any notice or action by Dealer or Counterparty if the price of the falls below the Termination Price will be the "Early Termination Date" for 16.            Special Provisions for Counterparty Payments.  The parties hereby Transaction and, as a result, Counterparty owes to Dealer an amount calculated Dealer has delivered Shares before the Original Delivery Date pursuant to Section 12 above, this Section 16 shall cease to apply. classification of the contract as equity by ASC 815‑40, Derivatives and Hedging – Contracts in Entity's Own Equity, as in effect on the relevant Trade Date (including, without limitation, where Counterparty so elects to deliver cash or fails timely to elect to deliver Shares or Alternative Delivery Property in respect of the settlement of such Transactions). 18.            Claim in Bankruptcy.  Dealer acknowledges and agrees that this of Counterparty's bankruptcy. 19.            General Obligations Law of New York.  With respect to each a "qualified financial contract", as such term is defined in Section 5‑701(b)(2) of the General Obligations Law of New York (the "General Obligations Law"); (ii) such Trade Notification constitutes a "confirmation in writing sufficient to indicate that a contract has been made between the parties" hereto, as set forth in Section 5‑701(b)(3)(b) of the General Obligations Law; and (iii) this Master Confirmation, together with the related Supplemental Confirmation, constitutes a prior "written contract" as set forth in Section 5‑701(b)(1)(b) of bound by this Master Confirmation and the related Supplemental Confirmation, as supplemented by the Trade Notification. 21.            Offices. (a)            The Office of Dealer for each Transaction is:  787 7th Avenue, New York, NY 22.            Rule 10b‑18.  During any Hedge Period or any Settlement Valuation Period, Dealer agrees (i) to make all purchases of Shares (A) through only one Rule 10b‑18, in each case as if such rule was applicable to such purchases. 23.            Delivery or Receipt of Cash. For the avoidance of doubt, other than payment of the Prepayment Amount by Counterparty, nothing in this Master Confirmation shall be interpreted as requiring Counterparty to cash settle this Transaction, except in circumstances where cash settlement is within Counterparty's control (including, without limitation, where Counterparty fails timely to elect to deliver shares of Shares in accordance with the Counterparty Settlement Provisions or deliver or receive Alternative Delivery Units in accordance with Section 13) or in those circumstances in which holders of the 24.            Calculations, Adjustments and Determinations.  All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Date, shall be made in good faith and in a commercially reasonable manner.  Dealer shall deliver to Counterparty, within five Exchange Business Days after a written request by Counterparty, a written explanation describing in reasonable detail any calculation, adjustment or determination made by it (including the methodology, interest rates, quotations, market data (including volatility) and information from internal sources used in making such calculation, adjustment or information that Dealer is not permitted to disclose to Counterparty under applicable law, rule, regulation or agreement with third party (any such information, but not any such models, "confidential information", it being understood that if Dealer is permitted to disclose information to Counterparty on the condition that Counterparty agrees to keep such information confidential, and Counterparty so agrees, then such information shall not be considered confidential information), notwithstanding Counterparty's agreement to keep such models or information confidential). 25.            Waiver of Jury Trial.  EACH PARTY WAIVES, TO THE FULLEST EXTENT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE AGREEMENT, THIS MASTER CONFIRMATION, EACH SUPPLEMENTAL CONFIRMATION, THE TRANSACTIONS HEREUNDER AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT, THIS MASTER CONFIRMATION AND ANY SUPPLEMENTAL CONFIRMATION AND THE TRANSACTIONS HEREUNDER.  EACH PARTY (I) INTO THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS 26.            Counterparts.  This Master Confirmation may be executed in any 27.            BNP Paribas Securities Corp. as Agent.  The parties agree and acknowledge that (i) BNP Paribas Securities Corp. ("BNPPSC"), an affiliate of BNP Paribas, has acted solely as agent and not as principal with respect to this Transaction and (ii) BNPPSC has no obligation or liability, by way of guaranty, thereof) for performance of such other parties' obligations under this Transaction. Dealer and Counterparty with respect to any particular Transaction to which this Marisa Flood, Facsimile No. (212) 841-3934. Yours faithfully, BNP Paribas By: /s/ M. Andrews Yeo Name: Title: BNP Paribas Name: Title: INTERNATIONAL GAME TECHNOLOGY By: /s/ John Vandemore Name:  John Vandemore Title:  Chief Financial Officer and Treasurer1 A‑ SCHEDULE A SUPPLEMENTAL CONFIRMATION To:   International Game Technology 6355 South Buffalo Drive   From:   BNP Paribas 787 Seventh Avenue     Subject:   Capped Accelerated Stock Buyback   Ref. No:   [       ]   Date: [       ] conditions of the Transaction entered into between BNP Paribas ("Dealer") and International Game Technology ("Counterparty") (together, the "Contracting Parties") on the Trade Date specified below.  This Supplemental Confirmation is a binding contract between Dealer and Counterparty as of the relevant Trade Date subject to the Master Confirmation dated as of November 7, 2013 (the "Master Confirmation") between the Contracting Parties, as amended and supplemented from Trade Date: [       ] Forward Price Adjustment Amount: USD [       ] Hedge Period End Date: [       ] Calculation Period Start Date: [       ] Scheduled Termination Date: [       ] First Acceleration Date: [       ] Prepayment Amount: [       ] Prepayment Date: [       ] Counterparty Additional Payment Amount: USD [       ] Initial Shares: [       ] Minimum Share Delivery Date: [       ] Minimum Shares: [       ] Ordinary Dividend Amount: For any calendar quarter, USD [       ] Scheduled Ex‑Dividend Dates: [       ] Termination Price: USD [       ] per Share any "affiliated purchaser" (as defined in Rule 10b‑18 under the Exchange Act) A‑ executed copy to Marisa Flood, facsimile No. (212) 841-3934. Yours faithfully, BNP Paribas By: Authorized Signatory BNP Paribas By: Authorized Signatory INTERNATIONAL GAME TECHNOLOGY By:                        _________________________ Name:  John Vandemore A‑ TRADE NOTIFICATION To:   International Game Technology 6355 South Buffalo Drive   From:   BNP Paribas787 Seventh Avenue   Subject:   Capped Accelerated Stock Buyback   Ref. No:   [       ]   Date: [       ] Transaction entered into between BNP Paribas ("Dealer") and International Game Technology ("Counterparty") (together, the "Contracting Parties") bearing the Supplemental Confirmation dated as of [       ] (the "Supplemental Confirmation dated as of November 7, 2013 (the "Master Confirmation") between Hedge Completion Date:                                                                                    [       ] Hedge Period Reference Price:                                                                                                  USD [       ] Minimum Shares:                                                                                                  [       ] Yours sincerely, BNP Paribas By: Authorized Signatory By: Authorized Signatory B‑ C‑ SCHEDULE B SHARE DELIVERY NOTIFICATION To:   International Game Technology 6355 South Buffalo Drive   From:   BNP Paribas 787 Seventh Avenue     Subject:   Capped Accelerated Stock Buyback   Ref. No:   [       ]   Date: [       ] of Shares that Dealer intends to deliver to you, and the expected delivery date thereof, pursuant to the Master Confirmation dated as of November 7, 2013 (the "Master Confirmation") between BNP Paribas ("Dealer") and International Game Technology ("Counterparty") (together, the "Contracting Parties") and the Supplemental Confirmation dated as of [    ] between the Contracting Parties.   [       ] Shares     [       ], 201_   [       ] Shares Yours sincerely, BNP Paribas By: Authorized Signatory By: Authorized Signatory C‑ ANNEX A COUNTERPARTY SETTLEMENT PROVISIONS Settlement Currency:   USD   Settlement Method Election:   amended by deleting the word "Physical" in the sixth line thereof and replacing it with the words "Net Share" and (ii) the Electing Party may make a settlement   Electing Party:   Counterparty       Default Settlement Method:   Cash Settlement       Settlement Price:   Confirmation.   Settlement Valuation Period:   A number of Scheduled Trading Days selected by Dealer or determined pursuant to a formula selected by Dealer, in each case in Dealer's reasonable discretion, beginning on the Scheduled Trading Day immediately following the earlier of following the Termination Date; provided that Dealer may extend the Settlement Valuation Period if Dealer determines, in its reasonable discretion, that such extension is necessary or advisable to preserve Dealer's hedging or hedge unwind the stock loan market or other relevant market or to enable Dealer to effect with related policies and procedures applicable to Dealer   Cash Settlement:       Period.   forth in paragraph 3 below (the "Registered Settlement Shares"), or a number of Shares not satisfying such conditions (the "Unregistered Settlement Shares"), in Settlement Amount, with such Shares' value based on the value thereof to Dealer Settlement Shares by Dealer (the "Registration Statement") shall have been filed prospectus supplement thereto, the "Prospectus") shall have been delivered to (d)            as of the date of delivery, an agreement (the "Underwriting Agreement") shall have been entered into with Dealer in connection with the Dealer, which Underwriting Agreement shall include, without limitation, the provision of customary opinions, accountants' comfort letters and lawyers' negative assurance letters. (or any affiliate of Dealer designated by Dealer) pursuant to the exemption from thereof; agreement (a "Private Placement Agreement") with Dealer (or any affiliate of reasonable fees and expenses of counsel for Dealer, in cash or Shares at Counterparty's election, and shall contain representations, warranties, form and substance reasonably satisfactory to Dealer 5.            Dealer, itself or through an affiliate (the "Selling Agent") or and any Makewhole Shares (as defined below) (together, the "Settlement Shares") Settlement Amount (such date, the "Final Resale Date").  If the proceeds of any sale(s) made by Dealer, the Selling Agent or any underwriter(s), net of any fees "Net Proceeds") exceed the absolute value of the Forward Cash Settlement Amount, Settlement Amount being the "Shortfall" and the date on which such determination is made, the "Deficiency Determination Date"), Counterparty shall on the "Makewhole Notice Date") deliver to Dealer, through the Selling Agent, a notice of Counterparty's election that Counterparty shall either (i) pay an amount in paragraph 3 or paragraph 4 above, as the case may be (the "Makewhole Shares"), calculation, the "Capped Number").  Counterparty represents and warrants (which A – B Capped Number; and "Reserved Shares" means initially, 12 million Shares.  The Reserved Shares may 8.            Notwithstanding anything to the contrary in the Agreement, this Master Confirmation, the Supplemental Confirmation or the Trade Notification, in no event shall Dealer be entitled to receive, or be deemed to receive, any Shares if, immediately upon giving effect to such receipt of such Shares, (i) the "beneficial ownership" (within the meaning of Section 13 of the Exchange affiliates subject to aggregation with Dealer for purposes of the "beneficial ownership" test under Section 13 of the Exchange Act and all persons who may form a "group" (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer with respect to "beneficial ownership" of any Shares (collectively, "[Dealer] Group") would be equal to or greater than 4.5% or more of the outstanding Shares on the date of determination or (ii) Dealer, Dealer Group or Dealer Group (Dealer, Dealer Group or any such person a "[Dealer] Person") under Nevada Revised Statutes §§ 78.378-78.3793, 78.411-78.444 or other federal, state, local or tribal laws (including gaming laws), regulations or regulatory orders applicable to ownership of Shares ("Applicable Laws"), would own, (any such condition described in clause (i) or (ii) an "Excess Ownership Position").  If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Counterparty's obligation to make such delivery shall not be extinguished and Counterparty shall make such delivery as Business Day after, Dealer gives notice to Counterparty that such delivery would not result in the existence of an Excess Ownership Position.

CREE, INC.     Exhibit 10.7 FISCAL 2004 MANAGEMENT INCENTIVE COMPENSATION PLAN   its fiscal year ending June 27, 2004:   performance, to attract and retain outstanding senior management personnel, to create a strong link between strategic and corporate operating plans and individual performance, to achieve greater corporate performance by focusing on results, not activities, and to encourage teamwork at the highest level within the organization. The Plan rewards participants with a cash bonus payment based on their contribution towards the attainment of corporate and individual performance goals. The bonus payment is calculated as a percentage of base salary and the target award percentage varies according the position level.   2.    Eligibility:    Eligible participants include the Chairman, the Chief Executive Officer and senior level managers of the Company who report directly to the Company’s Chief Executive Officer. Participation shall be determined solely by the Chief Executive Officer.             3.1    Target Award Levels:    The target award level represents the award for 100% achievement of objectives. The target awards are expressed as a percentage of salary and vary based on the position of the participant. The actual target award amount is determined by multiplying the participant’s base salary by the target award percentage. The target award is calculated on the base annual salary as of the payout date. Based on actual performance, a participant can earn between 0% to 100% of their target award.           3.2    Determination of Awards:    For the positions of Chairman and Chief Executive Officer, awards are based 100% on achieving predetermined corporate goals. Awards for all other eligible positions are determined based on performance against measures in two categories: Corporate and Individual. Unless otherwise approved by the Compensation Committee, corporate goals are weighted at 60% of the individuals’ total award payout and individual goals are weighted at 40% of the individual’s total award payout.           3.3    Corporate Measures:    The Corporate performance measures and corresponding goals are based on meeting or exceeding revenue targets for the current fiscal year and meeting or exceeding net income targets for the current fiscal year. This is measured and paid annually to coincide with the fiscal year end.           3.4    Individual Measures:    Individual performance measures are established at the beginning of each fiscal quarter. For each performance measure a performance goal (as a percentage) is determined. Performance goals are standards for evaluating success associated with a specific performance measure and are expressed as either Minimum or Target goals. Minimum performance goals are the lowest level of competent performance that is eligible for the award. Performance at the minimum performance level will yield an award which is 25% of the target award. Target performance goals are the expected level of performance. Performance at the target performance level will yield an award which is equal to the target award. Performance below the minimum performance level will not be eligible for an award. Each participant, in conjunction with the Chief Executive Officer, will develop a minimum of three (3) performance measures specific to their unit’s performance.           4.1    Performance Threshold:    In order to be eligible for an award performance thresholds as determined by the Chief Executive Officer must be met. Without limiting the foregoing, the corporate-level incentive component will not be paid if revenue and net profit targets for the fiscal year are not met.           4.2    Termination of Employment:    If a participant’s employment terminates prior to the end of an award period on account of death, disability under the Company’s long-term disability plan, or retirement, the award will be calculated on a pro rata basis based on the number of months employed during the period. If a participant terminates during the award period for other reasons that those stated above, no award will be made. Any participant whose employment is terminated for cause after the end of the award period but prior to the payment of an award will forfeit any unpaid award.           4.3    New Hires:    Participants who participate for part of the award period will receive a pro rata portion of the award based on the number of months of employment with the Company.           4.4    Exceptions:    In order to ensure that the Company’s best interests are met, the amount of a payment on an award otherwise calculated in accordance with this Plan can be increased, decreased or eliminated, at any time prior to payment, in the sole discretion of the Chief Executive Officer, except than no change with respect to any award to the Chairman, the Chief Executive Officer or any officer of the Company shall be made without Compensation Committee approval.   terminated at any time by the Company without prior notice to participants.           4.6    Earned Upon Payment:    No amounts shall be considered earned by any participant under the Plan until it is received by the participant from the Company.   - 2-

EXHIBIT 10.27   DESCRIPTION OF 2005 DISCRETIONARY CORPORATE BONUS PLAN   Purpose:   The terms of the 2005 Discretionary Corporate Bonus Plan (the “Plan”) have been achieving its operational goals through exemplary performance. Under the Plan, cash bonuses, if any, will be based on both the achievement of specified individual and corporate goals as well as a review of personal performance, which is determined at the discretion of the Compensation Committee of the Board     The cash bonuses under the Plan may range from 0% to a maximum of 150% of the recipients 2005 base salary. The target bonuses for participants in the Plan will be based on the achievement certain Company performance goals. The Company performance goals will be based on meeting the following target criteria: (i) net revenue, (ii) gross profit, (iii) net income, and (iv) cash flow. The Compensation Committee may recommend, and the Board may approve, adjustments to the 2005 bonuses in their discretion. The Board and Compensation Committee reserve the right to modify these goals, amounts and criteria at any time.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549-1004 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) January 13, 2010 MODAVOX, INC. (Exact Name of Registrant as Specified in its Charter) STATE OF DELAWARE 333-57818 20-0122076 (State or other jurisdiction of Incorporation or Organization) (Commission File Number) (I.R.S. Employer Identification No.) 1900 W University Dr, Suite 231 Tempe, AZ 85281 85281-3291 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code (480) 553 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17-CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement On January 11, 2010, Modavox, Inc. (the “Company” or “Modavox”) entered into a Subscription Agreement with a Midwest-based Accredited Investor, as that term is defined under Regulation D promulgated under the Securities Act of 1933, as amended, in connection with a private placement transaction (the "Transaction").

Skadden, Arps, Slate, Meagher & Flom llp FOUR TIMES SQUARE NEW YORK 10036-6522 TEL: (212) 735-3000 FAX: (212) 735-2000 www.skadden.com DIRECT DIAL 212-735-2482 DIRECT FAX 917-777-2482 EMAIL ADDRESS steven.grigoriou@SKADDEN.COM March 26, 2009 VIA EDGAR John Ganley, Esq. Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Re: BlackRock Global Opportunities Equity Trust (“BOE”) BlackRock Global Equity Income Trust (“BFD”) BlackRock World Investment Trust (“BWC”) Dear Mr. Ganley: We received your oral comments on March 13, 2009 and March 17, 2009 to the Joint Proxy Statement/Prospectus on Form N-14 filed on February 10, 2009 (Nos. 333-157207 and 811-21506) (the “Registration Statement”) pursuant to the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940 regarding the reorganizations (each a “Reorganization” and, collectively, the “Reorganizations”) of BFD and BWC (each a “Target Fund” and together the “Target Funds”) into BOE (the “Acquiring Fund” and, together with the Target Funds, each a “Fund” and, collectively, the “Funds”). The Funds have considered your comments and have authorized us to make the responses and changes discussed below to the Joint Proxy Statement/Prospectus on the Funds’ behalf.These changes have been reflected in Pre-Effective Amendment No. 1 to the Funds’ Joint Proxy Statement/Prospectus, which accompanies this letter and is marked to show the changes made in response to your comments, as well as other changes made to the Joint Proxy Statement/Prospectus Securities and Exchange Commission March 26, 2009 Page 2 since the initial filing.All changes were conformed throughout the Registration Statement, where applicable. For ease of reference, we have included your comments below followed by our responses. March 13, 2009 Comments Comment 1:Questions and Answers – Why Recommended Question.Provide a range of savings for the reduced annual operating ratio, depending on which combination of Funds approve the Reorganization. Response:The requested change has been made. Comment 2:Questions and Answers – Historical Trading Question.Revise historical trading to note which Funds currently are trading at discounts to each other. Response:The requested change has been made. Comment 3:Questions and Answers – Historical Trading Question.Include disclosure that shareholders of the Target Funds will receive shares of the Acquiring Fund based on their relative net asset value and that the Acquiring Fund's shares may trade at a discount to net asset value after the Reorganization. Response:The requested change has been made. Comment 4:Questions and Answers – Reorganization Costs Question.Supplementally inform us how the expenses associated with the Reorganization will be allocated among Funds. Response:Expenses incurred in connection with the Reorganizations will be allocated in one of the following three allocation methodologies:(1) certain expenses will be borne directly by the respective Fund incurring the expense (e.g. printing of the N-14, Fund’s financial statements, mailing, solicitation and tabulation costs); (2) certain expenses will be allocated among the Funds based upon a fee on the newly converted shares and then further allocated evenly based upon both the Target Funds and the Acquiring Fund (e.g. AMEX/NYSE Listing Fee and SEC Fee); (3) service fees will be allocated pro rata among the Funds based on relative net assets (e.g. legal, audit and transfer agent fees).Please see responses to Comments 14 and 17 below. Securities and Exchange Commission March26, Page 3 Comment 5:Questions and Answers – Tax Question.Can greater clarity be provided with respect to whether the Target Funds will sell a portion of their portfolio assets? Response:Due, in particular, to the fact that BFD will change its investment policies and portfolio manager prior to the completion of the Reorganization and for reasons unrelated to the Reorganization, the Funds now believe they will not need to dispose of assets in connection with the Reorganization.Disclosure indicating they may need to do so has been deleted from the Registration Statement. Comment 6:Joint Proxy Statement/Prospectus – Summary – Proposal 1: Reorganizations of the Target Funds.In the Non-U.S. Investments section of the comparison chart of the Funds, please change BOE's investment policy so that the Fund must invest at least 40% of its total assets at the time of investment in securities of non-U.S. issuers unless the Fund's investment adviser believes it is not in the best interest of the Funds, in which case it will invest at least 30% of its total assets in securities of non-U.S. issuers, and it will invest in issuers located in at least three different countries, including the United States. Response:The requested changes have been made. Comment 7:Joint Proxy Statement/Prospectus – Summary – Proposal 1: Reorganizations of the Target Funds – In the comparison chart, instead of listing entire relevant disclosure for Target Funds, indicate "Same as Acquiring Fund," where the information is the same for ease of readability. Response:The requested change has been made. Comment 8:Joint Proxy Statement/Prospectus – Summary – Proposal 1: Reorganizations of the Target Funds – In the comparison chart, include disclosure regarding the portfolio managers and advisers/sub-advisers for each Fund. Response:The requested change has been made. Comment 9:Joint Proxy Statement/Prospectus – Summary – Proposal 1: Reorganizations of the Target Funds – Further Information Regarding the Reorganization.At the end of Proposal 1, cross-reference the Risk Factors and Special Considerations section of the Registration Statement. Securities and Exchange Commission March26, Page 4 Response:The requested change has been made. Comment 10:Joint Proxy Statement/Prospectus – Risk Factors and Special Considerations.If there are no other material differences between the Funds, indicate that the non-investment grade securities risk is the primary difference between the Funds.Otherwise, indicate other differences between the Funds. Response:The disclosure has been revised to reflect additional differences. Comment 11: Joint Proxy Statement/Prospectus – Risk Factors and Special Considerations.Revise risk factors so that the risks applicable to all Funds are indicated as such. Response:The requested change has been made. Comment 12:Joint

ISDA @ 2002 MASTER AGREEMENT PB CAPITAL CORPORATION and FOUNDRY PARK I, LLC "Transaction") that are or will be "Confirmation") exchanged between the parties or otherwise effective for the Agreement and the Schedule are together referred to as this "Master Agreement". 1. Interpretation Definitions . The terms defined in Section 14 and elsewhere in this Master Agreement will Inconsistency event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction. Single Agreement Agreement and all Confirmations form a single agreement between the parties 2. Obligations i. Each party will make each payment or delivery specified in each Confirmation to be made by it, date in the place of condition precedent that no (b) Change of Account giving notice of a reasonable objection to such change. (c) Netting of Payments . If on any date amounts would otherwise be payable:- i. in the same currency; and ii. in respect of the same Transaction, the party by which the larger aggregate amount would have been payable to pay to aggregate amount. currency in respect of those Transactions, regardless of whether such amounts Schedule or any Confirmation by specifying that "Multiple Transaction Payment Netting" applies to the Transactions identified as being subject to the election (in which case clause (ii) above will not apply to such Transactions). If apply to those Transactions with effect from the starting date specified in the Schedule or such Confirmation, or, if a starting date is not specified in the in writing. This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. (d) Deduction or Withholding for Tax . (i) Gross-Up 1. promptly notify the other party ("Y") of such requirement; withheld authorities; and 2 which Y is A. the failure by Y to comply with or perform any agreement contained in accurate after a Transaction is entered into (regardless of whether such action is taken Law. relevant 3. Representations times until the termination of this Agreement). If any "Additional Representation" is specified in the Schedule or any Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or i. Status standing; Powers has taken all necessary action to authorise such execution, delivery and performance; 3 No Violation or Conflict of its assets; Consents of any such consents have been complied with; and Obligations Binding reorganisation, insolvency, moratorium or similar laws affecting creditors' Absence of Certain Events is a party. Absence of Litigation Credit Support Providers or any of its applicable Specified Entities any action, Accuracy of Specified Information every material respect. Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity. 4. Agreements directs:- i. any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; any other documents specified in the Schedule or any Confirmation; and 4 be required or completion, execution or submission of such form or document would not practicable. Maintain Authorisations consents of the future. laws and orders to which it perform its obligations under this Agreement or any Credit Support Document to which it is a party. Tax Agreement. It will give notice of any failure of a Payment of Stamp Tax in which it is incorporated, organised, managed and controlled or considered to have its seat, or where an Office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction"), and will indemnify the (a) Events of Default Credit Support respect to such party:- (i) Failure to Pay or Deliver such failure is not remedied on or before the first Local Business Day in the case of any such payment or the first Local Delivery Day in the case of any such delivery after, in each case, notice of such failure is given to the party; (ii) Breach of Agreement; Repudiation ofAgreement. . (other than an obligation to make any payment under this Agreement or delivery under Section is not remedied within 30 days after notice of such failure is given to the party; or challenges the validity of, this Master Agreement, any Confirmation executed and delivered by that party or any 5 person or entity or ceasing of such Credit Support Provider to the other party pursuant to any such Credit Support Document, to be in full force and effect for the purpose of this Agreement (in each case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or rejects, in Misrepresentation . A representation (other than a representation under Section 3(e) or 3(f)) made Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:- Transaction or any termination of, that Specified Transaction; period, in making termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one Local Business Day); last delivery acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or the validity Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party, Credit Support Provider or Specified Entity (or such action is taken by any 6 (vi) Cross Default occurrence or existence of:- described) in clause (2) below is not less than the applicable Threshold Amount (as specified or (vii) Bankruptcy Specified Entity of such party:- for relief or the making of an order for its winding-up or liquidation or (II) consolidation amalgamation or merger); (6) seeks or becomes subject to the 7 (viii) Merger Without Assumption its assets to, or reorganises, reincorporates or reconstitutes into or as, another entity and, at the time of such consolidation, amalgamation, merger, transfer, reorganisation, reincorporation or reconstitution:- 1. the resulting, surviving or transferee entity fails to assume all the obligations of such party Document to which it or its predecessor was a party; or the benefits of any Credit Support Document fail to extend (without the consent of the entity of its obligations under this Agreement. (b) Termination Events Credit (vi) below:- (i) Illegality . After giving effect to any applicable provision, disruption fallback or remedy Agreement, due to an event or circumstance (other than any action taken by a party or, if applicable, any Credit Support Provider of such party) occurring after a Transaction is entered into, it becomes unlawful under any applicable law (including without limitation the laws of any country in which payment, delivery or compliance is required by either party or any Credit Support and absolute or contingent obligation to make a payment or delivery in respect of Affected delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, to receive a payment or delivery under such Credit Support Document or to comply with any other material disruption fallback or this Agreement, by reason of force majeure or act of state occurring after a Transaction is entered into, on any day:- and receives performing any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, from receiving a payment or delivery in respect of such Transaction or from complying with any other material provision of this Agreement relating to such Transaction (or would be so prevented if such impossible or 8 impossible or Affected Party) Credit Support Document relating to such Transaction, from receiving a payment or delivery under such Credit Support Document or from complying with any other material provision of such Credit Support Document (or would be so prevented if party or Credit Support Provider so to perform, receive or comply if such payment, delivery or compliance were required on that day), Provider could not, after using all reasonable efforts (which will not require such party or Credit Support Provider to incur a loss, other than immaterial, incidental expenses), overcome such prevention, impossibility or impracticability; Tax Event succeeding Scheduled Settlement Date (A) be required to pay to the other party Tax (except in respect of interest under Section 9(h)) and no additional amount Tax Event Upon Merger . The party (the "Burdened Party") on the next succeeding Scheduled Settlement Section 9(h)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Tax in respect of which the other party is not conducted by it as of the date of this Master Agreement) to, or reorganising, reincorporating or reconstituting into or as, another entity (which will be the Affected Party) where such action does not constitute a Merger Without Assumption; Credit Event Upon Merger party, a Designated Event (as defined below) occurs with respect to such party, such party (in each case, "X") and such Designated Event does not constitute a Merger Without Assumption, and the creditworthiness of X or, if applicable, the successor, surviving or transferee entity of X, after taking into account any applicable Credit Support Document, is materially weaker immediately after the occurrence of such Designated Event than that of X immediately prior to the occurrence of such Designated Event (and, in any such event, such party or its successor, surviving or transferee entity, as appropriate, will be the Affected Party). A "Designated Event" with respect to X means that:- or substantially 9 entity; any person, related group of persons or entity acquires directly or indirectly the beneficial board of directors (or its equivalent) of X or (B) any other ownership interest enabling it to exercise control of X; or issuance, securities convertible into or exchangeable for debt or preferred stock or (B) in the case of entities other than corporations, any other form of ownership interest; or (vi) Additional Termination Event the Schedule or such Confirmation). Force Majeure Event will event or circumstance relates to the failure to make any payment or delivery or a failure to comply with any other material provision of this Agreement or a circumstance which would constitutes an Event of Default or any other Termination Event, it will be treated as an Event of Default or such other Termination Event, as the case may be, and will not constitute or give rise to an Illegality or a Force Majeure Event. If an event or circumstance which would otherwise constitute or give rise to a Force Majeure Event described in clause (ii) above, and not a Force Majeure Event. or a Force Majeure Event has due until:- Delivery Day (or the first appropriate, but for the occurrence of the event or circumstance constituting or giving rise to that Illegality or Force Majeure Event) following the end of any applicable Waiting Period in respect of that Illegality or Force Majeure Event, if earlier, the date on which the event or circumstance constituting or giving rise to that Illegality or or, in the case of a delivery, a Local Delivery Day, the first following day that is a Local Business Day or Local Delivery Day, as appropriate. Illegality or a Force Office is not the Affected Party's head 10 compliance with the relevant provision by the Affected Party's head or home office and (iv) the Affected Party's head Right to Terminate Following Event of Default Right to Terminate Following Termination Event . Notice . If a Termination Event other than a Force Majeure Event occurs, an Affected Party will, nature of that Termination Event and each Affected Transaction, and will also give the other party such other information about that Termination Event as the other party may reasonably require. If a Force Majeure Event occurs, each party the other party, specifying the nature of that Force Majeure Event, and will also give the other party such other information about that Force Majeure Event as the other party may reasonably require. Transfer to Avoid Termination Event . If a Tax Event occurs and there is only one Affected Party or if a Tax Event party to incur a loss, other than immaterial, incidental expenses) to transfer exist. conditional upon the prior other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. Two Affected Parties . If a Tax Event occurs and there are two Affected Parties, each party will use occurrence is given under Section 6(b)(i) to avoid that Termination Event. 11 (1) If:- the the case of a or the Non-affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, if the relevant Termination Event is then continuing, by not more than 20 days notice to the other party, designate a day not earlier than the day such notice is then continuing and any applicable Waiting Period has expired:- A. Subject to clause (B) below, either party may, by not more than 20 days notice to notice becomes effective as an Early Termination Date in respect of all Affected Transactions or (II) by specifying in that notice the Affected Transactions in respect of which it is designating the relevant day as an Early Termination Date, a day not earlier than two Local Business Days following the day on which such notice becomes effective as an Early Termination Date in respect of less than all Affected Transactions. Upon receipt of a notice designating an other party may, by notice to the designating party, if such notice is effective on or before the day so designated, designate that same day as an Early Termination Date in respect of any or all other Affected Transactions. An Affected Party (if the Illegality or Force Majeure Event relates to performance make any payment or delivery under, or to compliance with any other material provision of, the relevant Credit Support Document) will only have the right to 5(b)(ii)(2) following the prior designation by the other party of an Early all Affected Transactions. 6(b), the Early relevant Event of Default or Termination Event is then continuing. further payments or Termination Date will be determined pursuant to Sections 6(e) and 9(h)(ii). 12 of an Early showing, in reasonable detail, such calculations (including any quotations, calculations), 1. specifying (except where there are two Affected Parties) any Early Termination Amount payable and Termination Date will, payable (1) on the day on which notice of the amount payable is effective in the the day on which notice of the amount payable is effective (or, if there are two Affected Parties, after the day on which the statement provided pursuant to clause (i) above by the second party to provide such a statement is effective) Termination Event. amount, if any, payable in respect of that Early Termination Date (the "Early Termination Amount") will be determined pursuant to this Events of Default . If the Early Termination Date results from an Event of Default, the Early Currency Equivalent of the Close-out Amount or Close-out Amounts (whether positive or negative) determined by the Non-defaulting Party for each Terminated Non-defaulting Party less (2) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If the Early Termination Amount is a Termination Events. If the Early Termination Date results from a Termination Event:- One Affected Party. Subject to clause (3) below, if there is one Affected Party, the Early that references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and to the Non-affected Party, respectively. Two Affected Parties. Subject to clause (3) below, if there are two Affected Parties, each party will determine an amount equal to the Termination Currency Equivalent of the sum of be, and the Early Termination Amount will be an amount equal to (A) the sum of (I) one-half of the difference between the higher amount so determined (by party "X") and the lower amount so determined (by party "Y") and (II) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (B) the Termination will pay the absolute value of the Early Termination Amount to Y. 13 Majeure Event, (1) or (2) above, as appropriate, except that, for the purpose of determining a Close-out Amount or Close-out Amounts, the Determining Party will:- in any other case, use mid market values without regard to the creditworthiness of the Determining Party. Adjustment for Bankruptcy . In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the Early Termination Amount will be subject to such adjustments as are appropriate and permitted by applicable law to reflect any payments or deliveries made by one Adjustment for Illegality or Force Majeure Event. The failure by a party or any Credit Support Provider of such party to pay, when due, any Early Termination Amount will not constitute an Event of Default under otherwise be treated as an Unpaid Amount owing to the other party if Pre-Estimate . The parties agree that an amount recoverable under this Section 6(e) is a the loss of bargain and the loss of protection against future risks, and, except as otherwise provided in this Agreement, neither party will be entitled to recover any additional damages as a consequence of the termination of the Terminated Transactions. the other party (the "Payer"), in circumstances where there is a Defaulting Party or where there is respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be ("X") (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts ("Other Amounts") payable by the Payee to the Payer obligation). To the extent that any Other Amounts are so set off, those Other denominated at the rate of exchange at which such party would be able, in good faith and using commercially reasonable procedures, to purchase the relevant 14 ascertained. of accounts, lien, right of retention or withholding or similar right or requirement to which any party is at any time otherwise entitled or subject 7. Transfer or amalgamation with, or Agreement); and Termination Amount payable respect to that interest and any other rights associated with that interest pursuant to Sections 8, 9(h) and 11. void. 8. Contractual Currency Payment in the Contractual Currency this Agreement in the Contractual Currency will not be discharged or satisfied is owed, acting in good faith and using commercially reasonable procedures in by applicable law, immediately pay such additional amount in the Contractual Judgments refund promptly to the other party any excess of the Contractual Currency rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purpose of such judgment or order and the rate of exchange at which such party is able, acting in good faith and using 15 Separate Indemnities . To the extent permitted by applicable law, the indemnities in this Section 8 party to demonstrate that it 9. Miscellaneous . This Agreement constitutes the entire agreement and understanding of the parties with for fraud. (b) Amendments . An amendment, modification or waiver in respect of this Agreement will only be effective if (c) Survival of Obligations parties (d) Remedies Cumulative privileges by law. (e) Counterparts and Confirmations . may be executed electronic messaging system), each of which will be deemed an original. from the moment they agree to those terms (whether orally or otherwise). A Confirmation will be of telexes, by an exchange of electronic messages on an electronic messaging will specify therein or through another effective means that any such counterpart, telex, electronic message or e-mail constitutes a Confirmation. (f) No Waiver of Rights this privilege. (g) Headings are not to affect Agreement. 16 of an Early Termination Date in respect of the relevant Transaction:- Interest on Defaulted Payments. If a party defaults in the performance of any payment amount to the other party on demand in the same currency as the overdue amount, excluding) the date of actual payment (and excluding any period in respect of Compensation for Defaulted Deliveries. If a party defaults in the performance of any obligation required to be settled by delivery, it will on demand (A) compensate the other party to the extent provided for in the relevant Confirmation or elsewhere in this Agreement and (B) unless otherwise provided in the relevant Confirmation or elsewhere in this Agreement, to the extent permitted by applicable law and subject to Section 6(c), pay to the other party interest (before as well as after judgment) on an amount equal to the fair market value of that which was required to be delivered originally scheduled date for delivery to (but excluding) the date of actual delivery (and excluding any period in respect of which interest or compensation in respect of that amount is due pursuant to clause (4) below), at the Default Rate. The fair market value of any obligation referred to above will be using commercially reasonable procedures, by the party that was entitled to take delivery. Interest on Deferred Payments. If:- Applicable Deferral Rate; a payment is deferred pursuant to Section 5(d), the party which would otherwise or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the amount of the a party fails to make any payment due to the occurrence of an Illegality or a Force 17 that party (4) Compensation for Deferred Deliveries. If:- A. a party does not perform any obligation that, but for Section 2(a)(iii), would have been required to be settled by delivery; a delivery is deferred pursuant to Section 5(d); or a party fails to make a delivery due to the occurrence of an has expired, pay interest to the other party on demand (after, in the case of clauses (A) and (B) above, such delivery is required) if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement Termination Date in respect of a Transaction:- Unpaid Amounts. For the purpose of determining an Unpaid Amount in respect of the will accrue on the amount of any payment obligation or the amount equal to the fair market value of any obligation required to be settled by delivery included in such determination in the same currency as that amount, for the period from (and including) the date the relevant obligation was (or would have been but for the relevant Early Termination Date, at the Applicable Close-out Rate. Interest on Early Termination Amounts. If an Early Termination Amount is due in respect applicable law, be paid together with interest (before as well as after judgment) on that amount in the Termination Currency, for the period from (and including) such Early Termination Date to (but excluding) the date the amount is paid, at the Applicable Close-out Rate. calculated on the basis of 18 Transaction. If a party is specified as a Multibranch Party in the Schedule, such party may, 11. Expenses collection. 12. Notices Agreement may be given in any manner 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details i. if in writing and delivered in person or by courier, on the date it is delivered; ii. if sent by telex, on the date the recipient's answerback is received; responsible employee of the recipient in legible form (it being agreed iii. if sent by certified or registered mail (airmail, if overseas) or the delivery is attempted; iv. if sent by electronic messaging system, on the date it is received; or 19 address, telex or facsimile number or accordance with the law specified in the Schedule. any dispute arising out of or in (i) submits:- 1. if this Agreement is expressed to be governed by English law, to (A) the non-exclusive Convention Court and (B) the exclusive jurisdiction of the English courts if the Proceedings do involve a Convention Court; or 2. if this Agreement is expressed to be governed by the laws of the State of New York, to the City; any, specified opposite its name Proceedings. If for any reason any party's Process Agent is unable to act as a substitute process agent acceptable to the other party. The parties by applicable law, with injunction, or order for specific performance or recovery of property, (iv) 20 14. Definitions "Additional Representation" has the meaning specified in Section 3. "Additional Termination Event" has the meaning specified in Section 5(b). "Affected Party" has the meaning specified in "Affected Transactions" Force Majeure Event Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event (which, in the case of an 5(b)(ii)(2), means all Transactions unless the relevant Credit Support Document references only certain Transactions, in which case those Transactions and, if the relevant Credit Support Document constitutes a Confirmation for a Transaction, that Transaction) and (b) with respect to any other Termination Event, all Transactions. "Affiliate" person. "Agreement" has the meaning specified in Section 1(c). "Applicable Close-out Rate" means:- (a) in respect of the determination of an Unpaid Amount:- i. in respect of obligations payable or deliverable (or which would have been ii. in respect of obligations payable or deliverable (or which would have been Rate; iii. in respect of obligations deferred pursuant to Section 5(d), if there is iv. in all other cases following the occurrence of a Termination Event (except Deferral Rate; and (b) in respect of an Early Termination Amount:- (but excluding) the date payable:- 1. if the Early Termination Amount is payable by a Defaulting Party, the Default Rate; 2. if the Early Termination Amount is payable by a Non-defaulting Party, the 3. in all other cases, the Applicable Deferral Rate; and 21 Section 6(d)(ii) on which that amount is payable to (but excluding) the date of actual payment:- 1. if a party fails to pay the Early Termination Amount due to the occurrence of an event or Applicable Deferral Rate; 2. if the Early Termination Amount is payable by a Defaulting Party (but excluding any 3. if the Early Termination Amount is payable by a Non-defaulting Party (but excluding any and 4. in all other cases, the Termination Rate. "Applicable Deferral Rate" means:- payer to be a rate offered to the in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; of Applicable Close-out Rate, the a major bank in a relevant interbank market for overnight deposits in the after consultation with the other party, if practicable, for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; and "Automatic Early Termination" has the meaning specified in Section 6(a). "Burdened Party" has the meaning specified in Section 5(b)(iv). any law) that occurs after the parties enter into the relevant Transaction. "Close-out Amount" means, with respect to each Terminated Transaction or each group of Terminated Transactions and a Determining Party, the amount of the losses or costs of the Determining Party that are or would be incurred under then prevailing circumstances (expressed as a positive number) or gains of the Determining Party that are or would be realised under then prevailing circumstances (expressed as a negative number) in replacing, or in providing for the Determining Party the economic equivalent of, (a) the material terms of that Terminated Transaction or group of Terminated Transactions, including the payments and deliveries by the parties under Section 2(a)(i) in respect of that Terminated Transaction or group 22 Terminated Transactions. reasonable result. The Determining Party may determine a Close-out Amount for any group of Terminated Transactions or any individual Terminated Transaction but, in the aggregate, for not less than all Terminated Transactions. Each Close-out Amount will be determined as of the Early Termination Date or, if that would not be commercially reasonable, as of the date or dates following the Early Termination Date as would be commercially reasonable. limitation, one or more of the following types of information:- quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that the quotation is provided and the terms of any relevant documentation, including providing the quotation; information consisting of relevant market data in the relevant market supplied by one or more third parties volatilities, spreads, correlations or other relevant market data in the relevant market; or information of the types described in clause (i) or (ii) above from internal sources (including any of the Determining Party's Affiliates) if that information is of the same type used by the Determining Party in the regular course of its business for the valuation of similar transactions. clause (ii) above unless the Determining Party reasonably believes in good faith that such quotations or relevant market data are not readily available or would information described in clause (i), (ii) or (iii) above, the Determining Party may include costs of funding, to the extent costs of funding are not and would not be a component of the other information being utilised. Third parties supplying quotations pursuant to clause (i) above or market data pursuant to clause (ii) above may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other sources of market information. Determining Party may in addition consider in calculating a Close-out Amount any loss or cost incurred in connection with its terminating, liquidating or Terminated Transactions (or any gain resulting from any of them). include the following:- (ii) above or information from 23 groups of Terminated Transactions or group of Terminated Transactions. "Confirmation" has the meaning specified in the preamble. "consent" "Contractual Currency" has the meaning specified in Section 8(a). "Convention Court" means any court which is bound to apply to the Proceedings either Article 17 of the 1968 and Commercial Matters or Judgments in Civil and Commercial Matters. "Cross -Default" "Default Rate" "Defaulting Party" "Designated Event" "Determining Party" means the party determining a Close-out Amount. "Early Termination Amount" has the meaning specified in Section 6(e). "electronic messages" does not include e-mails but does include documents expressed in markup languages, and "electronic messaging system" will be construed accordingly. "English law" means the law of England and Wales, and "English"will be construed accordingly. "Event ofDefault" "Force Majeure Event" "General Business Day" means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits). "Illegality" 24 "Indemnifiable Tax" Support Document). "law" matters, by the practice of any relevant governmental revenue authority), and "unlawful" will be construed accordingly. means (a) in relation to any obligation under Section 2(a)(i), a General Business Day in the place or places specified in the relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so for the purpose of determining when a Waiting Period expires, a General Business to the Illegality or Force Majeure Event, as the case may be, occurs, (c) in relation to any other payment, a General Business Day in the place where the centre, if any, of the currency of such payment, and, if that currency does not have a single recognised principal financial centre, a day on which the settlement system necessary to accomplish such payment is open, (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, relevant new account is to be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction. "Local Delivery Day" systems necessary to accomplish the relevant delivery are generally open for business so that the delivery is capable of being accomplished in accordance with customary market practice, in the place specified in the relevant Confirmation or, if not so specified, in a location as determined in accordance with customary market practice for the relevant delivery. "Master Agreement" "Merger Without Assumption" means the event specified in Section 5(a)(viii). "Multiple Transaction Payment Netting" has the meaning specified in Section 2(c). "Non-affected Party" means, so long as there is only one Affected Party, the other party. means the rate certified by the Non-defaulting Party to be a rate offered to the Non-defaulting Party by a major bank in a relevant interbank market for faith by the Non-defaulting Party for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market. "Office" office. "Other Amounts" has the meaning specified in Section 6(f). 25 "Payee" has the meaning specified in Section 6(f). "Proceedings" has the meaning specified in Section 13(b). "Process Agent" has the meaning "rate of exchange" "Relevant Jurisdiction" "Schedule" "Scheduled Settlement Date" "Specified Entity" "Specified Indebtedness" borrowed money. "Specified Transaction" respect to any such transaction) now existing or hereafter entered into between Entity of such other party) which is not a Transaction under this Agreement but "Stamp Tax" means any stamp, registration, documentation or similar tax. "Stamp Tax 26 "Tax" tax. "Tax Event" "Terminated Transactions" means, with respect to any Early Termination Date (a) if resulting from an Illegality or a Force Majeure Event, all Affected Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if resulting from any other Termination Event, all Affected Transactions and (c) if resulting from an Event of Default, all Transactions in effect either immediately before the effectiveness of the notice designating that Early Termination Date or, if Automatic Early Termination applies, immediately before that Early Termination Date. "Termination Currency" means (a) if a Termination Currency is specified in the Schedule and that currency is freely available, that currency, and (b) otherwise, euro if this Agreement is expressed to be governed by English law or United States Dollars if this Agreement is expressed to be governed by the laws of the State of New York. as at the relevant Early Termination Date, or, if the relevant Close-out Amount the parties. "Termination Event" means an Illegality, a Force Majeure Event, a Tax Event, a Tax Event Upon Merger Termination Event. "Termination Rate" "Threshold Amount" means the amount, if any, specified as such in the Schedule. "Transaction" has the meaning specified in the preamble. "Unpaid Amounts" Termination Date, (b) in respect of each Terminated Transaction, for each 27 "Waiting Period" means:- relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and event or circumstance. dates specified below with PB Capital Corporation Foundry Park I, LLC NewMarket Development Corporation as Manager By: /s/ Robert Rengifo By: /s/ Bruce R. Hazelgrove, III Name: Robert Rengifo Title: Senior Director Title: Date: January 29, 2010 /s/Andrew E. Woodtli Name: Andrew E. Woodtli Title: Senior Director January 29, 2010     28

Exhibit 10.1 PARK HOTELS & RESORTS INC. EXECUTIVE SHORT-TERM INCENTIVE PROGRAM The Park Hotels & Resorts Executive Short-Term Incentive Program (the “STIP”) was adopted by the Committee, effective February 23, 2017, to set forth the terms and conditions of the executive short-term incentive program of the Company, the purpose of which is to incentivize the retention and performance of certain key executives of the Company through annual cash-based bonus awards. All cash-based bonus awards hereunder shall be granted under, and in accordance with, the Company’s 2017 Omnibus Incentive Plan (the “Incentive Plan”) and shall constitute Other Cash-Based Awards thereunder. Capitalized terms not otherwise defined herein shall have the same meanings as set forth in the Incentive Plan.   1. Administration. The STIP shall be administered by the Committee. The STIP and any awards made under the STIP, and its interpretations shall be   2. Participation. Employees of the Company at the Senior Vice President level and above shall participate in the STIP unless otherwise determined by (i) the Committee for an employee that would be a Committee Participant (as defined below) or (ii) the Company’s Chief Executive Officer (the “CEO”) for an employee that would be an Other Participant (as defined below). Each participating employee is referred to herein as a “Participant”.   3. Target Bonus and Actual Bonus Range. Each fiscal year of the Company, each Participant shall have a target bonus (the “Target Bonus”). Unless otherwise determined by the Committee, for each Participant who is a member of the Company’s Executive Committee or an officer who is subject to Section 16 of the Exchange Act (collectively, the “Committee Participants”), the Target Bonus shall be (i) up to 75% of the Participant’s annual base salary for Senior Vice Presidents (as determined each year by the Committee), (ii) up to 100% of the Participant’s annual base salary for Executive Vice Presidents (as determined each year by the Committee) or (iii) 150% of the Participant’s annual base salary for the CEO in accordance with his Executive Employment Agreement with the Company, dated April 26, 2016 (the “CEO Employment Agreement”). For each Participant who is not a Committee Participant (collectively, the “Other Participants”), the CEO shall determine the Target Bonus in an amount up to 50% of the Other Participant’s annual base salary. Each fiscal year of the Company, the actual bonus range that may be earned hereunder by each Participant shall be (i) determined by the Committee with respect to Senior Vice Presidents and Executive Vice Presidents who are Committee Participants, (ii) 75% to 225% of the Participant’s annual base salary for the CEO in accordance with the CEO Employment Agreement and (iii) determined by the CEO with respect to Other Participants subject to a maximum for the high end of the range of 100% of the Other Participant’s annual base salary.   4. Performance Objectives. Annual bonuses under the STIP shall be earned based on the achievement of both individual and Company performance objectives for each fiscal year of the Company, as follows: (i) 25% (in the case of Senior Vice Presidents), 20% (in the case of Executive Vice Presidents) or 10% (in the case of the CEO) of the annual bonus shall be earned based on the achievement of individual performance objectives (collectively, the “Individual Objectives”); and (ii) the remainder of the annual bonus shall be earned based on the achievement of one or more objective Company performance objectives (collectively, the “Corporate Objectives”) in an allocation set by the Committee (or, if no allocation is set, allocated equally). The Individual Objectives shall be (i) approved by the Committee for the CEO and by the immediate supervisor for each other Participant (with the CEO having the authority to revise any Individual Objectives for Participants for whom the CEO is not the immediate supervisor) and (ii) scored as between threshold (including whether threshold performance is met), target and high by the Committee for the CEO and by the immediate revise any scoring for Participants for whom the CEO is not the immediate supervisor). Each Corporate Objective shall be (i) approved by the Committee and shall be the same for all Participants and (ii) scored as between threshold (including whether threshold performance is met), target and high by the Committee as it considers appropriate (with any adjustments determined by the Committee to account for unforeseen or other circumstances (subject, if applicable, to Section 7 below)). The Committee may also (but is not required to) establish a master objective Company performance objective (an “Overall Corporate Objective”) for any fiscal year, which must be satisfied in order for any Participant to be eligible to receive an annual bonus under the STIP in respect of such fiscal year (and the satisfaction thereof shall be scored by the Committee). If the Committee establishes an Overall Corporate Objective for a fiscal year, then it shall also establish the maximum bonus amount that may be earned by each Participant in respect of such fiscal year if and to the extent the Overall Corporate Objective is satisfied, which maximum bonus amount shall be no greater than the applicable limit set forth in Section 5(b) of the Incentive Plan. Following the completion of each fiscal year of the Company, the Committee shall reasonably certify in writing whether, and to what extent, the applicable performance objectives have been achieved before any bonuses may be paid to Participants, and shall determine, in its discretion, the amount of the annual bonus, if any, that shall be paid to each Participant in respect of such fiscal year based on the achievement of the applicable performance objectives (subject, if applicable, to Section 7 below). The satisfaction of each performance objective (and the related payment of the bonus award) shall be separately determined (i.e., they are not contingent on each other unless specifically determined by the Committee with respect to any Overall Corporate Objective).   5. Payment of Bonuses. Except as provided below, Participants must remain employed with the Company Group through December 31 of a fiscal year in order to be eligible to receive an annual bonus under the STIP in respect of such fiscal year; provided, that, if a Participant’s employment is terminated by the Company Group for Cause following the end of a fiscal year but prior to the payment of annual bonuses under the STIP in respect of such fiscal year, then the Participant shall forfeit his or her right to receive an annual bonus under the STIP in respect of such fiscal year. If a Participant’s employment with the Company Group is terminated prior to December 31 of a fiscal year by the Company death, then the Participant shall be entitled to receive an amount equal to the Participant’s Target Bonus for such fiscal year multiplied by a fraction, the numerator of which is the number of days that have elapsed in such fiscal year through the date of the Participant’s termination of employment, and the denominator of which is the total number of days in such fiscal year, which amount shall be paid to the Participant in a cash lump sum within sixty (60) days following his or her termination of employment. If a Participant’s employment with the Company Group is terminated prior to December 31 of a fiscal year by the Participant due to his or her Retirement (as defined below), then the Participant shall be entitled to receive an amount equal to the annual bonus that he or she would have earned for such fiscal year had he or she remained employed with the Company Group through December 31, based on achievement of the applicable performance objectives, multiplied by a fraction, the numerator of which is the number of days that have elapsed in such fiscal year through the which is the total number of days in such fiscal year, which amount shall be paid to the Participant at the same time that annual STIP bonuses are paid to other Participants for such fiscal year. All bonuses under the STIP shall be paid in a cash lump sum no later than March 15 of the fiscal year following the fiscal year to which the bonus relates. For purposes of the STIP, the term for   2 attained the age of 65 years old and (ii) the number of completed years of the Participant’s employment with (A) Hilton Worldwide Holdings Inc. or any of its Subsidiaries (other than any member of the Company Group) and (B) any member of the Company Group is at least 5.   6. New Hires and Promotions. For new hires and promotions of individuals that, in either case, would be Committee Participants, the Committee shall determine (i) whether or not the individual will participate in the STIP during the year of hire or promotion, (ii) the applicable Target Bonus and range and (iii) whether or not the Target Bonus shall be prorated based on the hiring or promotion date of such individual. For new hires and promotions of individuals that, in either case, would be Other Participants, the CEO shall determine of hire or promotion, (ii) the applicable Target Bonus and range within the limits set forth in Section 3 and (iii) whether or not the Target Bonus shall be prorated based on the hiring or promotion date of such individual. All other terms of the annual bonus shall be as otherwise provided for the applicable fiscal year as contemplated hereunder.   7. Section 162(m). The Committee shall have the authority, at or before the time of grant of any Other Cash-Based Award hereunder, to designate such award as a compensation” under Section 162(m) of the Code, in which case such award shall be administered and interpreted in accordance with Section 11 of the Incentive Plan and the applicable requirements of Section 162(m) of the Code.   8. Amendment and Termination. The Committee may amend, alter, suspend, discontinue, or terminate the STIP or any portion thereof at any time; provided, that any such amendment, alteration, suspension, discontinuance or termination holder or beneficiary of any Other Cash-Based Award theretofore granted shall holder or beneficiary.   9. No Right to Continued Employment. Neither the STIP, its adoption, its operation, nor any action taken under the STIP shall be construed as giving any any Affiliates, nor shall it interfere in any way with the right and power of the Company or any of Affiliates to dismiss or discharge any employee or take any action that has the effect of terminating any employee’s employment at any time.   10. Governing Law. The STIP shall be governed by and construed in accordance   11. CEO Determinations. Any determination made by the CEO in connection with an award hereunder (including status as an Other Participant, Target Bonus and range and new hire/promotion prorations) shall be made in writing (including, for example, by executing a certificate setting forth such determination).   3

Exhibit 10.25 ABBVIE INC. PERFORMANCE SHARE AWARD AGREEMENT On this __ day of _________, 20__ (the “Grant Date”), AbbVie Inc. (the “Company”) hereby grants to _____________ (the “Employee”) a Performance Share Award (the “Award”) of ______ performance share units (the “Units”). The actual number of shares of Company common stock (the “Shares”) that may be issued under this Award will be determined in accordance with this Agreement by reference to the number of Units set forth above. 1. (b) discretion: (i) (A) (B) (C) employment; (D) (E) Disability); or (ii) Subsidiaries. (c) (d) (e) (f) (g) (h) (i) representative. (j) (i) (ii) (iii) (iv) (v) (vi) disability and vacation; 2 (vii) Control; or (viii) Section 5. (k) achieved. (l) (m) achieved. In no event will the number of Performance Shares exceed 275% of the (n) (o) (p) Retirement: (i) following: • • (ii) • • • (iii) • • (iv) 3 (q) 2. Delivery Dates and Shareholder Rights. The Delivery Dates for Shares issuable distributable to the Employee if the Units vest pursuant to Section 4 below. Prior to the Delivery Date(s): (a) (b) Agreement; and (c) the Program. cancelled phantom dividends. 4 3. events described in subsections 4(a), (b) or (c) or Section 5 occurs. 4. Vesting. If the Company’s 2018 return on equity (as defined and approved by the Committee) is a minimum of 18 percent, the number of Shares that become issuable under this Award, as described in this Section 4 and subject to the provisions of Sections 5, 6 and 7 below, will be calculated based on the extent to which the Performance Vesting Requirements described in the attached Schedule are achieved. If the Company’s 2018 return on equity is less than 18 percent, no Units will vest and no Shares will become issuable under the Award. The Committee may equitably adjust the Performance Vesting Requirements described in the attached Schedule in recognition of unusual or non-recurring events unusual in nature or infrequent in occurrence or related to the acquisition or disposal of a business or assets or related to a change in accounting principles. (a) Subsidiaries and has not experienced a Termination that triggers forfeiture, then, as of the applicable vesting event specified below: (i) ______ of the Units may be earned on Vesting Event 1, as determined in accordance with the Schedule; (ii) ______ of the Units may be earned on Vesting Event 2, as determined in (iii) ______ of the Units may be earned on Vesting Event 3, as determined in (iv) ______ of the Units may be earned on Vesting Event 4, as determined in accordance with the Schedule; and (v) ______ of the Units may be earned on Vesting Event 5, as determined in provided that none of the vesting events identified in paragraphs (i) through (v) above may result in the vesting of any portion of the Award before the first The number of Shares deliverable as a result of Units being earned as described above shall be determined in accordance with the Schedule. Each Delivery Date for the Shares to be delivered as a result of Units being earned under this subsection (a) shall be no later than 75 days after the date of the applicable vesting event. (b) previously vested will vest without adjustment and be settled (for the person or descent or distribution) in the form of Shares as soon as administratively 5 (c) Units not previously vested will vest without adjustment and be settled in the the date of Termination due to Disability. 5. Entity does not assume, convert or replace this Award, any Units not previously vested will vest without adjustment on the date of the Change in Control. for Good Reason, any Units not previously vested will vest without adjustment on Termination (referred to herein as the “Applicable Vesting Date”). the Program. 6. 7. other than those set forth in subsection 4(b) or (c) or Section 5, any Units that have not vested as of the date of Termination will be forfeited without consideration to the Employee or the Employee’s Representative. In the event that the Employee is terminated by the Company other than for Cause and in a 8. taxes arising from the grant of the Award, the vesting of Units or the delivery of Shares pursuant to this Agreement by: (a) (b) (c) 6 (d) withholding obligations. 9. (a) Subsidiaries; (b) (c) 10. Nature of Grant. In accepting this Award, the Employee acknowledges that: (a) at any time; (b) the past; (c) (d) (e) (f) The Units and Shares subject to the Units are: (i) (ii) 7 (iii) Subsidiaries; (g) The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty; (h) In consideration of the Award, no claim or entitlement to compensation or (i) liability; and (j) 11. Data Privacy. (a) (i) (ii) (b) only by those 8 (c) throughout the world. (d) (i) (ii) (iii) (iv) human resources manager. 12. 13. 14. 15. (a) 9 (b) settlement of the Units, the issuance of Shares upon payment of the Units, the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result. If the Employee has become subject to tax in more than one jurisdiction. If the Employee relocates to another country, the Company may establish special or alternative terms and conditions as necessary or advisable to comply with local laws, rules or regulations, to facilitate the operation and administration of the Award and the Program and/or to accommodate the Employee’s relocation. (c) 16. 10 17. 18. 19. descent or distribution. 20. 21. forth in any Addendum to this Agreement for the Employee’s country. Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to 11 and/or regulations or facilitate the operation and administration of the Units and the Program (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Employee’s relocation). The 22. 23. Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer. 24. 25. 26. *    *    * ABBVIE INC. By                                       Title                              12

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934 Date of Report(Date of earliest event reported): October 17, 2011 Angiotech Pharmaceuticals,Inc. (Exact name of registrant as specified in its charter) British Columbia 000-30334 98-0226269 (State or other jurisdiction of incorporation) (Commission File Number) (IRS. Employer Identification No.) 1618 Station Street Vancouver, BC, Canada V6A 1B6 (Address of principal executive offices and zip code) Registrant’s telephone number, including area code: (604)221-7676 (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers On October 21, 2011, Angiotech Pharmaceuticals, Inc., a corporation organized under the laws of British Columbia (the “Company”), announced that the employment of William L. Hunter as the Company’s President and Chief Executive Officer, had ended effective as of October 17, 2011, and that it has appointed K. Thomas Bailey, the Company’s Chief Financial Officer, as the Company’s Interim President and Chief Executive Officer.Mr. Bailey will continue to serve as the Company’s Chief Financial Officer. Mr. Bailey, 43, joined the Company in 2003 as Vice President, Business Development and became the Company’s Chief Financial Officer in 2005.Prior to joining the Company, Mr. Bailey served as an investment banker for over ten years, most recently as leader of the biotechnology practice group at Credit Suisse First Boston and Donaldson, Lufkin & Jenrette, where he advised on over 50 completed transactions for biotechnology, pharmaceutical and medical device companies, including mergers, acquisitions, strategic alliances and a wide range of equity, equity-linked and debt financings, and worked with the firms’ merchant banking and venture capital groups to identify and complete significant investments in life sciences companies.Mr. Bailey holds an A.B. and an M.B.A. from Harvard University. SIGNATURES 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. Angiotech Pharmaceuticals, Inc. (Registrant) Dated: October 21, 2011 By: /s/ K. Thomas Bailey Name: K. Thomas Bailey Title: Interim President and Chief Executive Officer and Chief Financial Officer

Name: Commission Regulation (EEC) No 2718/90 of 24 September 1990 fixing the import levies on cereals and on wheat or rye flour, groats and meal Type: Regulation Date Published: nan I No L 261 / 125. 9 . 90 Official Journal of the European Communities I (Acts whose publication is obligatory) COMMISSION REGULATION (EEC) No 2718/90 of 24 September 1990 fixing the import levies on cereals and on wheat or rye flour, groats and meal THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to the Act of Accession of Spain and Portugal, Having regard to Council Regulation (EEC) No 2727/75 of 29 October 1975 on the common organization of the market in cereals ('), as last amended by Regulation (EEC) No 1340/90 (2), and in particular Article 13 (5) thereof, Having regard to Council Regulation (EEC) No 1676/85 of 11 June 1985 on the value of the unit of account and the exchange rates to be applied for the purposes of the common agricultural policy (3), as last amended by Regu ­ lation (EEC) No 2205/90 (4), and in particular Article 3 thereof, Having regard to the opinion of the Monetary Committee, Whereas the import levies on cereals, wheat and rye flour, and wheat groats and meal were fixed by Commission Regulation (EEC) No 1 801 /90 (^ and subsequent amending Regulations ; Whereas, if the levy system is to operate normally, levies should be calculated on the following basis : ” in the case of currencies which are maintained in rela ­ tion to each other at any given moment within a band of 2,25 %, a rate of exchange based on their central rate, multiplied by the corrective factor provided for in the last paragraph of Article 3 (l)-of Regulation (EEC) No 1676/85, ” for the other currencies, an exchange rate based on an average of the ecu rates published in the Official Journal of the European Communities, C series, over a period to be determined, multiplied by the coeffi ­ cient referred to in the preceding indent ; Whereas these exchange rates being those recorded on 21 September 1990 ; Whereas the aforesaid corrective factor affects the entire calculation basis for the levies, including the equivalence coefficients ; Whereas it follows from applying the detailed rules ' contained in Regulation (EEC) No 1801 /90 to today's offer prices and quotations known to the Commission that the levies at present in force should be altered to the amounts set out in the Annex hereto, HAS ADOPTED THIS REGULATION : Article 1 The import levies to be charged on products listed in Article 1 (a), (b) and (c) of Regulation (EEC) No 2727/75 shall be as set but in the Annex hereto. Article 2 This Regulation shall enter into force on 25 September 1990. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 24 September 1990 . For the Commission Ray MAC SHARRY Member of the Commission (') OJ No L 281 , 1 . 11 . 1975, p. 1 . (2) OJ No L 134, 28 . 5. 1990 , p. 1 . (3) OJ No L 164, 24. 6. 1985, p. 1 . (4) OJ No L 201 , 31 . 7. 1990, p . 9 . 0 OJ No L 167, 30. 6. 1990, p . 8 . 25. 9 . 90No L 261 /2 Official Journal of the European Communities ANNEX to the Commission Regulation of 24 Septembier 1990 fixing the import levies on cereals and on wheat or rye flour, groats and meal (ECU/tonne) CN code Levies Portugal Third country 0709 90 60 0712 90 19 100110 10 1001 10 90 1001 90 91 1001 90 99 1002 00 00 1003 00 10 1003 00 90 1004 00 10 1004 00 90 1005 10 90 1005 90 00 1007 00 90 1008 10 00 1008 20 00 1008 30 00 1008 90 10 1008 90 90 1101 00 00 1102 10 00 1103 11 10 1103 11 90 39,96 39.96 20,60 20,60 26,85 26,85 51.60 42.97 42,97 34.61 34,61 39,96 39.96 56,65 42.97 42,97 42,97 O 42,97 50,93 85,58 45,06 54,64 1 50,33 Q (3) 150,33 (2)0 190,88 (') J5) 190,88 ( ») 0 160,00 160,00 145,86 0 145,28 145,28 131,93 131,93 1 50.33 0 0 150,33 (2)O 156,30 (4) 55,95 105,30 0 45,33 0 0 45,33 237.34 217,21 309,00 255,96 (') Where durum wheat originating in Morocco is transported directly from that country to the Community, the levy is reduced by ECU 0,60/tonne . (2) In accordance with Regulation (EEC) No 715/90 the levies are not applied to products imported directly into the French overseas departments, originating in the African, Caribbean and Pacific States or in the 'overseas countries and territories'. (3) Where maize originating in the ACP or OCT is imported into the Community the levy is reduced by ECU 1,81 /tonne. (4) Where millet and sorghum originating in the ACP or OCT is imported into the Community the levy is applied in accordance with Regulation (EEC) No 715/90. / (*) Where durum wheat and canary seed produced in Turkey are transported directly from that country to the Community, the levy is reduced by ECU 0,60/tonne. (') The import levy charged on rye produced in Turkey and transported directly from that country to the Commu ­ nity is laid down in Council Regulation (EEC) No 1180/77 (OJ No L 142, 9 . 6 . 1977, p. 10) and Commission Regulation (EEC) No 2622/71 (OJ No L 271 , 10 . 12. 1971 , p. 22). 0 The levy applicable to rye shall be charged on imports of the product falling within CN code 1008 90 10 (triti ­ cale).

  Exhibit 10.4   [tv517268_ex10-4pg01.jpg]   Exhibit 10.4 Technical Consultation and Service Agreement This Technical Consultation and Service Agreement (this “Agreement”) is made and entered into by and between the following parties on December 19, 2018 in Beijing, the Technology Development Co., Ltd. Address:Room 1209, Floor 12, No.12 Yabao Road, Chaowai, Chaoyang District, Beijing, China Party B:Beijing Ouruixi Medical Technology Co., Ltd. Address: Room 120808, Unit 2, Floor 7, Building 3, No.1 East Futong Street, Chaoyang District, Beijing, China Each of Party A and Party “Parties” collectively.         [tv517268_ex10-4pg02.jpg]   and has the necessary resources to provide consulting services; 2. Party B is a company with exclusively domestic capital registered in China and needs Party A’s support and services during its business operation. NOW THEREFORE, through friendly consultation, Party A and Party B hereby agree to enter into and perform this Agreement. MANAGEMENT CONSULTING AND SERVICES 1.1 Party A hereby agrees to provide consultation and services to Party B in the area of fund, human, technology and intellectual properties, and Party B hereby agrees to accept such management consultation and services in accordance with the terms and conditions under this Agreement. The management consultation and services provided by Party A include: (1) be responsible for providing training and technical support to the staff of Party B; (2) be responsible for providing consultation services regarding the marketing of Party B; 2 Technical Consultation and Service Agreement          [tv517268_ex10-4pg03.jpg]   (3) be responsible for providing general advice and assistance relating to the management and operation of Party B’s business; (4) be responsible for providing other consultation and services which are necessary for Party B’s businesses. 1.2 Party B shall provide appropriate assistance to Party A for its work, including but not limited to providing the relevant data, engineering requirement and technical directions. 1.3 The term of this Agreement is twenty (20) years. The Parties agree that, this Agreement can be extended only if Party A gives its written consent of the extension of this Agreement before the expiration of this Agreement and Party B shall agree with this extension without reserve. If Party B’s operation term is required to extended, Party B shall use its best efforts to renew its business license and extend its operation term until and unless otherwise instructed in Party A’s prior written notice. 1.4 Party A is the exclusive consultation and services provider of Party B; Party B shall not utilize third party to provide services which are same as or similar with Party A’s services and shall not establish similar corporation relationship with any third party regarding the matters contemplated by this Agreement without the prior written consent of Party A. Party A may appoint other parties SERVICES FEES3 Technical Consultation and Service Agreement         [tv517268_ex10-4pg04.jpg]    The Parties agree that, Party B shall pay relevant services fees to Party A which shall be determined according to the Appendix of this Agreement, as the consideration for the technical support and services provided by Party A to Party B as stipulated in Section 1.1. This Appendix can be amended by the Parties in considering the circumstances. INTELLECTUAL PROPERTY AND CONFIDENTIALITY 3.1 Unless otherwise stipulated in writing by the Parties, Party A shall be the sole and exclusive owner of all rights and interests to any and all intellectual property rights arising from the performance of this Agreement, including, but not limited to, any copyrights, patent, know-how and otherwise, whether developed by Party A or Party B. Party B shall execute all appropriate documents, take all appropriate actions, submit all filings and/or applications, render all appropriate assistance and otherwise conduct whatever is necessary as deemed by Party A in its sole discretion for the purposes of vesting any ownership, right or interest of any such intellectual property rights in Party A, and/or perfecting the protections for any such intellectual property rights in Party A. The Parties agree that this Section shall survive changes to, and rescission or termination of, this Agreement. 3.2 4 Technical Consultation and Service Agreement         [tv517268_ex10-4pg05.jpg]   For the purpose of this Agreement, Confidential Information includes, but not limited to, (i) technical information, materials, program, drawing, data, parameter, standard, software, computer program, web design in connection with the development, design, research, produce and maintenance of technology disclosed by one Party to the other Party; (ii) any contracts, agreement, memo, annexes, draft or record (including this Agreement) entered into by the Parties for the purpose of this Agreement; and (iii) any information designated to be proprietary or confidential when it is disclosed by one Party to the other Party. Upon termination or expiration of this Agreement, Party B shall, return all and any documents, materials or software contained any of such Confidential Information to Party A or destroy it, delete all of such Confidential Information from memory devices, and cease to use them. 3.3 Any Party shall not disclose any Confidential Information to any third party in any way without the other Party’s prior written consent. 3.4 The Parties may disclose Confidential Information solely to its employees, agents or consultant who must know such information, subject to such employees, agents or consultant being bound by confidentiality obligations at least as restrictive as this Section 3. 3.5 Notwithstanding the foregoing, Confidential Information shall not be deemed to include the following information: (1) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); or (2) is under the of any stock exchange, or orders of the court or other government authorities, in which case the receiving Party will promptly notify the disclosing Party, and will take 5  Technical Consultation and Service Agreement          [tv517268_ex10-4pg06.jpg]   reasonable and lawful steps to minimize the extent of the disclosure. 3.6 Any Party breaching confidentiality obligations under this Section shall indemnity all losses of the other Party. REPRESENTATIONS AND WARRANTIES 4.1 Party A hereby represents and warrants as follows: (1) Party A is a wholly owned foreign enterprise legally registered and validly existing in accordance with the laws of China. (2) Party A has taken all necessary corporate actions, obtained all necessary authorization and the consent and approval from third parties and government agencies (if any) for the execution and performance of this Agreement. Party A’s execution and performance of this Agreement do not violate any explicit requirements under any law or regulation binding on Party A. (3) enforceable in accordance with its terms. 4.2 Party B hereby represents and warrants as follows: (1) Party B is a company legally registered and validly existing in 6 Technical Consultation and Service Agreement          [tv517268_ex10-4pg07.jpg]   accordance with the laws of China and has obtained the relevant permit and license for engaging in its business in a timely manner. It has independent legal person status, and has full and independent civil and legal capacity to execute, deliver and perform this Agreement. It can sue and be sued as a separate entity; (2) Party B has taken all necessary corporate actions, obtained all necessary authorization and the consent and approval from third parties and Agreement. Party B’s execution and performance of this Agreement do not violate any explicit requirements under any law or regulation binding on Party B. (3) This Agreement constitutes Party B's legal, valid and binding obligations, enforceable in accordance with its terms. LIABILITY FOR BREACH OF AGREEMENT 5.1 within the reasonable period of time or within thirty (30) days of non-defaulting Party’s written notice requesting for such rectification or remedy, then the non-defaulting Party shall be entitled to elect any one of the following remedial actions: (a) to terminate this Agreement and request the specific performance by the Defaulting 7 Technical Consultation and Service Agreement        [tv517268_ex10-4pg08.jpg]   Party of its obligations hereunder and request the Defaulting Party to fully compensate non-defaulting Party’s losses and damages. 5.2 No waiver of rights in respect of any default hereunder shall be valid unless it was made in writing. Any failure to exercise or delay in exercising any rights or remedy by any Party under this Agreement shall not be deemed as a waiver of such Party. Any partial exercise of any right or remedy shall not affect the exercise of any other rights and remedies. 5.3 Notwithstanding Section 5.1 above, the Parties agree and confirm that in no circumstance shall Party B early terminate this Agreement unless the applicable law provides otherwise or it has obtained the prior written consent of Party A. 5.4 The validity of this Section shall not be affect by the suspension or termination of this Agreement. FORCE MAJEURE 6.1 In this Agreement, “Force Majeure” will mean war, earthquake and other events which are unforeseen, inevitable and beyond the control of the Party. 6.2 If the Force Majeure causes any one party to the Agreement the impossibility to further perform this Agreement, the Parties agree that the suffering party will waive any liability to the other party for any loss that result from any such Force Majeure, provided that the suffering party shall continue to perform this Agreement after the Force Majeure. 8 Technical Consultation and Service Agreement           [tv517268_ex10-4pg09.jpg] AMENDMENT AND TERMINATION 7.1 Any amendment of this Agreement shall come into force only after a written agreement is signed by both Parties. 7.2 During the Agreement upon giving thirty (30) days’ prior written notice to Party B at any time. 7.3 During the term of this Agreement, if any Party is going into liquidation (either voluntary or compulsory), or is prohibited to conduct business by the governmental authority, the other Party shall be entitled to terminate this Agreement. The termination notice shall come into force upon the notice is sent. 7.4 The amendment and termination of this Agreement shall not affect the exercise of any other remedies under this Agreement. Except when it may be exempted from liability according to law, the Party that is held responsible shall compensate the other Party for all losses and damages thus caused by such amendment or termination. GOVERNING LAW AND DISPUTE RESOLUTION 8.1 The execution, effectiveness, interpretation, performance, amendment, 9 Technical Consultation and Service Agreement          [tv517268_ex10-4pg10.jpg] termination and dispute resolution shall be governed by the law of the People’s Republic of China. 8.2 In the event of any dispute with respect to this Agreement, the Parties shall first resolve the dispute through friendly dispute, either Party may submit the relevant dispute to the Beijing Commission of China International Economic and Trade Arbitration Commission for arbitration award shall be final and binding on all Parties. 8.3 Upon the occurrence of any disputes arising from the construction and performance of this their respective rights under this Agreement and perform their respective obligations under this Agreement. NOTICES 9.1 All notices and other commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by shall be determined as follows: 。10 Technical Consultation and Service Agreement        [tv517268_ex10-4pg11.jpg] refusal at the address specified for notices. 9.2 For the purpose of notices, the addresses of the Parties are as follows: Party A:Beijing Qianhaitong Chaowai, Chaoyang District, Beijing, China Attn: Shi Baoning Phone: 010-6478-8692 Party B:Beijing Ouruixi Medical Technology Co., Ltd. 1372120808 Address:Room 120808, Unit 2, Floor 7, Building 3, No.1 East Futong Street, Chaoyang District, Beijing, China Attn:Shi Baoning Phone:010-6478-8692 9.3 If any Party change its address for notices or its contact person, a notice shall ASSIGNMENT11 Technical Consultation and Service Agreement          [tv517268_ex10-4pg12.jpg] rights and obligations under this Agreement to any third party. 10.2 Party B consent of Party B. SEVERABILITY In the event that one or several of the or enforceability of the remaining provisions of this Agreement shall not be or unenforceable provisions. AMENDMENTS AND SUPPLEMENTS Any amendments and this Agreement shall be an 12 Technical Consultation and Service Agreement          [tv517268_ex10-4pg13.jpg] Agreement. MISCELLANEOUS 13.1 This Agreement shall become effective upon and from the date on which it is signed by the authorized representative and seal of each Party. 13.2 The clauses in connection with confidentiality obligations, disputes resolution and default responsibilities shall survive rescission or termination of this Agreement. 13.3 This Agreement shall be signed in Chinese and English language bearing the same legal effect. In the event of any inconsistency between the Chinese and English language, the Chinese version of this Agreement shall prevail. This Agreement shall have two (2) counterparts, with each party holding one (1) original. All counterparts shall be given the same legal effect. [The Remainder of this page is intentionally left blank] 13         [tv517268_ex10-4pg14.jpg]   representatives to execute this Technical Consultation and Service Agreement as of the date first above written. Party A:Beijing Qianhaitong Technology Development Co., Ltd. (Seal) Name:SHI Baoning Title:Legal Representative By:         [tv517268_ex10-4pg15.jpg] of the date first above written. Party B: Beijing Ouruixi Medical Technology Co., Ltd. (Seal) Name: SHI Baoning Title: Legal Representative By: Technical Consultation and Service Agreement          [tv517268_ex10-4pg16.jpg] Exhibit Provisions on the payment standard and method of technology service fee 1. Both Parties agreed that Party B should pay service fee relating to Section 1.1 to Party A based on the following terms: (1) Annual Fee Party B should pay 100% of net profit after tax of Party B accepted by US GAAP to Party A as the annual fee (the “Annual Fee”) of technology support and service herein. The Annual fee should be paid to the designed bank account of Party A within fifteen (15) working days after the first day of each quarter of the year. (2) Floating Charge Besides the Annual Fee, Party B should pay Floating Charge (the “Floating Charge”), the amount of which should not be exceed total net profit accepted by the US GAAP deducting the Annual Fee of Party B, to Party A in each quarter of the year according to the technology support and service provided by Party A. The amount of the Floating Charge should be determined by both Parties based on the following factors: A. Technical Consultation and Service Agreement          [tv517268_ex10-4pg17.jpg] The number and qualification of the employees provided by Party A for the technology support and service in a certain quarter; B. The service time costed for the technology support and service in a certain quarter; C. The investment made for the technology support and service in a certain quarter; D. The service and the value of the service provided for the technology support and service in a certain quarter; E. The operation revenue of Party B. 2. Within fifteen (15) days of the end of each quarter, Party A should provide all the required financial information to be used to calculate the Floating Charge on the certain quarter with Party B and should pay the Floating Charge within thirty (30) days of the end each quarter. Both Parties can engage independent accountants with good reputation to audit on the Financial Information, if any Party has a doubt on it. The audit would be conducted during the business hour and should not be affect the normal business of Party B. 3. Party B should negotiate with Party B within seven (7) working days after receiving the written notice regarding the adjustment of the Annual Fee or the Floating Charge from Party A. 4. Technical Consultation and Service Agreement          [tv517268_ex10-4pg18.jpg] If Party B is in a status of loss accepted by the US GAAP, Party A is obliged to absorb all the loss of Party B and to pay the amount of loss to Party B.    

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4186 John Hancock Income Securities Trust (Exact name of registrant as specified in charter) 601 Congress Street, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip code) Salvatore Schiavone Treasurer 601 Congress Street Boston, Massachusetts 02210 (Name and address of agent for service) Registrant's telephone number, including area code: 617-663-4497 Date of fiscal year end: October 31 Date of reporting period: April 30, 2012 ITEM 1. SCHEDULE OF INVESTMENTS Portfolio summary Portfolio Composition 1 Corporate Bonds 52.0% U.S. Government 1.5% U.S. Government Agency 24.4% Term Loans 0.4% Collateralized Mortgage Obligations 10.3% Municipal Bonds 0.2% Asset Backed Securities 4.1% Foreign Government Obligations 0.1% Preferred Securities 2.4% Convertible Bonds 0.1% Common Stocks 2.1% Short-Term Investments 0.4% Capital Preferred Securities 2.0% Quality Distribution U.S. Government 1.5% B 9.8% U.S. Government Agency 24.4% CCC & Below 6.1% AAA 3.0% Not Rated 0.3% AA 3.3% Preferred Securities 2.4% A 8.4% Equity 2.1% BBB 29.7% Short-Term Investments 0.4% BB 8.6% 1 As a percentage of the Fund’s total investments on 4-30-12. 2 Ratings are from Moody’s Investor Services, Inc. If not available, we have used Standard & Poor’s ratings. In the absence of ratings from these agencies, we have used Fitch, Inc. ratings. “Not Rated” securities are those with no ratings available from these agencies. All ratings are as of 4-30-12 and do not reflect subsequent downgrades or upgrades, if any. 6 Income Securities Trust | Semiannual report Fund’s investments As of 4-30-12 (unaudited) Maturity Rate (%) date Par value Value Corporate Bonds 77.2% (52.0% of Total Investments) (Cost $128,169,474) Consumer Discretionary 11.0% Auto Components 0.8% Allison Transmission, Inc. (S)(Z) 7.125 05-15-19 $380,000 398,050 Exide Technologies (Z) 8.625 02-01-18 545,000 442,813 Hyva Global BV (S)(Z) 8.625 03-24-16 340,000 286,450 Visteon Corp. 6.750 04-15-19 220,000 226,600 Automobiles 1.5% Ford Motor Credit Company LLC (Z) 5.000 05-15-18 440,000 475,352 Hyundai Capital Services, Inc. (S)(Z) 4.375 07-27-16 310,000 326,992 Hyundai Capital Services, Inc. (S)(Z) 6.000 05-05-15 430,000 470,958 Kia Motors Corp. (S)(Z) 3.625 06-14-16 315,000 323,592 Nissan Motor Acceptance Corp. (S)(Z) 4.500 01-30-15 1,000,000 1,071,110 Food Products 0.1% Simmons Foods, Inc. (S)(Z) 10.500 11-01-17 250,000 230,000 Hotels, Restaurants & Leisure 2.9% CCM Merger, Inc. (S) 9.125 05-01-19 380,000 386,175 Downstream Development Authority of the Quapaw Tribe of Oklahoma (S)(Z) 10.500 07-01-19 275,000 286,669 Greektown Superholdings, Inc. 13.000 07-01-15 1,713,000 1,890,724 Jacobs Entertainment, Inc. (Z) 9.750 06-15-14 600,000 598,500 Little Traverse Bay Bands of Odawa Indians (S) 9.000 08-31-20 319,000 290,290 Marina District Finance Company, Inc. 9.500 10-15-15 255,000 247,988 MGM Resorts International (S)(Z) 8.625 02-01-19 340,000 369,325 Seminole Indian Tribe of Florida (S)(Z) 6.535 10-01-20 650,000 661,622 Seminole Indian Tribe of Florida (S)(Z) 7.750 10-01-17 325,000 353,438 Waterford Gaming LLC (S) 8.625 09-15-14 201,821 112,918 Household Durables 0.5% American Standard Americas (S) 10.750 01-15-16 165,000 120,863 Corp. GEO SAB de CV (S) 8.875 03-27-22 410,000 416,150 DR Horton, Inc. 4.750 05-15-17 305,000 311,863 Internet & Catalog Retail 0.3% Expedia, Inc. (Z) 5.950 08-15-20 530,000 553,781 See notes to financial statements Semiannual report | Income Securities Trust 7 Maturity Rate (%) date Par value Value Media 3.6% AMC Entertainment, Inc. 8.750 06-01-19 $140,000 $149,275 CBS Corp. (Z) 7.875 07-30-30 595,000 783,796 CCO Holdings LLC 8.125 04-30-20 145,000 162,400 Cinemark USA, Inc. 7.375 06-15-21 195,000 210,600 Grupo Televisa SAB (Z) 6.625 01-15-40 310,000 370,960 News America, Inc. 6.150 03-01-37 165,000 183,079 News America, Inc. (Z) 6.150 02-15-41 275,000 315,242 News America, Inc. 6.400 12-15-35 150,000 171,473 News America, Inc. (Z) 7.600 10-11-15 1,000,000 1,167,105 News America, Inc. (Z) 7.750 01-20-24 1,020,000 1,194,591 Nexstar Broadcasting, Inc. (Z) 7.000 01-15-14 84,000 84,000 Nexstar Broadcasting, Inc., PIK (Z) 7.000 01-15-14 255,998 254,718 Regal Cinemas Corp. 8.625 07-15-19 115,000 126,500 Regal Entertainment Group 9.125 08-15-18 100,000 110,750 Time Warner Cable, Inc. (Z) 6.750 07-01-18 605,000 738,349 UBM PLC (S)(Z) 5.750 11-03-20 275,000 277,334 Multiline Retail 0.3% Macy’s Retail Holdings, Inc. (Z) 7.875 08-15-36 444,000 494,865 Specialty Retail 0.3% AutoNation, Inc. 6.750 04-15-18 205,000 222,425 Hillman Group, Inc. (Z) 10.875 06-01-18 305,000 321,775 Textiles, Apparel & Luxury Goods 0.7% Burlington Coat Factory Warehouse Corp. (Z) 10.000 02-15-19 665,000 711,550 Levi Strauss & Company (Z) 7.625 05-15-20 500,000 536,875 Consumer Staples 2.4% Food & Staples Retailing 0.4% Rite Aid Corp. (S) 9.250 03-15-20 720,000 730,800 Food Products 0.9% Bunge, Ltd. Finance Corp. (Z) 4.100 03-15-16 205,000 215,727 Bunge, Ltd. Finance Corp. (Z) 8.500 06-15-19 389,000 483,821 Corp. Pesquera Inca SAC (S)(Z) 9.000 02-10-17 340,000 363,800 Del Monte Corp. 7.625 02-15-19 235,000 237,350 Grupo Bimbo SAB de CV (S) 4.500 01-25-22 245,000 254,318 Household Products 0.5% Reynolds Group Issuer, Inc. (S)(Z) 9.000 04-15-19 420,000 422,100 Reynolds Group Issuer, Inc. (S)(Z) 9.875 08-15-19 365,000 380,513 Tobacco 0.6% Alliance One International, Inc. (Z) 10.000 07-15-16 1,000,000 1,010,000 Lorillard Tobacco Company (Z) 6.875 05-01-20 110,000 130,439 Energy9.2% Energy Equipment & Services 1.0% Astoria Depositor Corp., Series B (S)(Z) 8.144 05-01-21 1,000,000 870,000 Offshore Group Investments, Ltd. (S) 11.500 08-01-15 415,000 453,906 Trinidad Drilling, Ltd. (S)(Z) 7.875 01-15-19 265,000 282,225 Weatherford International, Inc. 6.800 06-15-37 115,000 130,151 8 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value Gas Utilities 0.3% DCP Midstream LLC (S)(Z) 9.750 03-15-19 $405,000 $523,725 Oil, Gas & Consumable Fuels 7.9% Afren PLC (S) 10.250 04-08-19 240,000 251,299 Afren PLC (S)(Z) 11.500 02-01-16 400,000 433,552 Alpha Natural Resources, Inc. 6.000 06-01-19 125,000 116,875 Alpha Natural Resources, Inc. (Z) 6.250 06-01-21 270,000 251,775 Arch Coal, Inc. (S) 7.000 06-15-19 160,000 143,600 Arch Coal, Inc. (S)(Z) 7.250 06-15-21 270,000 240,975 BreitBurn Energy Partners LP (S) 7.875 04-15-22 165,000 166,650 Chesapeake Energy Corp. (Z) 6.125 02-15-21 265,000 250,425 DTEK Finance BV (S) 9.500 04-28-15 200,000 192,750 Energy Transfer Partners LP 5.200 02-01-22 135,000 143,809 Energy Transfer Partners LP (Z) 9.700 03-15-19 425,000 547,198 Enterprise Products Operating LLC (7.000% to 6-1-17, then 3 month LIBOR + 2.778%) (Z) 7.000 06-01-67 695,000 696,738 EV Energy Partners LP (Z) 8.000 04-15-19 400,000 408,000 Kerr-McGee Corp. (Z) 6.950 07-01-24 770,000 958,042 Kinder Morgan Energy Partners LP (Z) 7.750 03-15-32 195,000 237,985 Marathon Petroleum Corp. (Z) 6.500 03-01-41 280,000 307,198 Newfield Exploration Company (Z) 5.750 01-30-22 260,000 276,900 NuStar Logistics LP (Z) 7.650 04-15-18 845,000 1,008,529 Peabody Energy Corp. (S)(Z) 6.250 11-15-21 325,000 329,063 Petro-Canada (Z) 9.250 10-15-21 1,000,000 1,405,575 Petrohawk Energy Corp. (Z) 6.250 06-01-19 595,000 670,119 Petroleos Mexicanos (S) 4.875 01-24-22 275,000 293,003 Phillips 66 (S)(Z) 2.950 05-01-17 565,000 579,624 Spectra Energy Capital LLC (Z) 6.200 04-15-18 1,000,000 1,175,791 Targa Resources Partners LP (S) 6.375 08-01-22 245,000 246,838 TransCanada Pipelines, Ltd. (6.350% to 5-15-17, then 3 month LIBOR + 2.210%) (Z) 6.350 05-15-67 710,000 741,004 Williams Partners LP (Z) 7.250 02-01-17 1,463,000 1,773,024 Financials 28.0% Capital Markets 3.4% Affinion Group Holdings, Inc. 11.625 11-15-15 235,000 198,575 Credit Suisse New York (Z) 4.375 08-05-20 555,000 583,714 Jefferies Group, Inc. (Z) 6.875 04-15-21 905,000 901,606 Jefferies Group, Inc. 8.500 07-15-19 165,000 182,325 Macquarie Bank, Ltd. (S)(Z) 6.625 04-07-21 260,000 266,168 Macquarie Group, Ltd. (S)(Z) 6.000 01-14-20 340,000 339,136 Morgan Stanley (Z) 4.750 03-22-17 800,000 798,374 Morgan Stanley (Z) 5.550 04-27-17 500,000 508,556 Morgan Stanley (Z) 5.750 01-25-21 290,000 286,201 Morgan Stanley (Z) 7.300 05-13-19 485,000 520,338 The Goldman Sachs Group, Inc. (Z) 5.250 07-27-21 300,000 303,411 The Goldman Sachs Group, Inc. 5.750 01-24-22 275,000 286,982 The Goldman Sachs Group, Inc. (Z) 6.150 04-01-18 760,000 827,046 See notes to financial statements Semiannual report | Income Securities Trust 9 Maturity Rate (%) date Par value Value Commercial Banks 4.8% Abbey National Treasury Services PLC (Z) 4.000 04-27-16 $385,000 $380,588 Banco de Credito del Peru (S) 4.750 03-16-16 175,000 180,250 Barclays Bank PLC (Z) 5.140 10-14-20 1,930,000 1,845,435 Barclays Bank PLC (S)(Z) 6.050 12-04-17 295,000 295,866 Barclays Bank PLC (S)(Z) 10.179 06-12-21 260,000 302,463 BBVA Bancomer SA (S) 6.500 03-10-21 140,000 141,400 BPCE SA (12.500% to 9-30-19, then 3 month LIBOR + 12.980%) (Q)(S)(Z) 12.500 09-30-19 330,000 346,411 First Horizon National Corp. (Z) 5.375 12-15-15 355,000 378,309 ICICI Bank, Ltd. (S)(Z) 5.750 11-16-20 475,000 467,983 Lloyds TSB Bank PLC (Z) 6.375 01-21-21 440,000 475,407 Nordea Bank AB (S) 3.125 03-20-17 680,000 686,374 Regions Financial Corp. 7.750 11-10-14 1,000,000 1,100,000 Santander Holdings USA, Inc. 4.625 04-19-16 115,000 114,583 Svenska Handelsbanken AB 2.875 04-04-17 530,000 538,746 Synovus Financial Corp. 7.875 02-15-19 200,000 211,750 Wachovia Bank NA (Z) 5.850 02-01-37 390,000 437,507 Wachovia Corp. (Z) 5.750 06-15-17 405,000 472,157 Consumer Finance 2.0% Capital One Financial Corp. (Z) 6.150 09-01-16 730,000 806,837 Capital One Financial Corp. (Z) 6.750 09-15-17 1,000,000 1,197,939 Discover Bank (Z) 7.000 04-15-20 270,000 313,844 Discover Financial Services (S) 5.200 04-27-22 585,000 610,600 Nelnet, Inc. (P)(Z) 3.846 09-29-36 715,000 570,570 Diversified Financial Services 6.5% Bank of America Corp. (Z) 5.700 01-24-22 415,000 435,394 Bank of America Corp. (Z) 6.500 08-01-16 305,000 333,401 Bank of America NA 5.300 03-15-17 150,000 156,409 Bank of America NA (Z) 6.000 10-15-36 390,000 377,991 Bank of Ceylon (S) 6.875 05-03-17 250,000 252,485 Citigroup, Inc. (Z) 5.850 12-11-34 300,000 314,788 Citigroup, Inc. 6.125 11-21-17 1,935,000 2,146,323 Cooperatieve Centrale Raiffeisen- Boerenleenbank BA 3.375 01-19-17 275,000 283,694 General Electric Capital Corp. (Z) 4.375 09-16-20 365,000 390,913 General Electric Capital Corp. (Z) 5.875 01-14-38 390,000 435,570 General Electric Capital Corp. (Z) 6.000 08-07-19 335,000 395,732 JPMorgan Chase & Company 3.450 03-01-16 135,000 141,332 JPMorgan Chase & Company (Z) 6.000 01-15-18 1,000,000 1,155,147 JPMorgan Chase & Company (7.900% to 4-30-18, then 3 month LIBOR + 3.470%) (Q)(Z) 7.900 04-30-18 655,000 717,644 Merrill Lynch & Company, Inc. (Z) 6.875 04-25-18 1,000,000 1,114,066 Merrill Lynch & Company, Inc. (Z) 7.750 05-14-38 310,000 342,975 Nationstar Mortgage (Z) 10.875 04-01-15 540,000 577,800 The Bear Stearns Companies LLC (Z) 7.250 02-01-18 1,000,000 1,216,190 USB Realty Corp. (P)(Q)(S)(Z) 1.614 01-15-17 800,000 599,112 10 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value Insurance 5.6% Aflac, Inc. (Z) 8.500 05-15-19 $385,000 $508,519 American International Group, Inc. (Z) 3.800 03-22-17 530,000 547,272 AXA SA (6.379% to 12-14-36, then 3 month LIBOR + 2.256%) (Q)(S) 6.379 12-14-36 175,000 139,125 Chubb Corp. (6.375% until 4-15-17, then 3 month LIBOR + 2.250%) (Z) 6.375 03-29-67 315,000 322,481 CNA Financial Corp. (Z) 6.500 08-15-16 720,000 812,634 CNA Financial Corp. (Z) 7.250 11-15-23 540,000 618,758 CNO Financial Group, Inc. (S)(Z) 9.000 01-15-18 375,000 406,875 Glen Meadow Pass-Through Trust (6.505% to 2-15-17, then 3 month LIBOR + 2.125%) (S)(Z) 6.505 02-12-67 835,000 636,688 Hartford Financial Services Group, Inc. 5.125 04-15-22 390,000 393,671 Hartford Financial Services Group, Inc. (Z) 6.625 03-30-40 225,000 232,215 Liberty Mutual Group, Inc. (S)(Z) 7.800 03-15-37 705,000 690,900 Lincoln National Corp. (Z) 8.750 07-01-19 535,000 684,040 Lincoln National Corp. (6.050% until 4-20-17, then 3 month LIBOR + 2.040%) (Z) 6.050 04-20-67 535,000 497,550 Teachers Insurance & Annuity Association of America (S)(Z) 6.850 12-16-39 605,000 756,992 The Hanover Insurance Group, Inc. 6.375 06-15-21 150,000 162,397 Unum Group (Z) 7.125 09-30-16 395,000 456,043 UnumProvident Finance Company PLC (S)(Z) 6.850 11-15-15 605,000 681,923 W.R. Berkley Corp. (Z) 5.600 05-15-15 365,000 394,675 Willis Group Holdings PLC (Z) 5.750 03-15-21 350,000 380,529 Willis North America, Inc. (Z) 7.000 09-29-19 495,000 574,446 Real Estate Investment Trusts 5.2% Alexandria Real Estate Equities, Inc. 4.600 04-01-22 190,000 190,678 Boston Properties LP 3.700 11-15-18 195,000 202,854 Brandywine Operating Partnership LP (Z) 7.500 05-15-15 345,000 385,563 CommonWealth REIT (Z) 6.650 01-15-18 480,000 519,656 DDR Corp. (Z) 7.500 04-01-17 675,000 773,985 Goodman Funding Pty, Ltd. (S)(Z) 6.375 04-15-21 645,000 669,537 Health Care REIT, Inc. 4.950 01-15-21 190,000 197,154 Health Care REIT, Inc. (Z) 6.125 04-15-20 700,000 783,087 Health Care REIT, Inc. (Z) 6.200 06-01-16 505,000 560,107 Healthcare Realty Trust, Inc. (Z) 6.500 01-17-17 540,000 595,736 Host Hotels & Resorts LP (S) 5.250 03-15-22 430,000 427,313 Mack-Cali Realty LP 7.750 08-15-19 176,000 216,417 MPT Operating Partnership LP (Z) 6.375 02-15-22 320,000 321,600 MPT Operating Partnership LP 6.875 05-01-21 230,000 240,350 ProLogis LP 4.500 08-15-17 55,000 57,694 ProLogis LP (Z) 6.250 03-15-17 475,000 538,278 Ventas Realty LP (Z) 4.750 06-01-21 670,000 690,342 Vornado Realty LP (Z) 4.250 04-01-15 755,000 790,617 WEA Finance LLC (S)(Z) 6.750 09-02-19 290,000 339,755 Weyerhaeuser Company (Z) 7.375 03-15-32 690,000 752,918 See notes to financial statements Semiannual report | Income Securities Trust 11 Maturity Rate (%) date Par value Value Real Estate Management & Development 0.4% General Shopping Investments, Ltd. (12.000% to 3-20-17, then 5 Year USGG + 11.052%) (Q)(S) 12.000 03-20-17 $260,000 $256,100 Realogy Corp. (S) 7.875 02-15-19 215,000 210,700 Ventas Realty LP 4.000 04-30-19 165,000 167,704 Thrifts & Mortgage Finance 0.1% Nationstar Mortgage LLC (S) 9.625 05-01-19 220,000 226,050 Health Care 1.7% Health Care Equipment & Supplies 0.1% Alere, Inc. 8.625 10-01-18 185,000 191,475 Health Care Providers & Services 0.8% BioScrip, Inc. (Z) 10.250 10-01-15 285,000 308,513 HCA, Inc. (Z) 7.500 02-15-22 380,000 408,975 Medco Health Solutions, Inc. (Z) 7.125 03-15-18 545,000 672,813 Pharmaceuticals 0.8% Catalent Pharma Solutions, Inc., PIK (P) 9.500 04-15-15 421,756 434,409 Hospira, Inc. (Z) 6.050 03-30-17 485,000 545,761 Valeant Pharmaceuticals International, Inc. (S) 6.750 10-01-17 95,000 97,731 Valeant Pharmaceuticals International, Inc. (S)(Z) 6.875 12-01-18 315,000 324,450 Industrials 7.7% Aerospace & Defense 1.6% Bombardier, Inc. (S)(Z) 7.750 03-15-20 240,000 268,200 Ducommun, Inc. 9.750 07-15-18 70,000 74,025 Embraer Overseas, Ltd. (Z) 6.375 01-15-20 380,000 421,800 Huntington Ingalls Industries, Inc. (Z) 7.125 03-15-21 360,000 381,150 Kratos Defense & Security Solutions, Inc. (Z) 10.000 06-01-17 230,000 247,250 Textron Financial Corp. (6.000% to 2-15-17, then 3 month LIBOR + 1.735%) (S)(Z) 6.000 02-15-67 750,000 562,500 Textron, Inc. (Z) 5.600 12-01-17 505,000 552,516 Textron, Inc. (Z) 7.250 10-01-19 270,000 314,434 Airlines 3.6% America West Airlines 2000-1 Pass Through Trust (Z) 8.057 07-02-20 189,240 197,756 American Airlines 2011-1 Class B Pass Through Trust (S) 7.000 01-31-18 579,597 568,005 Continental Airlines 1997-4 Class A Pass Through Trust 6.900 01-02-18 312,367 335,014 Continental Airlines 1998-1 Class A Pass Through Trust (Z) 6.648 09-15-17 169,168 176,155 Continental Airlines 1999-1 Class A Pass Through Trust (Z) 6.545 02-02-19 199,151 214,087 Continental Airlines 2000-2 Class B Pass Through Trust (Z) 8.307 04-02-18 140,561 142,669 Continental Airlines 2007-1 Class A Pass Through Trust (Z) 5.983 04-19-22 515,281 558,410 Continental Airlines 2010-1 Class A Pass Through Trust 4.750 01-12-21 152,014 157,335 Continental Airlines 2012-1 Class B Pass Through Trusts 6.250 04-11-20 240,000 243,000 12 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value Airlines (continued) Delta Air Lines 2002-1 Class G-1 Pass Through Trust (Z) 6.718 01-02-23 $519,850 $547,143 Delta Air Lines 2007-1 Class A Pass Through Trust (Z) 6.821 08-10-22 685,293 741,830 Delta Air Lines 2010-1 Class A Pass Through Trust 6.200 07-02-18 202,339 219,032 Delta Air Lines 2011-1 Class A Pass Through Trust (Z) 5.300 04-15-19 349,093 368,729 Northwest Airlines 2002-1 Class G-2 Pass Through Trust 6.264 11-20-21 139,260 145,527 Northwest Airlines 2007-1 Class A Pass Through Trust (Z) 7.027 11-01-19 407,680 432,140 UAL 2009-2A Pass Through Trust (Z) 9.750 01-15-17 379,873 434,005 United Airlines 2007-1 Class C Pass Through Trust (P) 3.059 07-02-14 612,256 587,765 United Airlines 2009-1 Pass Through Trust 10.400 11-01-16 149,732 170,889 US Airways 2012-1 Class A Pass Through Trust Series 2012-1A, Class PTT 5.900 10-01-24 175,000 175,000 Building Products 0.8% Masco Corp. (Z) 7.125 03-15-20 285,000 308,126 Voto-Votorantim Overseas Trading Operations NV (S)(Z) 6.625 09-25-19 450,000 504,000 Voto-Votorantim, Ltd. (S)(Z) 6.750 04-05-21 490,000 548,800 Commercial Services & Supplies 0.5% Garda World Security Corp. (S) 9.750 03-15-17 100,000 106,000 International Lease Finance Corp. (S)(Z) 7.125 09-01-18 290,000 319,000 Steelcase, Inc. (Z) 6.375 02-15-21 500,000 522,434 Construction & Engineering 0.2% Tutor Perini Corp. (Z) 7.625 11-01-18 335,000 340,025 Electrical Equipment 0.1% Coleman Cable, Inc. 9.000 02-15-18 205,000 216,275 Industrial Conglomerates 0.3% Odebrecht Finance, Ltd. (S)(Z) 6.000 04-05-23 350,000 369,250 Odebrecht Finance, Ltd. (Q)(S) 7.500 09-14-15 200,000 206,500 Marine 0.2% Navios South American Logistics, Inc. 9.250 04-15-19 315,000 288,225 Road & Rail 0.1% Avis Budget Car Rental LLC (S) 8.250 01-15-19 125,000 130,938 Trading Companies & Distributors 0.3% Air Lease Corp. (S) 5.625 04-01-17 110,000 107,250 Aircastle, Ltd. (S) 6.750 04-15-17 160,000 161,600 Aircastle, Ltd. (S) 7.625 04-15-20 160,000 162,400 HD Supply, Inc. (S) 8.125 04-15-19 90,000 96,638 Information Technology 0.5% Computers & Peripherals 0.2% Hewlett-Packard Company (Z) 4.375 09-15-21 310,000 321,375 IT Services 0.3% Brightstar Corp. (S)(Z) 9.500 12-01-16 560,000 589,400 See notes to financial statements Semiannual report | Income Securities Trust 13 Maturity Rate (%) date Par value Value Materials 5.9% Chemicals 1.1% American Pacific Corp. (Z) 9.000 02-01-15 $245,000 246,838 Braskem America Finance Company (S)(Z) 7.125 07-22-41 425,000 427,125 Braskem Finance, Ltd. (S)(Z) 7.000 05-07-20 515,000 572,938 Incitec Pivot Finance LLC (S)(Z) 6.000 12-10-19 345,000 373,994 Lyondellbasell Industries NV (S) 5.000 04-15-19 240,000 247,800 Polymer Group, Inc. 7.750 02-01-19 95,000 101,413 Construction Materials 0.4% Magnesita Finance, Ltd. (Q)(S) 8.625 04-05-17 420,000 412,807 Severstal Columbus LLC 10.250 02-15-18 100,000 107,250 Vulcan Materials Company 7.500 06-15-21 130,000 143,975 Containers & Packaging 0.6% Pretium Packaging LLC 11.500 04-01-16 165,000 171,600 Temple-Inland, Inc. (Z) 6.625 01-15-18 750,000 871,964 Metals & Mining 2.6% Alcoa, Inc. (Z) 5.400 04-15-21 255,000 267,855 Allegheny Technologies, Inc. 5.950 01-15-21 140,000 155,076 Allegheny Technologies, Inc. (Z) 9.375 06-01-19 280,000 353,721 ArcelorMittal (Z) 9.850 06-01-19 370,000 447,033 Cliffs Natural Resources, Inc. 6.250 10-01-40 33,000 35,309 Commercial Metals Company (Z) 7.350 08-15-18 310,000 323,175 FMG Resources August 2006 Pty, Ltd. (S) 8.250 11-01-19 170,000 184,025 JMC Steel Group (S) 8.250 03-15-18 185,000 191,475 Metinvest BV (S)(Z) 8.750 02-14-18 435,000 402,375 Mongolian Mining Corp. (S) 8.875 03-29-17 500,000 500,000 Rain CII Carbon LLC (S)(Z) 8.000 12-01-18 555,000 581,363 SunCoke Energy, Inc. 7.625 08-01-19 259,000 264,180 Teck Resources, Ltd. 10.750 05-15-19 119,000 147,263 Thompson Creek Metals Company, Inc. (Z) 7.375 06-01-18 395,000 337,725 Vale Overseas, Ltd. (Z) 6.875 11-10-39 320,000 383,729 Paper & Forest Products 1.2% Georgia-Pacific LLC (S) 5.400 11-01-20 485,000 552,475 Georgia-Pacific LLC 7.250 06-01-28 165,000 197,577 International Paper Company (Z) 9.375 05-15-19 385,000 514,320 Verso Paper Holdings LLC 8.750 02-01-19 100,000 49,000 Westvaco Corp. (Z) 7.950 02-15-31 770,000 854,538 Telecommunication Services 3.8% Diversified Telecommunication Services 3.1% BellSouth Telecommunications, Inc. (Z) 6.300 12-15-15 513,172 544,333 CenturyLink, Inc. (Z) 5.800 03-15-22 480,000 475,591 CenturyLink, Inc. (Z) 6.450 06-15-21 305,000 317,262 CenturyLink, Inc. (Z) 7.600 09-15-39 305,000 289,326 Crown Castle Towers LLC (S)(Z) 4.883 08-15-20 760,000 805,756 GTP Acquisition Partners I LLC (S)(Z) 4.347 06-15-16 650,000 671,423 GTP Acquisition Partners I LLC (S)(Z) 7.628 06-15-16 325,000 314,304 GTP Towers Issuer LLC (S) 8.112 02-15-15 885,000 909,949 14 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value Diversified Telecommunication Services (continued) PAETEC Holding Corp. (Z) 9.875 12-01-18 $369,000 $417,893 Qwest Communications International, Inc. (Z) 8.000 10-01-15 275,000 292,875 Telecom Italia Capital SA (Z) 7.200 07-18-36 365,000 334,431 Real Estate Investment Trusts 0.2% American Tower Corp. 4.700 03-15-22 400,000 410,369 Wireless Telecommunication Services 0.5% America Movil SAB de CV (Z) 5.000 03-30-20 440,000 496,808 Nextel Communications, Inc. (Z) 7.375 08-01-15 415,000 402,550 Utilities 7.0% Electric Utilities 3.7% Beaver Valley II Funding (Z) 9.000 06-01-17 384,000 398,757 BVPS II Funding Corp. (Z) 8.890 06-01-17 475,000 524,464 Commonwealth Edison Company (Z) 5.800 03-15-18 525,000 634,385 Exelon Corp. (Z) 4.900 06-15-15 985,000 1,077,816 FPL Energy National Wind LLC (S)(Z) 5.608 03-10-24 222,404 230,184 ITC Holdings Corp. (S)(Z) 5.500 01-15-20 415,000 475,913 Oncor Electric Delivery Company LLC (Z) 5.000 09-30-17 820,000 904,910 PNM Resources, Inc. (Z) 9.250 05-15-15 705,000 813,394 PNPP II Funding Corp. (Z) 9.120 05-30-16 246,000 263,643 PPL Capital Funding, Inc. (6.700% to 3-30-17, then 3 month LIBOR + 2.665%) (Z) 6.700 03-30-67 525,000 519,750 Southern California Edison Company (6.250% to 2-1-22, then 3 month LIBOR + 4.199%) (Q) 6.250 02-01-22 275,000 286,996 TXU Corp. (Z) 7.460 01-01-15 94,476 84,019 W3A Funding Corp. (Z) 8.090 01-02-17 337,407 340,984 Independent Power Producers & Energy Traders 1.6% Allegheny Energy Supply Company LLC (S)(Z) 5.750 10-15-19 460,000 506,648 DPL, Inc. (S)(Z) 7.250 10-15-21 570,000 632,700 Exelon Generation Company LLC (Z) 6.250 10-01-39 360,000 416,797 Ipalco Enterprises, Inc. (Z) 5.000 05-01-18 500,000 497,500 NRG Energy, Inc. (Z) 7.625 01-15-18 385,000 389,813 NRG Energy, Inc. (Z) 8.250 09-01-20 355,000 355,888 Multi-Utilities 1.3% CMS Energy Corp. (Z) 5.050 03-15-22 400,000 406,914 Integrys Energy Group, Inc. (6.110% to 12-1-16, then 3 month LIBOR + 2.120%) (Z) 6.110 12-01-66 650,000 652,438 MidAmerican Energy Holdings Company (Z) 8.480 09-15-28 550,000 804,279 Wisconsin Energy Corp. (6.250% to 5-15-17, then 3 month LIBOR + 2.113%) (Z) 6.250 05-15-67 410,000 423,346 Water Utilities 0.4% Cia de Saneamento Basico do Estado de Sao Paulo (S)(Z) 6.250 12-16-20 305,000 325,588 Midwest Generation LLC, Series B (Z) 8.560 01-02-16 386,932 375,324 See notes to financial statements Semiannual report | Income Securities Trust 15 Maturity Rate (%) date Par value Value Convertible Bonds 0.2% (0.1% of Total Investments) (Cost $267,530) Consumer Discretionary 0.2% Media 0.2% XM Satellite Radio, Inc. (S)(Z) 7.000 12-01-14 $248,000 360,530 Municipal Bonds 0.3% (0.2% of Total Investments) (Cost $450,947) California 0.2% State of California General Obligation Bond 7.600 11-01-40 $225,000 299,837 Illinois 0.1% State of Illinois General Obligation Bond 5.100 06-01-33 250,000 237,003 Term Loans (M) 0.6% (0.4% of Total Investments) (Cost $1,098,050) Consumer Discretionary 0.5% Hotels, Restaurants & Leisure 0.5% CCM Merger, Inc. 6.000 03-01-17 $189,220 188,589 Kalispel Tribal Economic Authority 7.500 02-24-17 572,747 561,292 Landry’s, Inc. 6.500 04-24-18 130,000 129,919 Financials 0.1% Real Estate Investment Trusts 0.1% iStar Financial, Inc. 7.000 06-30-14 220,000 219,890 Capital Preferred Securities (a) 2.9% (2.0% of Total Investments) (Cost $5,192,858) Financials 2.9% Capital Markets 0.8% State Street Capital Trust III (P)(Q)(Z) 5.464 06-11-12 $715,000 717,803 State Street Capital Trust IV (P)(Z) 1.474 06-15-37 935,000 695,802 Commercial Banks 1.5% Fifth Third Capital Trust IV (6.500% to 4-15-17 then 3 month LIBOR + 1.368%) (Z) 6.500 04-15-37 825,000 816,750 PNC Financial Services Group, Inc. (6.750% to 8-1-21, then 3 month LIBOR + 3.678%) (Q) 6.750 08-01-21 215,000 225,357 PNC Preferred Funding Trust III (8.700% to 3-15-13, then 3 month LIBOR + 5.226%) (S)(Z) 8.700 03-15-13 835,000 855,959 Regions Financing Trust II (6.625% to 5-15-27, then 3 month LIBOR + 1.290%) (Q) 6.625 05-15-27 260,000 245,700 Sovereign Capital Trust VI (Z) 7.908 06-13-36 480,000 470,400 Insurance 0.6% Aon Corp. (Z) 8.205 01-01-27 345,000 402,784 MetLife Capital Trust X (9.250% to 4-8-38 then 3 month LIBOR + 5.540%) (S)(Z) 9.250 04-08-38 315,000 384,300 ZFS Finance USA Trust II (6.450% to 6-15-16 then 3 month LIBOR + 2.000%) (S)(Z) 6.450 12-15-65 360,000 352,800 16 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value U.S. Government & Agency Obligations 38.5% (25.9% of Total Investments) (Cost $66,173,921) U.S. Government 2.2% U.S. Treasury Bonds Bond (Z) 3.125 11-15-41 $2,260,000 2,263,530 U.S. Treasury Notes Note (Z) 0.875 02-28-17 180,000 180,830 Note (Z) 2.000 02-15-22 830,000 835,706 U.S. Treasury Strips, PO 2.907 11-15-30 1,020,000 579,408 U.S. Government Agency 36.3% Federal Home Loan Mortgage Corp. Bond 1.750 05-30-19 1,440,000 1,449,089 30 Yr Pass Thru 5.000 03-01-41 5,693,342 6,328,950 30 Yr Pass Thru 6.500 06-01-37 30,190 33,907 30 Yr Pass Thru 6.500 10-01-37 85,996 96,423 30 Yr Pass Thru 6.500 11-01-37 184,534 206,908 30 Yr Pass Thru 6.500 12-01-37 79,901 89,589 30 Yr Pass Thru (Z) 6.500 04-01-39 1,885,445 2,114,055 Federal National Mortgage Association 30 Yr Pass Thru (Z) 4.000 10-01-40 755,260 807,412 30 Yr Pass Thru 4.000 09-01-41 13,205,402 14,049,252 30 Yr Pass Thru 4.000 10-01-41 6,188,846 6,608,468 30 Yr Pass Thru 4.000 02-01-42 3,930,953 4,170,458 30 Yr Pass Thru (Z) 4.500 10-01-40 3,256,465 3,547,893 30 Yr Pass Thru 5.000 02-01-41 3,019,588 3,293,946 30 Yr Pass Thru 5.000 04-01-41 928,290 1,034,681 30 Yr Pass Thru 5.500 02-01-36 1,710,267 1,873,744 30 Yr Pass Thru (Z) 5.500 12-01-36 4,317,549 4,720,802 30 Yr Pass Thru 5.500 06-01-37 713,692 780,015 30 Yr Pass Thru (Z) 5.500 06-01-38 1,422,733 1,554,058 30 Yr Pass Thru (Z) 5.500 10-01-39 3,568,554 3,900,179 30 Yr Pass Thru 5.500 08-01-40 361,546 395,709 30 Yr Pass Thru 6.000 05-01-37 1,875,432 2,076,382 30 Yr Pass Thru (Z) 6.500 07-01-36 660,351 744,958 30 Yr Pass Thru (Z) 6.500 01-01-39 3,185,542 3,590,704 30 Yr Pass Thru (Z) 6.500 03-01-39 198,755 224,344 30 Yr Pass Thru 6.500 06-01-39 262,287 295,892 Foreign Government Obligations 0.2% (0.1% of Total Investments) (Cost $368,538) South Korea 0.2% Korea Development Bank (Z) 4.000 09-09-16 $370,000 387,343 Collateralized Mortgage Obligations 15.3% (10.3% of Total Investments) (Cost $28,390,517) Commercial & Residential 13.2% American Home Mortgage Assets Series 2006-6, Class XP IO 2.153 12-25-46 $7,609,094 434,132 American Tower Trust Series 2007-1A, Class D (S) 5.957 04-15-37 865,000 909,423 See notes to financial statements Semiannual report | Income Securities Trust 17 Maturity Rate (%) date Par value Value Banc of America Commercial Mortgage, Inc. Series 2006-2, Class AM (P) 5.956 05-10-45 $595,000 $643,475 Series 2006-4, Class AM 5.675 07-10-46 845,000 895,629 Series 2006-3, Class A4 (P) 5.889 07-10-44 785,000 886,635 Bear Stearns Adjustable Rate Mortgage Trust Series 2005-1, Class B2 (P) 3.346 03-25-35 770,770 93,449 Bear Stearns Alt-A Trust Series 2004-12, Class 1A1 (P) 0.589 01-25-35 688,135 595,378 Series 2005-3, Class B2 (P) 2.685 04-25-35 536,036 10,444 Bear Stearns Commercial Mortgage Securities, Inc. Series 2006-PW14, Class D (S) 5.412 12-11-38 655,000 177,364 Citigroup/Deutsche Bank Commercial Mortgage Trust Series 2005-CD1, Class C (P) 5.400 07-15-44 295,000 243,962 Commercial Mortgage Pass Through Certificates Series 2012-LC4, Class B (P) 4.934 12-10-44 360,000 371,191 Series 2012-LC4, Class C (P) 5.825 12-10-44 285,000 281,272 Countrywide Alternative Loan Trust Series 2006-OA12, Class X IO 2.709 09-20-46 10,625,623 683,611 Fontainebleau Resorts LLC 4.270 05-05-17 315,000 317,736 Fontainebleau Resorts LLC 5.007 05-05-17 465,000 468,939 GMAC Mortgage Loan Trust Series 2004-AR2, Class 3A (P) 3.178 08-19-34 796,752 751,473 Greenwich Capital Commercial Funding Corp. Series 2006-GG7, Class AM (P) 6.081 07-10-38 670,000 692,878 GSR Mortgage Loan Trust Series 2006-4F, Class 6A1 6.500 05-25-36 2,614,642 1,838,522 Series 2004-9, Class B1 (P) 3.159 08-25-34 789,632 330,542 Harborview Mortgage Loan Trust Series 2004-11, Class X1 IO 2.060 01-19-35 4,405,005 317,361 Series 2005-11, Class X IO 2.026 08-19-45 2,828,269 121,938 Series 2005-2, Class IX IO 2.231 05-19-35 11,459,176 627,774 Series 2005-8, Class 1X IO 2.195 09-19-35 4,561,191 225,332 Series 2007-3, Class ES IO 0.350 05-19-47 11,538,001 72,113 Series 2007-4, Class ES IO 0.350 07-19-47 14,162,508 88,516 Series 2007-6, Class ES IO (S) 0.342 08-19-37 9,748,896 61,905 IndyMac Index Mortgage Loan Trust Series 2004-AR13, Class B1 5.296 01-25-35 306,081 24,141 Series 2005-AR18, Class 1X IO 2.099 10-25-36 9,541,403 615,993 Series 2005-AR18, Class 2X IO 1.759 10-25-36 8,957,851 422,363 Series 2005-AR5, Class B1 (P) 2.646 05-25-35 168,005 554 JPMorgan Chase Commercial Mortgage Securities Corp. Series 2005-PDP5, Class AM (P) 5.414 12-15-44 1,155,000 1,252,086 Series 2006-LDP7, Class AM (P) 6.065 04-15-45 735,000 793,581 LB-UBS Commercial Mortgage Trust Series 2007-C1, Class AM 5.455 02-15-40 850,000 878,800 MLCC Mortgage Investors, Inc. Series 2006-3, Class 2A1 (P) 2.507 10-25-36 673,143 612,152 Series 2007-3, Class M1 (P) 5.278 09-25-37 283,639 144,916 Series 2007-3, Class M2 (P) 5.278 09-25-37 104,717 10,098 Series 2007-3, Class M3 (P) 5.278 09-25-37 71,101 3,239 Morgan Stanley Capital I Series 2006-HQ10, Class AM 5.360 11-12-41 660,000 697,044 Series 2008-HQ8, Class AM (P) 5.649 03-12-44 1,020,000 1,091,720 18 Income Securities Trust | Semiannual report See notes to financial statements Maturity Rate (%) date Par value Value Provident Funding Mortgage Loan Trust Series 2005-1, Class B1 (P) 2.881 05-25-35 $382,356 $55,646 Thornburg Mortgage Securities Trust Series 2004-1, Class II2A (P) 1.907 03-25-44 779,655 724,317 UBS Commercial Mortgage Trust 4.822 05-10-45 405,000 411,055 UBS Commercial Mortgage Trust Series 2012-C1, Class GAL5-C 5.720 05-10-45 270,000 264,146 WaMu Mortgage Pass Through Certificates Series 2004-AR13, Class X IO 1.411 11-25-34 11,455,627 541,818 Series 2005-AR1, Class X IO 1.492 01-25-45 16,864,972 808,008 Series 2005-AR2, Class X IO 1.599 01-25-45 12,705,640 682,769 Series 2005-AR6, Class X IO 1.000 04-25-45 7,820,529 428,884 Series 2005-AR8, Class X IO 1.618 07-25-45 14,004,390 696,688 U.S. Government Agency 2.1% Federal Home Loan Mortgage Corp. Series 3747, Class HI IO 4.500 07-15-37 6,121,361 762,866 Series 3794, Class PI IO 4.500 02-15-38 992,343 119,666 Series K017, Class X1 IO 1.609 12-25-21 2,083,605 214,590 Series K707, Class X1 IO 1.560 12-25-18 2,470,000 210,808 Federal National Mortgage Association Series 2009-47, Class EI IO 5.000 08-25-19 752,597 73,762 Series 2010-68, Class CI IO 5.000 11-25-38 1,282,871 153,477 Series 398, Class C3 IO 4.500 05-25-39 1,074,828 145,093 Series 401, Class C2 IO 4.500 06-25-39 695,767 69,346 Series 402, Class 3 IO 4.000 11-25-39 963,883 127,688 Series 402, Class 4 IO 4.000 10-25-39 1,656,021 209,983 Series 402, Class 7 IO 4.500 11-25-39 1,428,702 201,991 Series 402, Class 8 IO 4.500 11-25-39 1,621,387 210,069 Series 407, Class 15 IO 5.000 01-25-40 1,317,114 208,142 Series 407, Class 16 IO 5.000 01-25-40 301,195 34,532 Series 407, Class 17 IO 5.000 01-25-40 270,062 44,898 Series 407, Class 21 IO 5.000 01-25-39 1,083,521 119,963 Series 407, Class 7 IO 5.000 03-25-41 455,868 77,134 Series 407, Class 8 IO 5.000 03-25-41 445,681 78,091 Series 407, Class C6 IO 5.500 01-25-40 2,055,313 392,309 Government National Mortgage Association Series 2010-78, Class AI IO 4.500 04-20-39 1,410,140 140,762 Asset Backed Securities 6.0% (4.1% of Total Investments) (Cost $10,493,671) Asset Backed Securities 6.0% Ameriquest Mortgage Securities, Inc. Series 2005-R1, Class M1 (P) 0.689 03-25-35 $455,000 413,277 Bravo Mortgage Asset Trust Series 2006-1A, Class A2 (S) 0.479 07-25-36 588,587 475,674 Carrington Mortgage Loan Trust Series 2005-OPT2, Class M2 (P) 0.689 05-25-35 435,000 391,773 Citigroup Mortgage Loan Trust Series 2006-WFH3, Class A3 (P) 0.389 10-25-36 583,483 550,261 ContiMortgage Home Equity Loan Trust Series 1995-2, Class A–5 8.100 08-15-25 35,940 35,759 Dominos Pizza Master Issuer LLC Series 2012-1A, Class A2 (S) 5.216 01-25-42 1,110,819 1,152,918 FUEL Trust Series 2011-1 (S) (Z) 4.207 04-15-16 630,000 657,735 See notes to financial statements Semiannual report | Income Securities Trust 19 Maturity Rate (%) date Par value Value Home Equity Asset Trust Series 2005-5, Class M1 (P) 0.719 11-25-35 $450,000 $358,010 Series 2007-3, Class 2A2 (P) 0.419 08-25-37 1,760,000 1,323,654 Leaf Capital Funding SPE A LLC Series 2010-A, Class C (P)(S) 7.240 12-15-20 399,318 399,318 Series 2010-A, Class D (P) (S) 10.240 12-15-20 298,513 298,513 Series 2010-A, Class E1 (P) (S) 14.740 12-15-20 347,549 347,549 Leaf II Receivables Funding LLC Series 2011-1, Class A (S) 1.700 12-20-18 226,215 222,754 Master Asset Backed Securities Trust Series 2007-HE2, Class A2 (P) 0.939 08-25-37 511,983 452,170 Merrill Lynch Mortgage Investors, Inc. Series 2005-HE2, Class A2C (P) 0.609 09-25-36 670,000 589,303 Series 2005-WMC1, Class M1 (P) 0.989 09-25-35 256,559 245,630 New Century Home Equity Loan Trust Series 2005-3, Class M1 (P) 0.719 07-25-35 305,000 284,154 Novastar Home Equity Loan Series 2004-4, Class M3 (P) 1.319 03-25-35 645,000 613,038 Park Place Securities, Inc. Series 2004-WHQ2, Class M2 (P) 0.869 02-25-35 915,000 780,630 People’s Choice Home Loan Securities Trust Series 2005-1, Class M3 (P) 0.819 01-25-35 480,000 422,201 Sonic Capital LLC Series 2011-1A, Class A2 (S) 5.438 05-20-41 602,950 632,611 Shares Value Common Stocks 3.1% (2.1% of Total Investments) (Cost $5,169,483) Consumer Discretionary 0.0% Hotels, Restaurants & Leisure 0.0% Greektown Superholdings, Inc. (I) 768 42,601 Consumer Staples 0.5% Tobacco 0.5% Philip Morris International, Inc. (Z) 10,000 895,100 Energy 0.3% Oil, Gas & Consumable Fuels 0.3% Royal Dutch Shell PLC, ADR (Z) 8,000 572,320 Health Care 0.7% Pharmaceuticals 0.7% Eli Lilly & Company (Z) 17,000 703,630 Johnson & Johnson (Z) 8,258 537,513 Information Technology 0.4% Semiconductors & Semiconductor Equipment 0.4% Intel Corp. (Z) 26,000 738,400 Materials 0.5% Containers & Packaging 0.5% Rock-Tenn Company, Class A (Z) 12,402 773,017 20 Income Securities Trust | Semiannual report See notes to financial statements Shares Value Telecommunication Services 0.7% Diversified Telecommunication Services 0.7% Oi SA, ADR 53,117 816,987 Telefonica SA, ADR (Z) 26,000 380,380 Preferred Securities (b) 3.6% (2.4% of Total Investments) (Cost $6,596,744) Consumer Discretionary 0.7% Hotels, Restaurants & Leisure 0.7% Greektown Superholdings, Inc., Series A (I) 14,991 1,167,199 Consumer Staples 0.6% Food & Staples Retailing 0.6% Ocean Spray Cranberries, Inc., Series A, 6.250% (S) 12,500 1,119,531 Financials 2.3% Commercial Banks 0.5% PNC Financial Services Group, Inc., 6.125% 19,375 490,188 US Bancorp, 6.000% 15,475 399,255 Consumer Finance 0.1% Ally Financial, Inc., 7.300% (Z) 11,815 275,880 Diversified Financial Services 0.3% Citigroup Capital XIII (7.875% to 10-30-15, then 3 month LIBOR + 6.370%) 3,900 103,857 GMAC Capital Trust I (8.125% to 2-15-16, then 3 month LIBOR + 5.785%) (Z) 16,350 391,583 Real Estate Investment Trusts 1.4% Apartment Investment & Management Company, Series T, 8.000% (Z) 55,000 1,402,500 Public Storage, Inc., Depositary Shares, Series W, 6.500% (Z) 40,000 1,014,800 Maturity Rate (%) date Par value Value Escrow Certificates 0.0% (0.0% of Total Investments) (Cost $0) Materials 0.0% Smurfit-Stone Container Corp. (I) 8.000 03-15-17 $245,000 5,819 See notes to financial statements Semiannual report | Income Securities Trust 21 Par value Value Short-Term Investments 0.7% (0.4% of Total Investments) (Cost $1,150,000) Repurchase Agreement 0.7% Repurchase Agreement with State Street Corp. dated 4-30-12 at 0.010% to be repurchased at $1,150,000 on 5-1-12, collateralized by $1,175,000 Federal Home Loan Bank, 0.700% due 4-24-15 (valued at $1,175,000) $1,150,000 1,150,000 Total investments (Cost $253,521,733) † 148.6% Other assets and liabilities, net (48.6%) Total net assets 100.0% The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. ADR American Depositary Receipts IO Interest Only Security — (Interest Tranche of Stripped Mortgage Pool). Rate shown is the annualized yield at the end of the period. LIBOR London Interbank Offered Rate PIK Payment-in-kind PO Principal-Only Security — (Principal Tranche of Stripped Security). Rate shown is the annualized yield on date of purchase. REIT Real Estate Investment Trust USGG U.S. Generic Government Yield Index (a) Includes hybrid securities with characteristics of both equity and debt that trade with, and pay, interest income. (b) Includes preferred stocks and hybrid securities with characteristics of both equity and debt that pay dividends on a periodic basis. (I) Non-income producing security. (M) Term loans are variable rate obligations. The coupon rate shown represents the rate at period end. (P) Variable rate obligation. The coupon rate shown represents the rate at period end. (Q) Perpetual bonds have no stated maturity date. Date shown is next call date. (S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $46,321,271 or 26.28% of the Fund’s net assets as of 4-30-12. (Z) All or a portion of this security is segregated as collateral pursuant to the Committed Facility Agreement. Total collateral value at 4-30-12 was $179,535,828. † At 4-30-12, the aggregate cost of investment securities for federal income tax purposes was $254,226,687. Net unrealized appreciation aggregated $7,711,750, of which $16,117,063 related to appreciated investment securities and $8,405,313 related to depreciated investment securities. 22 Income Securities Trust | Semiannual report See notes to financial statements F I N A N C I A L S T A T E M E N T S Financial statements Statement of assets and liabilities 4-30-12 (unaudited) This Statement of assets and liabilities is the Fund’s balance sheet. It shows the value of what the Fund owns, is due and owes. You’ll also find the net asset value for each common share. Assets Investments, at value (Cost $253,521,733) $261,938,437 Cash 60,339 Cash held at broker for futurescontracts 33,638 Cash segregated at custodian for swapcontracts 260,000 Receivable for investmentssold 1,702,948 Dividends and interestreceivable 2,817,735 Other receivables and prepaidexpenses 51,805 Totalassets Liabilities Payable for investmentspurchased 2,961,185 Committed facility agreementpayable 87,000,000 Swap contracts, atvalue 521,720 Payable for futures variationmargin 4,063 Interestpayable 9,274 Payable toaffiliates Accounting and legal servicesfees 2,415 Trustees’fees 18,514 Other liabilities and accruedexpenses 68,762 Totalliabilities Netassets Paid-incapital $184,454,541 Undistributed net investmentincome 694,675 Accumulated net realized loss on investments, futures contracts and swapagreements (16,699,995) Net unrealized appreciation (depreciation) on investments, futures contracts and swapagreements 7,829,748 Netassets Net asset value pershare Based on 11,667,465 shares of beneficial interest outstanding — unlimited number of shares authorized with no parvalue $15.11 See notes to financial statements Semiannual report | Income Securities Trust 23 F I N A N C I A L S T A T E M E N T S Statement of operations For the six-month period ended 4-30-12 (unaudited) This Statement of operations summarizes the Fund’s investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated. Investmentincome Interest $7,142,392 Dividends 255,487 Less foreign taxeswithheld (7,491) Total investmentincome Expenses Investment managementfees 678,836 Accounting and legal servicesfees 15,853 Transfer agentfees 60,666 Trustees’fees 25,609 Printing andpostage 45,337 Professionalfees 38,979 Custodianfees 14,798 Interestexpense 430,926 Stock exchange listingfees 12,225 Other 12,913 Totalexpenses Net investmentincome Realized and unrealized gain(loss) Net realized gain (loss)on Investments (349,035) Futurescontracts 39,624 Swapcontracts (118,589) Change in net unrealized appreciation (depreciation)of Investments 6,884,599 Futurescontracts (185,237) Swapcontracts (247,762) Net realized and unrealizedgain Increase in net assets fromoperations 24 Income Securities Trust | Semiannual report See notes to financial statements F I N A N C I A L S T A T E M E N T S Statements of changes in net assets These Statements of changes in net assets show how the value of the Fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions. Sixmonths ended Year 4-30-12 ended (unaudited) 10-31-11 Increase (decrease) in netassets Fromoperations Net investmentincome $6,054,246 $12,557,511 Net realized gain(loss) (428,000) 3,145,523 Change in net unrealized appreciation(depreciation) 6,451,600 (4,581,560) Increase in net assets resulting fromoperations Distributions toshareholders From net investmentincome (6,621,149) (13,136,659) From Fund sharetransactions Issued pursuant to Dividend ReinvestmentPlan 525,288 1,037,011 Total increase(decrease) Netassets Beginning ofperiod 170,296,984 171,275,158 End ofperiod Undistributed net investmentincome Share activity Sharesoutstanding Beginning ofperiod 11,631,473 11,559,635 Issued pursuant to Dividend ReinvestmentPlan 35,992 71,838 End ofperiod See notes to financial statements Semiannual report | Income Securities Trust 25 F I N A N C I A L S T A T E M E N T S Statement of cash flows This Statement of cash flows shows cash flow from operating and financing activities for the period stated. For the six-month period ended 4-30-12 (unaudited) Cash flows from operating activities Net increase in net assets from operations $12,077,846 Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: Long-term investments purchased (84,329,360) Long-term investments sold 81,258,040 Increase in short-term investments (153,000) Net amortization of premium (discount) 1,883,810 Decrease in dividends and interest receivable 156,504 Increase in payable for investments purchased 1,993,621 Increase in receivable for investments sold (144,868) Increase in cash segregated at custodian for swap contracts (260,000) Decrease in cash held at broker for futures contracts 28,650 Increase in other receivables and prepaid expenses (29,804) Increase in unrealized depreciation of swap contracts 247,762 Increase in payable for futures variation margin 1,047 Increase in payable to affiliates 2,559 Decrease in interest payable (67) Decrease in other liabilities and accrued expenses (41,569) Net change in unrealized (appreciation) depreciation on investments (6,884,599) Net realized loss on investments 349,035 Net cash provided by operating activities Cash flows from financing activities Distributions to common shareholders net of reinvestments (6,095,861) Net cash used in financing activities Net increase in cash Cash at beginning of period Cash at end of period Supplemental disclosure of cash flow information Cash paid for interest Noncash financing activities not included herein consist of reinvestment of distributions 26 Income Securities Trust | Semiannual report See notes to financial statements Financial highlights The Financial highlights show how the Fund’s net asset value for a share has changed during the period. COMMON SHARES Periodended 4-30-12 1 10-31-11 10-31-10 10-31-09 10-31-08 2 12-31-07 12-31-06 Per share operatingperformance Net asset value, beginning ofperiod Net investmentincome 3 0.52 1.08 1.19 1.18 1.05 1.34 1.26 Net realized and unrealized gain (loss) oninvestments 0.52 (0.13) 1.37 2.70 (3.92) (0.69) (0.03) Distributions to Auction Preferred Shares(APS) — (0.15) (0.42) (0.38) Total from investmentoperations Less distributions to commonshareholders From net investmentincome (0.57) (1.13) (1.16) (1.13) (0.84) (0.92) (0.93) Net asset value, end ofperiod Per share market value, end ofperiod Total return at net asset value (%) 4 5 5 Total return at market value (%) 4 5 5 Ratios and supplementaldata Net assets applicable to common shares, end of period (inmillions) $176 $170 $171 $154 $121 $165 $172 Ratios (as a percentage of average net assets): Expenses (excluding interestexpense) 1.06 6 1.04 1.12 1.40 1.41 6 1.16 7 1.17 7 Interestexpense 0.51 6 0.52 0.66 0.85 0.76 6 — — Expenses (including interestexpense) 1.57 6 1.56 1.78 2.25 2.17 6 1.16 7 1.17 7 Net investmentincome 7.12 6 7.34 8.44 10.56 9.37 6 8.87 8 8.30 8 Portfolio turnover (%) 32 71 79 94 40 54 94 See notes to financial statements Semiannual report | Income Securities Trust 27 COMMON SHARES Periodended 4-30-12 1 10-31-11 10-31-10 10-31-09 10-31-08 2 12-31-07 12-31-06 Seniorsecurities Total value of APS outstanding (inmillions) — $90 $90 Involuntary liquidation preference per unit (inthousands) — 25 25 Average market value per unit (inthousands) — 25 25 Asset coverage perunit 9 — 10 $73,375 Total debt outstanding end of period (inmillions) $87 $87 $84 $58 $58 — — Asset coverage per $1,000 ofAPS 11 — $2,851 $2,928 Asset coverage per $1,000 ofdebt 12 $3,025 $2,957 $3,051 $3,656 $3,094 — — 1 Six months ended 4-30-12.Unaudited. 2 For the ten-month period ended 10-31-08. The Fund changed its fiscal year end from December 31 to October31. 3 Based on the average daily sharesoutstanding. 4 Total return based on net asset value reflects changes in the Fund’s net asset value during each period. Total return based on market value reflects changes in market value. Each figure assumes that dividend and capital gain distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or premium to net asset value at which the Fund’s shares traded during theperiod. 5 Notannualized. 6 Annualized. 7 Ratios calculated on the basis of expenses relative to the average net assets of common shares. Without the exclusion of preferred shares, the annualized ratio of expenses would have been 0.76% and 0.77% for the years ended 12-31-07 and 12-31-06,respectively. 8 Ratios calculated on the basis of net investment income relative to the average net assets of common shares. Without the exclusion of preferred shares, the annualized ratio of net investment income would have been 5.82% and 5.45% for the years ended 12-31-07 and 12-31-06,respectively. 9 Calculated by subtracting the Fund’s total liabilities from the Fund’s total assets and dividing that amount by the number of APS outstanding, as of the applicable 1940 Act Evaluation Date, which may differ from the financial reportingdate. 10 In May 2008, the Fund entered into a Committed Facility Agreement with a third-party commercial bank in order to redeem the APS. The redemption of all APS was completed on 6-12-08. 11 Asset coverage equals the total net assets plus APS divided by the APS of the Fund outstanding at periodend. 12 Asset coverage equals the total net assets plus borrowings divided by the borrowings of the Fund outstanding at period end (Note 7). As debt outstanding changes, level of invested assets may change accordingly. Asset coverage ratio provides a consistent measure ofleverage. 28 Income Securities Trust | Semiannual report See notes to financial statements Notes to financial statements (unaudited) Note 1 — Organization John Hancock Income Securities Trust (the Fund) is a closed-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). Note 2 — Significant accounting policies The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund: Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P

SEVERANCE AGREEMENT September 9, 2002 Mr. Mark Perlstein Executive Vice President, Sales and Operations 7 Ridgedale Avenue Dear Mark: Directors of AlphaNet Solutions, Inc., a New Jersey corporation (hereinafter, the “Company”), approved the issuance to Mark Perlstein (hereinafter referred to as “you” or “Executive”) of this Severance Agreement, detailing your rights and the Company’s obligations to you in the event of the involuntary termination of defined in the Change-of-Control Agreement dated September 9, 2002 by and null and void. your employment is terminated (a) involuntarily by the Company at any time for quarter.      The aforementioned salary continuation payments will be made in twenty-six (26) equal biweekly installments in the normal payroll cycle and shall include active employees.      For and in consideration of the aforementioned salary continuation payments, you agree that, during the Salary Continuation Period, you shall not within the Restricted Territory, as hereinafter defined, directly or indirectly, as an owner, principal, agent, servant, representative or employee, or as a member of a partnership or as an officer, director or stockholder of any corporation or limited liability corporation, or in any manner whatsoever, solicit, service, have contact with or divert any entity which is, or was during the immediate one (1) year period prior the date of termination of your employment with the Company, a customer of the Company. In addition, during the Salary Continuation Period, you agree to comply with all provisions of the Confidentiality/Non-Solicitation Agreement executed by and between the Company and yourself on June 7, 2002 and any other Confidentiality/Non-Solicitation Agreement thereafter executed by and between the Company and yourself. The in Pennsylvania. to a serious health (physical or mental) condition or as a result of Executive’s thereby limited.      This Severance Agreement supersedes all prior understandings, written or oral, by and between the Company and yourself concerning the subject matter hereof.      Please signify your acceptance of and agreement to the foregoing by signing in the space provided below for this purpose. Very truly yours, RICHARD G. ERICKSON President & CEO ACCEPTED AND AGREED TO MARK PERLSTEIN Mark Perlstein

Lehman SAIL 2005-HE2 Client Name: Lehman Security: SAIL 2005-HE2 Date of Report: 8/30/2005 Hightlight Summary Non-Performing Loans: Delinquencies: There are a total of 65 loans that are delinquent; of which 6 are delinquent for 90 days or more. RMG has sent an email to the servicer(s) requesting an explanation as to why the foreclosure process was not initiated for these loans. Foreclosures: There are a total of 19 loans that are in foreclosure. In reviewing the loans in foreclosure we have noted and are taking action on the following exceptions: Loans in Foreclosure >= 60 days beyond state average: 0 Loans with Late FC Initiation (>= 100 days del): 11 Loans in FC with a BPO >= 180 days old: 0 Bankruptcies: There are a total of 7 loans in bankruptcy. In reviewing the loans in bankruptcy we have noted and are taking action on the following exceptions: BKs with End/Dismissal Dates: 0 Chapter 7 BKs >= 150 days old: 0 Non-performing Chapter 11/13 BKs 0 REOs There are a total of 0 loans in REO. In reviewing the loans in REO we have noted and are taking action on the following exceptions: REO Eviction Initiation Exceptions: 0 REO in Inventory >= 200 days: 0 REO Listing Timeline Exceptions: 0 Forbearances: There are a total of 86 loans in forbearance. In reviewing the loans in forbearance we have noted and are taking action on the following exceptions: Non-performing FBs: 0 Paid Off Loans There are a total of 66 loans which paid off during the month with a total upb of $15,321,931.00. In reviewing the loans that paid off during the month we have noted and are taken action on the following: Missing Prepayment Premiums: 0 Loans with Negative BPO variance: There are a total of 38 loans with a total upb of $5,764,682.00 which have a negative BPO variance. RMG has contacted the servicer(s) for loans with a negative variance >= to -40% requesting an explanation for the significant decline in the value of these properties. RMG will advise you if our investigation uncovers any declines due to a fraudulent appraisal. First Payment Defaults: There are a total of 27 loans with a total upb of $6,486,150.00 which appear to have defaulted on there first payment. RMG has contacted the servicer(s) to confirm that they are, in fact, first payment defaults and will advise you once we receive this confirmation. RMG is actively monitoring this pool of loans against FNMA and industry guidelines and has developed a series of exception reports that will contain the loan level detail for any exceptions summarized above. As the servicer(s) respond to our queries concerning these exceptions, their responses will be incorporated into our loan level reports for you to view. Additionally, RMG is working closely with the servicer(s) in ensuring that all defaults are being properly managed and expedited. Insurance: Insurance Claims Pending: There are a total of 0 claims pending with a total claim amount of $ 0.00. Of the total claims pending, 0 claims are pending >= 90 days. RMG has sent an email to the servicer(s) requesting an explanation as to the delay in settling these claims. Insurance Claims Settled: There are a total of 0 claims that were paid this month totaling 0.00. Of the total paid claims, 0 were settled for less than the amount claimed. RMG has sent an email to the servicer(s) requesting an explanation for the curtailments in the claim amount. Insurance Claims Rejected: There are a total of 0 claims that were rejected. RMG has sent an email to the servicer(s) requesting an explanation for each reject. Other: Forecasted Loss Report: There are 17 loans appearing on this report with a total estimate loss for all loans amounting to $678,286.00. These loans are in either foreclosure or REO at the present time and will potentially result in a loss at the completion of the liquidation process. Watchlist Report: This report contains 0 loans which are currently delinquent but may result in a future loss if they are not managed back into a performing status. Deal Statistics: CPR: 7.40528776640698 MDR: 0 CDR: 1.34925848567516 SDA: 0.00083005142123835 Attachment: Not Available * If you are asked to authenticate again, please enter username and password you were assigned to.

January 27, 2014 U.S. Securities & Exchange Commission treet, N.E. Washington, DC 20549 Re: Vanguard Fenway Funds (the Trust) File No. 33-19446 Ladies and Gentlemen: Pursuant to Rule 497(j) under the Securities Act of 1933, this letter serves as certification that the Prospectuses and Statement of Additional Information with respect to the above-referenced Trust do not differ from that filed in the most recent post-effective amendment, which was filed electronically. Sincerely, Alexander F. Smith Associate Counsel The Vanguard Group, Inc. cc: Amy Miller, Esq. U.S. Securities and Exchange Commission

EXHIBIT 10.1 ENTRUST, INC. AMENDMENT TO EMPLOYMENT AGREEMENT This amendment (the “Amendment”) is made by and between William Conner (the “Executive”) and Entrust, Inc., a Maryland corporation (the “Company” and “Parties”) on December 31, 2008. WITNESSETH: WHEREAS, the Parties previously entered into an employment agreement, dated April 22, 2001 (the “Agreement”); and WHEREAS, the Parties wish to amend the Agreement, and bring certain terms into documentary compliance with Section 409A of the Internal Revenue Code and the final regulations and other official guidance thereunder (“Section 409A”) so as to avoid the imposition of any additional tax under Section 409A, as set forth below. 1. Bonus. Section 2(b) of the Agreement is hereby amended to add the following “Any annual bonus under this Section 2(b) shall be paid no later than the March 15th of the year following the year in which such annual bonus was earned.” 2. Code Section 409A. A new Section 11 is hereby inserted into the Agreement to provide as follows: “11. Code Section 409A. (a) Reimbursement. To the extent that any taxable reimbursements of expenses or in-kind benefits are provided under this Agreement, they shall be made in accordance with Section 409A, including, but not limited to the following provisions:     i) The amount of any such expense reimbursement or in-kind benefit provided during any one of Executive’s taxable years shall not affect any expenses eligible for reimbursement in any other taxable year;   last day of the Executive’s taxable year that immediately follows the taxable   iii) The right to any reimbursement shall not be subject to liquidation or (b) Deferred Payments. Notwithstanding anything to the contrary in this Agreement, no Deferred Payments (as defined below) shall be payable until regulations and official guidance thereunder (together, “Section 409A”). that would otherwise be exempt from Section 409A pursuant to Treasury Regulation 1.409A-1(b)(9) shall be payable until Executive has a “separation from service” (c) Timing of Deferred Payments. Further, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service (other than due to death), and the severance payments and benefits payable to Executive, if any, pursuant to the Agreement, when considered Payments”), such Deferred Payments that are otherwise payable within the first 6 months following Executive’s separation from service will become payable on the first payroll date that occurs on or after the date 6 months and 1 day following contrary, if Executive dies following Executive’s separation from service but prior to the 6 month anniversary of Executive’s separation from service (or any payment and benefit payable under the Agreement is intended to constitute a Regulations. (d) Construction of Section 11. The foregoing provisions are intended to comply to so comply. Executive and the Company agree to work together in good faith to Section 409A.” 4. Entire Agreement. This Amendment and the Agreement constitute the full and 5. Successors and Assigns. This Amendment and the rights and obligations of the Texas (with the exception of its conflict of laws provisions). above.   COMPANY     ENTRUST, INC.     By:   /s/ Jay D. Kendry     Title:   VP & CGO     Date:   Dec. 31, 2008 EXECUTIVE     By:   /s/ F. William Conner     Title:   President & CEO     Date:   Dec. 31. 2008

EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 I, Ying Xue, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: the Annual Report on Form 10-K of China Media Inc. for the year ended June 30, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of China Media Inc. Dated: September 28, 2010 /s/ Ying Xue Ying Xue Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to China Media Inc. and will be retained by China Media Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 10.1 THIS AMENDED AND RESTATD EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of August 3, 2017 (the “Effective Date”), by and between Robert Nipper follows: time.  Executive shall report to the Board.  Executive shall devote Executive’s full working time and attention to Executive’s employment and service with the Company and shall perform Executive’s services in a capacity and in a manner consistent with Executive’s position for the Company; provided, that this Section 2 shall not be interpreted as prohibiting Executive from (i) managing Executive’s personal investments (so long as such investment activities are of a organizations, or (iv) subject to approval by the Board in its sole and absolute controlled by, or is under common control with,     the Company (an “Affiliate”) without any additional compensation; for purposes of this Agreement, “Affiliate” shall not include other entities under common control with Advent International other than the Company and its Affiliates.   at an annual rate of $450,000, payable in accordance with the Company’s normal Salary.”   Bonus of one hundred and five percent (105%) of Base Salary (“Target Bonus”) up to a maximum Annual Bonus of two hundred percent (200%) of Base Salary, based upon the achievement of annual performance targets established by the Board at the beginning of each such calendar year.  The Annual Bonus, if any, for each 2       Executive; 3       representative. Agreement; and 4       (ii)       (A) an amount equal to three  (3) times the sum of (i) Executive’s Base Salary as in effect immediately prior to Executive’s date of termination and (ii) Executive’s Target Bonus, which amount shall be payable during the twelve (12) months commencing on the date of termination (the “Change of Control occurs. period shall be a 5       diminution in Executive’s responsibilities, authorities, title, reporting structure or duties, (ii) any material reduction in Executive’s (x) Base Salary or (y) target Annual Bonus opportunity (except in the event of an across the board reduction in Base Salary or target Annual Bonus opportunity of up to 10%, applicable to substantially all senior executives of the Company), (iii) a miles from the location of Executive’s principal place of employment on the Effective Date and such principal place of employment is more than fifty  (50) miles from Executives principal residence or (iv) a material breach by the Company of any material provisions of this Agreement; provided, that no event (A) Executive has given the Company written notice of the termination, setting within sixty  (60) days following the occurrence of such event, and (B) Executive has provided the Company at least sixty  (60) days following the date on which such notice is provided to cure such conduct and the Company has failed to do so.  Failing such cure, a termination of employment by Executive for Good period. 6       7       8       completions technology. 9       disparage Executive. under this Agreement.  Executive may undertake. 10       circumstances. 17.Miscellaneous. as follows: Houston, TX 77070 11        Boston, Massachusetts 02110 Attention: Marilyn French   If to Executive:   12       original thereof. found.  13       Agreement.  obligation of 14       contained herein. regulation.   15       first above written.                           By: /s/ Ryan Hummer      By: Ryan Hummer                              EXECUTIVE                  Name: Robert Nipper                              Exhibit A RELEASE  the Agreement. release 2       released.  waiver and release; 3           4       above written.                                  By:             Name:               Title:                                         EXECUTIVE