Document:

Registration Agreement, dated October 1, 2003

 Exhibit 4.4 
  
 EXECUTION COPY 
  
 LEVEL 3 FINANCING, INC. 
  
 10.750 % Senior Notes due 2011 
  
 REGISTRATION AGREEMENT 
  
 New York, New York 
 October 1, 2003 
  
 Citigroup Global Markets Inc. 
 Credit Suisse First Boston LLC 
 J.P. Morgan Securities Inc. 
 Morgan Stanley & Co. Incorporated 
 UBS Securities LLC 
  
 c/o Citigroup Global Markets Inc. 
 388
Greenwich Street 
 New York, New York 10013 
  
 and 
  
 Credit Suisse First Boston LLC 
 11 Madison Avenue, 21st Floor 
 New York, New York 10010 
  
 Ladies and Gentlemen: 
  
 Level 3 Financing, Inc., a Delaware company (the “Issuer”),
proposes to issue and sell to certain purchasers (the “Purchasers”), upon the terms set forth in a purchase agreement dated September 26, 2003 (the “Purchase Agreement”), $500,000,000 aggregate principal amount of its 10.750%
Senior Notes due 2011 (the “Original Securities”) (such sale, the “Initial Placement”) to be guaranteed on an unsecured unsubordinated basis by Level 3 Communications, Inc., the direct parent company of the Issuer
(“Parent”). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Issuer and Parent jointly and severally agree with you, (i) for your benefit and the
benefit of the other Purchasers and (ii) for the benefit of the holders from time to time of the Original Securities (including you and the other Purchasers) (each of the foregoing a “Holder” and together the “Holders”), as
follows: 
  
 1. Definitions. Capitalized terms used herein
without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: 
  
 “Affiliate” of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
  

 “Commission” means the Securities and Exchange Commission. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder. 
  
 “Exchange Offer Prospectus” means the prospectus included in the Exchange Offer Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the New Securities covered by such Exchange Offer Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. 
  
 “Exchange Offer Registration Period” means the 180-day
period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. 
  
 “Exchange Offer Registration Statement” means a registration
statement of the Issuer and Parent on an appropriate form under the Securities Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 
  
 “Exchanging Dealer” means any Holder (which may include the Purchasers) which is a broker-dealer electing to exchange Original Securities
acquired for its own account as a result of market-making activities or other trading activities for New Securities. 
  
 “Holder” has the meaning set forth in the preamble hereto. 
  
 “Indenture” means the Indenture relating to the Original Securities and the New Securities, dated as of
October 1, 2003, among Parent, the Issuer and The Bank of New York, as trustee, as the same may be amended from time to time in accordance with the terms thereof. 
  
 “Initial Placement” has the meaning set forth in the preamble hereto. 
  
 “Majority Holders” means the Holders of a majority of the
aggregate principal amount of securities registered under a Registration Statement. 
  

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 “Managing Underwriters” means the investment banker or investment bankers and manager or
managers that shall administer an offering of securities under a Shelf Registration Statement. 
  
 “New Securities” means debt securities of the Issuer identical in all material respects to the Original Securities (except that the interest rate step-up provisions and the transfer restrictions will
be modified or eliminated, as appropriate), to be issued under the Indenture. 
  
 “Original Securities” has the meaning set forth in the preamble hereto. 
  
 “Prospectus” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Original Securities or the New Securities, covered by such Registration Statement, and all amendments and supplements to the Prospectus, including post-effective amendments. 
  
 “Registered Exchange Offer” means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Original Securities, a like principal amount of the New Securities. 
  
 “Registration Securities” has the meaning set forth in Section 3(a) hereof. 
  
 “Registration Statement” means any Exchange Offer Registration Statement or Shelf Registration Statement
that covers any of the Original Securities or the New Securities pursuant to the provisions of this Agreement, all amendments and supplements to such registration statement, including, without limitation, post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 
  
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

  
 “Shelf Registration” means a registration
effected pursuant to Section 3 hereof. 
  
 “Shelf
Registration Period” has the meaning set forth in Section 3(b) hereof. 
  
 “Shelf Registration Statement” means a “shelf” registration statement of Parent and the Issuer pursuant to the provisions of Section 3 hereof which covers some of or all the Original
Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the Commission, all amendments and supplements to such registration statement, including 

  

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post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

  
 “Trustee” means the trustee with respect to
the Original Securities and the New Securities under the Indenture. 
  
 “underwriter” means any underwriter of securities in connection with an offering thereof under a Shelf Registration Statement. 
  
 2. Registered Exchange Offer; Resales of New Securities by Exchanging Dealers; Private Exchange. 
  
 (a) The Issuer and Parent shall prepare and, not later than April 30, 2005,
shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Issuer and Parent shall use their best efforts to cause the Exchange Offer Registration Statement to become effective under
the Securities Act by June 30, 2005. 
  
 (b) Upon the
effectiveness of the Exchange Offer Registration Statement, the Issuer and Parent shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Original
Securities for New Securities (assuming that such Original Securities do not constitute a portion of an unsold allotment acquired by such Holder directly from the Issuer, such Holder is not an Affiliate of the Issuer or Parent, such Holder acquires
the New Securities in the ordinary course of its business and such Holder has no arrangements with any person to participate in the distribution of the New Securities) to trade such New Securities from and after their receipt without any limitations
or restrictions under the Securities Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. 
  
 (c) In connection with the Registered Exchange Offer, the Issuer and Parent shall: 
  
 (i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; 
  
 (ii) keep the Registered Exchange Offer open for not less than 30 days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law); 
  
 (iii) utilize
the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; and 
  
 (iv) comply in all material respects with all applicable laws. 
  

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 (d) As soon as practicable after the close of the Registered Exchange Offer, the Issuer and Parent shall:

  
 (i) accept for exchange all Original
Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; 
  
 (ii) deliver to the Trustee for cancellation all Original Securities so accepted for exchange; and 
  
 (iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Original Securities, a principal amount of New Securities equal to the principal amount of the Original Securities of such Holder so accepted for exchange. 
  
 (e) The Purchasers, the Issuer and Parent acknowledge that, pursuant to current interpretations by the Commission’s
staff of Section 5 of the Securities Act, and in the absence of an applicable exemption therefrom, each Exchanging Dealer is required to deliver a Prospectus in connection with a sale of any New Securities received by such Exchanging Dealer pursuant
to the Registered Exchange Offer in exchange for Original Securities acquired for its own account as a result of market-making activities or other trading activities. Accordingly, the Issuer and Parent shall: 
  
 (i) include the information set forth in Annex A hereto on
the cover of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of
distribution section of the Prospectus forming a part of the Exchange Offer Registration Statement, and in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer (it being understood that a Holder’s
participation in the Exchange Offer is conditioned on the Holder, by executing and returning the Letter of Transmittal, representing in writing to the Issuer as set forth in Rider B of Annex D hereto); and 
  
 (ii) use their best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Securities Act during the Exchange Offer Registration Period for delivery by Exchanging Dealers in connection with sales of New Securities received pursuant to the Registered Exchange Offer, as
contemplated by Section 4(h) below. 
  
 (f) In the event that any
Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Original Securities constituting any portion of an unsold allotment, at the request of such Purchaser, the Issuer and Parent
shall issue and deliver to such Purchaser or the party purchasing New Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Purchaser, in exchange for such Original Securities, a like principal
amount of New Securities. The Issuer and Parent shall seek to 

  

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cause the CUSIP Service Bureau to issue the same CUSIP number for such New Securities as for New Securities issued pursuant to the Registered Exchange Offer.

  
 3. Shelf Registration. If, (i) because of any change in
law or applicable interpretations thereof by the Commission’s staff, the Issuer and Parent determine upon advice of outside counsel that they are not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii)
for any other reason the Exchange Offer Registration Statement is not declared effective by June 30, 2005 or the Registered Exchange Offer is not consummated by July 31, 2005, or (iii) any Purchaser so requests with respect to Original Securities
(or any New Securities received pursuant to Section 2(f)) not eligible to be exchanged for New Securities in a Registered Exchange Offer or, in the case of any Purchaser that participates in any Registered Exchange Offer, such Purchaser does not
receive freely tradable New Securities, or (iv) any Holder (other than a Purchaser) is not eligible to participate in the Registered Exchange Offer or (v) in the case of any such Holder that participates in the Registered Exchange Offer, such Holder
does not receive freely tradable New Securities in exchange for tendered securities, other than by reason of such Holder being an affiliate of the Issuer and Parent within the meaning of the Securities Act (it being understood that, for purposes of
this Section 3, (x) the requirement that a Purchaser deliver a Prospectus containing the information required by Items 507 and/or 508 of Regulation S-K under the Securities Act in connection with sales of New Securities acquired in exchange for such
Original Securities shall result in such New Securities being not “freely tradeable” but (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of New Securities acquired in the Registered Exchange
Offer in exchange for Original Securities acquired as a result of market-making activities or other trading activities shall not result in such New Securities being not “freely tradeable”), the following provisions shall apply: 

 
 (a) The Issuer and Parent shall as promptly as practicable (but in no
event more than the later of (i) April 30, 2005 or (ii) 45 days after so required or requested pursuant to this Section 3), file with the Commission and thereafter shall use their best efforts to cause to be declared effective under the Securities
Act a Shelf Registration Statement relating to the offer and sale of the Original Securities or the New Securities, as applicable, by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth
in such Shelf Registration Statement (such Original Securities or New Securities, as applicable, to be sold by such Holders under such Shelf Registration Statement being referred to herein as “Registration Securities”); provided,
however, that, with respect to New Securities received by a Purchaser in exchange for Original Securities constituting any portion of an unsold allotment, the Issuer and Parent may, if permitted by current interpretations by the
Commission’s staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Regulation S-K Items 507 and/or 508, as applicable, in satisfaction of its obligations under this paragraph
(a) with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be 

  

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referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. 
  
 (b) The Issuer and Parent shall use their best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration Statement is declared effective by the Commission or such
shorter period that will terminate when all the Original Securities or New Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called
the “Shelf Registration Period”). The Issuer and Parent shall be deemed not to have used their best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if the Issuer, or Parent voluntarily takes
any action that would result in Holders of securities covered thereby not being able to offer and sell such securities during that period, unless (i) such action is required by applicable law or (ii) such action is taken by such party in good faith
and for valid business reasons (not including avoidance of the obligations of the Issuer and Parent hereunder), including the acquisition or divestiture of assets, so long as the Issuer and Parent promptly thereafter comply with the requirements of
Section 4(k) hereof, if applicable. 
  
 4. Registration
Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply: 
  
 (a) (i) The Issuer and Parent shall furnish to you, prior to the filing thereof with the Commission, a copy
of any Exchange Offer Registration Statement, each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use its best efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose. 
  
 (ii) The Issuer and Parent shall furnish to you, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement, each amendment thereof and each amendment or supplement, if any, to the Prospectus included
therein and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as any Holder whose securities are to be included in such Shelf Registration Statement reasonably may propose. 
  
 (b) The Issuer and Parent shall ensure that (i) any
Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any
Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact 

  

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required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Registration Statement,
and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. 
  
 (c) (1) The Issuer and
Parent shall advise you and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby, and, if requested by you or any such Holder, confirm such advice in writing: 
  
 (i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; and 
  
 (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus included therein or
for additional information. 
  
 (2) The Issuer
and Parent shall advise you and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby, and, in the case of an Exchange Offer Registration Statement, any Exchanging Dealer which has provided in writing to the
Issuer a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or Exchanging Dealer, confirm such advice in writing: 
  
 (i) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; 
  
 (ii) of the receipt by the Issuer or Parent of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and 
  
 (iii) of
the happening of any event that requires the making of any changes in the Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made). 
  
 Each
such Holder or Exchanging Dealer agrees by its acquisition of such securities to be sold by such Holder or Exchanging Dealer, that, upon being so 

  

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advised by the Issuer or Parent of any event described in clause (iii) of this paragraph (c)(2), such Holder or Exchanging Dealer will forthwith discontinue
disposition of such securities under such Registration Statement or Prospectus, until such Holder’s or Exchanging Dealer’s receipt of the copies of the supplemented or amended Prospectus contemplated by paragraph 4(k) hereof, or until it
is advised in writing by the Issuer or Parent that the use of the applicable Prospectus may be resumed. 
  
 (d) The Issuer and Parent shall use their best efforts to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time. 
  
 (e) The Issuer and Parent shall furnish to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so requests in writing, any documents incorporated by reference therein and all exhibits thereto (including those incorporated by reference therein). 
  
 (f) The Issuer and Parent shall, during the Shelf
Registration Period, deliver to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may reasonably request; and each of the Issuer and Parent hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the securities covered by the Prospectus or any amendment or supplement thereto. 
  
 (g) The Issuer and Parent shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange
Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if the Exchanging Dealer so requests in writing, any documents incorporated by reference therein and all exhibits thereto
(including those incorporated by reference therein). 
  
 (h) The Issuer and Parent shall, during the Exchange Offer Registration Period, promptly deliver to each Exchanging Dealer, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably request for delivery by such Exchanging Dealer in connection with a sale of New Securities received by it pursuant to the Registered Exchange Offer; and the Issuer and Parent
hereby consent to the use of the Prospectus or any amendment or supplement thereto by any such Exchanging Dealer, as aforesaid. 
  

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 (i) Prior to the Registered Exchange Offer or any other offering of securities pursuant
to any Registration Statement, the Issuer shall register or qualify or cooperate with the Holders of securities included therein and their respective counsel in connection with the registration or qualification of such securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the securities covered
by such Registration Statement; provided, however, that the Issuer will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general
service of process or to taxation in any such jurisdiction where it is not then so subject. 
  
 (j) The Issuer and Parent shall cooperate with the Holders of Original Securities to facilitate the timely preparation and delivery of
certificates representing Original Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request prior to sales of securities pursuant to
such Registration Statement. 
  
 (k) Upon the
occurrence of any event contemplated by paragraph (c)(2)(iii) above, the Issuer and Parent shall promptly prepare a post-effective amendment to any Registration Statement or an amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading. 
  
 (l) Not later than the effective date of any such Registration Statement hereunder, the Issuer and Parent shall provide a CUSIP number for the Original Securities or New Securities, as the case may be, registered
under such Registration Statement, and provide the Trustee with printed certificates for such Original Securities or New Securities, in a form, if requested by the applicable Holder or Holder’s Counsel, eligible for deposit with The Depository
Trust Company or any successor thereto under the Indenture. 
  
 (m) The Issuer and Parent shall use their best efforts to comply with all applicable rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the
Shelf Registration and will make generally available to the security holders of the Issuer a consolidated earnings statement (which need not be audited) covering a twelve-month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as practicable after the end of such period, 

  

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which consolidated earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. 
  
 (n) The Issuer and Parent shall cause the Indenture to be
qualified under the Trust Indenture Act of 1939, as amended, on or prior to the effective date of any Shelf Registration Statement or Exchange Offer Registration Statement. 
  
 (o) The Issuer and Parent may require each Holder of securities to be sold pursuant to any Shelf
Registration Statement to furnish to the Issuer in writing such information regarding the Holder and the distribution of such securities as the Issuer may from time to time reasonably require for inclusion in such Registration Statement. The Issuer
may exclude from any such Registration Statement the securities of any such Holder who fails to furnish such information within a reasonable time after receiving such request. Each Holder as to which any Shelf Registration is being effected agrees
to furnish promptly to the Issuer all information required to be disclosed in order to make the information previously furnished to the Issuer by such Holder not materially misleading. 
  
 (p) The Issuer and Parent shall, if requested, promptly incorporate in a Prospectus supplement or
post-effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters, if any, and Majority Holders reasonably agree should be included therein and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. 
  
 (q) (i) In the case of any Shelf Registration Statement, the Issuer and Parent shall enter into such agreements (including underwriting
agreements) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Original Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than those set forth in Section 6 hereof (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any), with respect to all
parties to be indemnified pursuant to Section 6 hereof. 
  
 (ii) Without limiting in any way paragraph (q)(i), no Holder may participate in any underwritten registration hereunder unless such Holder (x) agrees to sell such Holder’s securities to be covered by such
registration on the basis provided in any underwriting arrangements approved by the Majority Holders and the Managing Underwriters and (y) completes and executes in a timely manner all customary questionnaires, powers of attorney, underwriting
agreements and other documents reasonably required by the Issuer or the Managing Underwriters in connection with such underwriting arrangements. 
  

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 (r) In the case of any Shelf Registration Statement, the Issuer and Parent shall (i) make
reasonably available for inspection by the Holders of securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the
Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of Parent and its subsidiaries reasonably requested by such person; (ii) cause the officers, directors and employees of the Issuer
and Parent to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for due diligence examinations in connection
with primary underwritten offerings; provided, however, that any information that is nonpublic at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or
agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; provided
further, however, that such Holders or any such underwriter, attorney, accountant or agent may disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of any transaction contemplated
therein and all materials of any kind (including opinions or other tax analyses) that are provided to such Holders or any such underwriter, attorney, accountant or agent relating to such U.S. tax treatment and U.S. tax structure, other than any
information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws; (iii) make such representations and warranties to the Holders of securities registered thereunder and the underwriters, if any, in form,
substance and scope as are customarily made by an issuer to underwriters in primary underwritten offerings; (iv) obtain opinions of counsel to the Issuer and Parent (which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters; (v) obtain “cold comfort” letters (or, in the case of any person that does not satisfy the conditions for receipt of a “cold comfort” letter specified in Statement on
Auditing Standards No. 72, an “agreed-upon procedures” letter under Statement on Auditing Standards No. 35) and updates thereof from the independent certified public accountants of Parent (and, if necessary, any other independent certified
public accountants of any subsidiary of Parent or of any business acquired by Parent for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to
each selling Holder of securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with primary underwritten offerings; and
(vi) deliver such documents and certificates as may be reasonably requested by the 

  

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Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 4(k) and with any customary conditions contained
in the underwriting agreement or other agreement entered into by the Issuer and Parent. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(r) shall be performed (A) on the effective date of such Registration
Statement and each post-effective amendment thereto and (B) at each closing under any underwriting or similar agreement as and to the extent required thereunder. 
  
 (s) In the case of any Exchange Offer Registration Statement, the Issuer and Parent shall (i) make
reasonably available for inspection by each Purchaser, and any attorney, accountant or other agent retained by such Purchaser, all relevant financial and other records, pertinent corporate documents and properties of Parent and its subsidiaries
reasonably requested by such person; (ii) cause the officers, directors and employees of the Issuer and Parent to supply all relevant information reasonably requested by such Purchaser or any such attorney, accountant or agent in connection with any
such Registration Statement as is customary for due diligence examinations in connection with primary underwritten offerings; provided, however, that any information that is nonpublic at the time of delivery of such information shall
be kept confidential by such Purchaser or any such attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality; provided further, however, that such Purchaser or any such attorney, accountant or agent may disclose to any and all persons, without limitation of any kind, the U.S.
tax treatment and U.S. tax structure of any transaction contemplated therein and all materials of any kind (including opinions or other tax analyses) that are provided to such Purchaser or any such attorney, accountant or agent relating to such U.S.
tax treatment and U.S. tax structure, other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws; (iii) make such representations and warranties to such Purchaser, in form, substance
and scope as are customarily made by an issuer to underwriters in primary underwritten offerings; (iv) obtain opinions of counsel to the Issuer and Parent (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to
such Purchaser and its counsel), addressed to such Purchaser, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Purchaser or its counsel;
(v) obtain “cold comfort” letters and updates thereof from the independent certified public accountants of Parent (and, if necessary, any other independent certified public accountants of any subsidiary of Parent or of any business
acquired by Parent for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to such Purchaser, in customary form and covering matters of the type
customarily covered in “cold comfort” letters in 

  

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connection with primary underwritten offerings, or if requested by such Purchaser or its counsel in lieu of a “cold comfort” letter, an agreed-upon
procedures letter under Statement on Auditing Standards No. 35, covering matters requested by such Purchaser or its counsel; and (vi) deliver such documents and certificates as may be reasonably requested by such Purchaser or its counsel, including
those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(s) shall be performed (A) at the close of the
Registered Exchange Offer and (B) on the effective date of any post-effective amendment to the Exchange Offer Registration Statement. 
  
 5. Registration Expenses. The Issuer and Parent shall jointly and severally bear all expenses incurred in connection with the performance of their
obligations under Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel (in addition to one local counsel in each relevant
jurisdiction) designated by the Majority Holders to act as counsel for the Holders in connection therewith (“Holders’ Counsel”). Notwithstanding the foregoing, the Holders of the securities being registered shall pay all agency or
brokerage fees and commissions and underwriting discounts and commissions attributable to the sale of such securities and the fees and disbursements of any counsel or other advisors or experts retained by such Holders (severally or jointly), other
than the counsel and experts specifically referred to above in this Section 5, transfer taxes on resale of any of the securities by such Holders and any advertising expenses incurred by or on behalf of such Holders in connection with any offers they
may make. 
  
 6. Indemnification and Contribution. (a) In
connection with any Registration Statement, the Issuer and Parent jointly and severally agree to indemnify and hold harmless each Holder of securities covered thereby (including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each other person, if any, who controls any such Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage, liability or action; provided, 

  

 14 

 
however, that the Issuer and Parent will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Issuer or Parent by or on behalf of any such Holder
specifically for inclusion therein; provided further, however, that the indemnity agreement contained in this Section 6(a) shall not inure to the benefit of any indemnified party to the extent that it is determined by a final,
non-appealable judgment that (i) a preliminary Prospectus contained an untrue statement of a material fact or omitted to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the
sale to the person asserting any such losses, claims, damages or liabilities was an initial resale of securities by any Holder, (iii) any such loss, claim, damage or liability of such indemnified party results from the fact that there was not sent
or given to such person, at or prior to the written confirmation of the sale of such securities to such person, a copy of any revised preliminary Prospectus, the related Prospectus or the related Prospectus as amended or supplemented in any case
where such delivery is required by the Securities Act, and the Issuer and Parent had previously furnished copies thereof to such Holder and (iv) the revised preliminary Prospectus, the related Prospectus or the related Prospectus as amended or
supplemented corrected such untrue statement or omission. This indemnity agreement will be in addition to any liability which the Issuer and Parent may otherwise have. 
  
 The Issuer and Parent also jointly and severally agree to indemnify or contribute to Losses (as defined below) of, as
provided in Section 6(d), any underwriters of Original Securities or New Securities registered under a Shelf Registration Statement, their officers, directors, employees and agents and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Purchasers and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(q)
hereof. 
  
 (b) Each Holder of securities covered by a
Registration Statement (including each Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally and not jointly agrees to indemnify and hold harmless the Issuer, Parent, each of
their directors and officers and each other person, if any, who controls the Issuer or Parent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Issuer and
Parent to each such Holder, but only with reference to written information relating to such Holder furnished to the Issuer by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder may otherwise have. 
  
 (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a
claim in 

  

 15 

 
respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but
the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel) if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or proceeding. It is understood, however, that the Issuer and Parent shall, in connection with any one such action or separate but substantially similar or related actions
in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such Holders and
controlling persons. An indemnifying party shall not be liable under this Section 6 to any indemnified party regarding any settlement or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent is consented to
by such indemnifying party, which consent shall not be unreasonably withheld. 
  

 16 

 (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable to
or insufficient to hold harmless an indemnified party for any reason, then the Issuer, Parent and the Holders, in lieu of indemnifying such indemnified party, shall have a joint and several obligation to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively “Losses”) to which the Issuer, Parent and the Holders may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Issuer and Parent, on the one hand, and by the Holders, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided,
however, that in no case shall any Purchaser or any subsequent Holder of any Security or New Security be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the
case of a New Security, applicable to the Security which was exchangeable into such New Security, as set forth in the Final Memorandum and in the Purchase Agreement, nor shall any underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any
reason, the Issuer, Parent and the Holders severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuer and Parent, on the one hand, and the Holders, on the
other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Issuer and Parent shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth in the Final Memorandum and in the Purchase Agreement and (y) the total amount of additional interest which the Issuer was not required to pay as a result of registering
the securities covered by the Registration Statement which resulted in such Losses. Benefits received by the Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth in the Final Memorandum and in the
Purchase Agreement, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Original Securities or New Securities, as applicable, registered under the Securities Act. Benefits received by any underwriter
shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to information provided by the Issuer and Parent, on the one hand, or by Holders, on the other hand. The parties agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person who controls a Holder within the
meaning of either the Securities Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have 

  

 17 

 
the same rights to contribution as such Holder, and each person who controls the Issuer or Parent within the meaning of either the Securities Act or the
Exchange Act, each of their officers who shall have signed the Registration Statement and each of their directors shall have the same rights to contribution as the Issuer and Parent, subject in each case to the applicable terms and conditions of
this paragraph (d). 
  
 (e) The provisions of this Section 6 will
remain in full force and effect, regardless of any investigation made by or on behalf of any Purchaser, any other Holder, the Issuer and Parent or any underwriter or any of the officers, directors or controlling persons referred to in this Section
6, and will survive the sale by a Holder of securities covered by a Registration Statement. 
  
 7. Miscellaneous. 
  
 (a)
No Inconsistent Agreements. None of the Issuer or Parent has, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that limits the rights granted to the
Holders herein or otherwise conflicts with the provisions hereof. 
  
 (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may
not be given, unless the Issuer has obtained the written consent of the Holders of at least a majority of the then outstanding aggregate principal amount of Original Securities (or, after the consummation of any Exchange Offer in accordance with
Section 2 hereof, of New Securities); provided that, with respect to any matter that directly or indirectly affects the rights of any Purchaser hereunder, the Issuer shall obtain the written consent of each such Purchaser against which such
amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of securities
being sold rather than registered under such Registration Statement. 
  
 (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, facsimile, or air courier guaranteeing overnight delivery: 
  
 (1) if to a Holder, at the most current address given by
such Holder to the Issuer in accordance with the provisions of this Section 7(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the registrar under the Indenture, with a copy in like manner to
Citigroup Global Markets Inc. by facsimile (212-816-7912) and confirmed by mail to it at 388 Greenwich Street, New York, New York 10013, Attention: General Counsel; 
  

 18 

 (2) if to you, initially at the address set forth in the Purchase Agreement; and

  
 (3) if to the Issuer or Parent, initially at
the address set forth in the Purchase Agreement. 
  
 All such
notices and communications shall be deemed to have been duly given when received. 
  
 The Purchasers or the Issuer by notice to the other may designate additional or different addresses for subsequent notices or communications. 
  
 (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including, without the need for an express assignment or any consent by the Issuer and Parent or subsequent Holders of Original Securities and/or New Securities. The Issuer and Parent hereby agree to extend the
benefits of this Agreement to any Holder of Original Securities and/or New Securities and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 
  
 (e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 
  
 (f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. 
  
 (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF). 

 
 (h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 
  
 (i) Securities Held by the Issuer or Parent, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of Original Securities or New Securities is required hereunder, Original Securities or New Securities, as applicable, held by the Issuer, Parent or their Affiliates (other than
subsequent Holders of Original Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Original Securities or New 

  

 19 

 
Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 
  
 (j) Termination. This Agreement shall automatically terminate, without
any further action on the part of the Issuer and Parent or the Purchasers, upon the termination or cancellation of the Purchase Agreement prior to the Closing Date. 
  

 20 

 Please confirm that the foregoing correctly sets forth the agreement among Parent, the Issuer and you.

  

			
	 Very truly yours,

	
	 Level 3 Financing, Inc.

		
	 By:
	 	 /s/ Neil J. Eckstein

	 Name:
	 	 Neil J. Eckstein

	 Title:
	 	 Senior Vice President and Assistant Secretary

	
	 Level 3 Communications, Inc.

		
	 By:
	 	 /s/ Thomas C. Stortz

	 Name:
	 	 Thomas C. Stortz

	 Title:
	 	 Group Vice President and Secretary

  

			
	 The foregoing Agreement is hereby
 confirmed
and accepted as of the
 date first above written.

	
	 Citigroup Global Markets Inc.
 Credit Suisse
First Boston LLC
 J.P. Morgan Securities
 Morgan Stanley &
Co. Incorporated
 UBS Securities LLC

	
	 By: Citigroup Global Markets Inc.

		
	 By:
	 	/s/ D. Scott Miller
	 Name:
	 	D. Scott Miller
	 Title:
	 	Managing Director
	
	 By: Credit Suisse First Boston LLC

		
	 By:
	 	/s/ William L. Raincsuk, Jr.
	 Name:
	 	William L. Raincsuk, Jr.
	 Title:
	 	Managing Director

  

 21 

  
 ANNEX A 
  
 Each broker-dealer that receives New Securities for its own account pursuant
to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Original Securities where such New Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Issuer and Parent have agreed that, starting on the date
hereof (the “Expiration Date”) and ending on the close of business on the day that is 180 days following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See
“Plan of Distribution.” 
  

  
 ANNEX B 
  
 Each broker-dealer that receives New Securities for its own account in
exchange for Original Securities, where such Original Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any
resale of such New Securities. See “Plan of Distribution.” 
  

  
 ANNEX C 
  
 PLAN OF DISTRIBUTION 
  
 Each broker-dealer that receives New Securities for its own account pursuant
to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. The Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Securities received in exchange for Original Securities where such Original Securities were acquired as a result of market-making activities or other trading activities. Each of the Issuer and Parent has agreed that,
starting on the Expiration Date and ending on the close of business on the day that is 180 days following the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until                     , 2005, all dealers effecting transactions in the Exchange Securities may be required to deliver
a prospectus.* 
  
 Neither the Issuer nor Parent will receive any
proceeds from any sale of New Securities by broker-dealers. New Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Securities. Any broker-dealer
that resells New Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such New Securities may be deemed to be an “underwriter”
within the meaning of the Securities Act and any profit of any such resale of New Securities and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. 
  
 For a period of 180 days after the Expiration Date, the Issuer and Parent
will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Issuer and Parent have agreed to pay all expenses incident
to the Exchange Offer (other than the expenses of counsel for the Holders of the Original Securities) other than commissions or concessions of any brokers or 

	*	In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer Prospectus. 

  

 dealers and will indemnify the Holders of the Original Securities (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act. 
  
 [If applicable, add information required by Regulation S-K Items 507 and/or 508.] 
  

 2 

  
 ANNEX D 
  
 Rider A 
  

					
	0	  	CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
			
	 	  	Name:	  	 
			
	 	  	Address:  	  	 
			
	 	  	 	  	 

  
 Rider B

  
 If the undersigned is not a broker-dealer, the undersigned represents that
it acquired the New Securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of New Securities and it has no arrangements or understandings with any person to participate in a
distribution of the New Securities. If the undersigned is a broker-dealer that will receive New Securities for its own account in exchange for Original Securities, it represents that the Original Securities to be exchanged for New Securities were
acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such New Securities; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.Employment Agreement

 Exhibit 10.1 
  
 AMENDED AND RESTATED 
 EMPLOYMENT AGREEMENT 
  
 THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of May 1, 2005, (the “Effective Date”) by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and DANIEL R. LEE, an individual
(“Executive”), with respect to the following facts and circumstances: 
  
 RECITALS 
  
 The Company and
Executive have entered into an Employment Agreement effective as of April 10, 2002 (the “Original Agreement”) pursuant to which Executive serves as Chief Executive Officer of the Company and as a member and Chairman of the Company’s
Board of Directors. The Company and Executive desire to amend and restate the Original Agreement on the terms and conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows: 
  
 ARTICLE 1. 
  
 EMPLOYMENT AND TERM 
  
 1.1 Employment. The Company agrees to engage Executive in the capacity as Chief Executive Officer of the Company, and Executive hereby accepts such
engagement by the Company upon the terms and conditions specified below. The Company further agrees to cause Executive to be elected as a Director and, subject to the provisions of Section 6.3 hereof, Chairman of the Board of Directors, and
Executive agrees to serve in such capacities without additional compensation. 
  
 1.2 Term. The term of this Agreement shall commence on the date hereof and, unless earlier terminated under Article 6 below, shall continue in force until April 30, 2008, provided that commencing on May 1, 2007
and as of May 1 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least 90 days
prior to the next Renewal Date; provided that no such Renewal Period shall extend past Executive’s sixty-fifth (65) birthday. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”. 
  
 ARTICLE 2. 
  
 DUTIES OF EXECUTIVE 
  
 2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Chairman and Chief Executive Officer,
subject to the control and 

 supervision of the Board of Directors, and such other executive duties consistent with the foregoing as may be assigned
to him from time to time by the Board of Directors of the Company. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall devote all his
business time and efforts to the rendition of such services. Executive shall, at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any
and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in
all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between
the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control. 
  
 2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters at such location as Executive
and the Board of Directors shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment. 
  
 2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business
time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations and serve on the boards of directors
of companies, including Lynch Interactive, so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive
outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that
competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one percent (1%) of the securities
of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity
engaged in the casino gaming, card club or horse racing business. In this regard, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States. 
  
 ARTICLE 3. 
  
 COMPENSATION 
  
 3.1 Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual salary, effective as of May 1, 2005
at the rate of not less than $875,000 per year during each of the years of the Term; payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local
withholding taxes, and any other authorized or mandated similar withholdings). The annual salary shall be reviewed by the Compensation Committee of the Board (the 

 “Committee”) no less frequently than annually and may be increased (but not decreased) at the discretion of the
Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term. 
  
 3.2 Bonus. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this
Agreement up to one hundred fifty percent (150%) of Executive’s annual salary with a targeted bonus of seventy-five percent (75%) of Executive’s annual salary for such year based upon meeting performance targets with respect to the
Company’s earnings before interest, taxes, depreciation and amortization that shall be established annually by the Committee in consultation with Executive. Any such bonus earned by Executive shall be paid annually within ninety (90) days after
the conclusion of the Company’s fiscal year and certification by the Committee that the targets have been met. Bonuses relative to partial years (or a termination caused by death or disability) shall be prorated based on Executive’s target
bonus. It is the contemplation of the parties that the setting of the targets and goals and the payment of bonuses will be done in such a manner as to qualify such bonuses as “performance based” compensation under § 162(m) of the
Internal Revenue Code. 
  
 3.3 Stock Options. As an
additional element of compensation to Executive, in consideration of the services to be rendered hereunder, the Company shall grant to Executive an option to purchase 600,000 shares of the Company’s common stock which shall have an exercise
price equal to the fair market value of such stock on the date of grant and a term of ten (10) years. Such option shall be granted under the Company’s Stock Option Plans (the “Plans”) and shall constitute incentive stock options under
the Internal Revenue Code of 1986, as amended (the “Code”) to the maximum extent possible. The remaining options shall be non-qualified options under the Code.. The terms and conditions of such option shall be governed by a stock option
agreement reflecting such grant. Such option shall vest in five (5) equal annual installments as provided in the stock option agreement and shall be subject to accelerated vesting as provided in Sections 6.5.2 and 6.5.3. In addition, before the 2008
Renewal Date and at appropriate times thereafter, the Committee shall review Executive’s long-term compensation and, in consultation with Executive, shall consider granting additional stock options to Executive. 
  
 ARTICLE 4. 
  
 EXECUTIVE BENEFITS 
  
 4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the
Company’s personnel policies from time to time, Executive shall be entitled to not less than four weeks vacation each calendar year, without reduction in compensation 
  
 4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any
other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time. 

 4.3 Benefits. Executive shall receive all other such fringe benefits as the Company may offer to
other senior executives of the Company generally under the Company personnel policies in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not
cover the annual physical examination of Executive and Executive’s wife, or any pregnancy of Executive’s wife, the Company shall bear the cost of such examinations or the medical costs of such pregnancy. 
  
 4.4 Indemnification. Executive shall have the benefit of
indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts during the term
hereof and shall be covered by the Company’s directors and officers indemnity trust. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance covering directors and
officers of the Company, copies of which have been provided to Executive, in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable
efforts to cause the current policies of directors and officers liability insurance covering directors and officers of the Company to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as
may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms
and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). 
  
 ARTICLE 5. 
  
 REIMBURSEMENT FOR EXPENSES 
  
 5.1 Executive shall be
reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to
time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. 
  
 ARTICLE 6. 
  
 TERMINATION 
  
 6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s
employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”). 
  
 6.1.1 Failure to Perform Duties. If Executive neglects to perform the
material duties of his employment under this Agreement in a professional and businesslike manner after having received written notice specifying such failure to perform and a reasonable opportunity to perform. 

 6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement or a
material willful breach of his fiduciary duty to the Company. 
  
 6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning
the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company. 

 
 6.1.4 Disability. If Executive is physically or mentally disabled
from the performance of a major portion of his duties for a continuous period of 180 days or greater, which determination shall be made in the reasonable exercise of the Company’s judgment, provided, however, if Executive’s disability is
the result of a serious health condition as defined by the federal Family and Medical Leave Act (or its Nevada equivalent) (“FMLA”), Executive’s employment shall not be terminated due to such disability at any time during or after any
period of FMLA-qualified leave except as permitted by FMLA. If there should be a dispute between the Company and Executive as to Executive’s physical or mental disability for purposes of this Agreement, the question shall be settled by the
opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten days after a request for designation of such party, then a physician or psychiatrist designed
by the Clark County Medical Association. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto. 
  
 6.1.5 Failure To Be Licensed. If Executive fails to be licensed in all jurisdictions in which the Company or its
subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for
Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses. 
  
 6.2 Termination Without Cause. Notwithstanding anything to the
contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal
Period shall not be a termination of this Agreement without cause. 
  
 6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement,
“Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority or duties of Executive (other than cessation of his being Chairman of
the Board due to the requirements of any state regulation or applicable rules or regulations of the SEC or any Exchange on which the Company’s stock is listed or admitted for trading), or any relocation of his or its principal place of business
outside the greater Las Vegas metropolitan area (without Executive’s consent) and the failure of the Company to remedy such 

 breach within thirty (30) days after written notice (or as soon thereafter as practicable so long as it commences
effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable); or (b) a change of control with respect to the Company (a “Change of Control”). For purposes of this Agreement, a
“Change of Control” shall mean (i) a sale of all or substantially all of the property of the Company (ii) the acquisition or ownership by   any person, corporation, entity or group of stock possessing more than thirty percent
(30%) of the aggregate voting power of the then outstanding stock of the Company, (iii) a change in the majority of the Board of Directors which is not approved by a majority of the members of the Board of Directors as of the date of this Agreement
or directors whose election or appointment to the Board of Directors is approved by directors; (iv) the dissolution for liquidation of the Company; or (v) the reorganization, merger or combination of the Company with one or more corporations or
entities unless the Company’s shareholders immediately before such reorganization, merger or combination own stock or equity possessing more than 50% of the voting power of the stock or equity of the surviving corporation or entity in
substantially the same proportions after such reorganization, merger or combination as they owned in the Company immediately before such reorganization, merger, or combination. Failure by the Company to extend the Term for any Renewal Period shall
not constitute Good Reason for Executive to terminate this Agreement. 
  
 6.4 Effectiveness on Notice. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein
or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. 
  
 6.5 Effect of Termination. 
  
 6.5.1 Payment of Salary and Expenses Upon Termination. If the Term of this Agreement is terminated, all benefits provided to Executive by the
Company hereunder shall thereupon cease and the Company shall pay or cause to be paid to Executive all accrued but unpaid salary and vacation benefits. In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the
Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Term of the Agreement is terminated for “Cause,” Executive shall not be entitled to receive any payments other than as
specified in this Section 6.5.1 and other any benefit plan or policy of the Company, and provided that Executive may exercise any vested options. 
  
 (a) 
  
 6.5.2 Termination Due to Disability. If the Company terminates Executive due to disability, the following shall apply: 
  

	 	(a)	Executive shall be entitled to receive a lump sum amount equal to a sum of not less than (i) Executive’s annual salary as in effect on the date of termination; plus (ii) the
greater of the amount of Executive’s targeted bonus in the year of the termination or the average of the actual annual bonuses paid to Executive in the three consecutive years prior to the year of termination; times (iii) the number of years
and partial years remaining in the Term disregarding any early termination thereof, but in no event less 

 than 150% of the sum of (i) and (ii) above (the “Disability Severance Benefit”). In addition,
Executive shall be entitled to receive any amounts payable under Section 6.5.1 above, a pro rata annual bonus for the year of termination based on the Executive’s targeted bonus for such year and a continuation of health and disability
insurance coverage as specified in Section 6.5.2(c). The Disability Severance Benefit shall be payable to Executive in a lump sum as soon as practicable after the termination of Executive’s employment. 
  

	 	(b)	Executive shall be entitled to accelerated vesting of his outstanding stock options, based on the following schedule: (i) if such termination shall occur during the first year of
the Term, one-third (1/3) of Executive’s outstanding stock options shall be vested and exercisable as of the date of termination, (ii) if such termination shall occur during the second year of the Term, two-thirds (2/3) of Executive’s
outstanding stock options shall be vested and exercisable as of the date of termination and (iii) if such termination shall occur during the third year of the Term or thereafter all of Executive’s outstanding stock options shall be fully vested
and exercisable as of the date of termination. 

  

	 	(c)	Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or
arrangement(s) under which Executive was were covered immediately before his termination of employment or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives. Such
health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive will be required to make such payments as Executive would be required to make if Executive
were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earlier of (a) the balance of the Term but in no event less than one and one-half (1 1/2) years following Executive’s termination of employment with the Company and all of its Subsidiaries, and (b) the date Executive becomes covered under
any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or
Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such
pre-existing condition until such exclusion under such other group 

 health plan lapses or expires. In the event Executive is required to make an election under Sections 601
through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c)
shall be conditioned upon Executive’s timely making such an election. 
  

	 	(d)	The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5
shall be limited to six months from the date of termination. 

  
 6.5.3 Termination Without Cause or Termination by Executive for Good Reason Prior to A Change of Control or After Twenty-Four (24) Months Following a Change of Control. If the Company terminates Executive
without Cause or Executive terminates for Good Reason prior to or after twenty-four months following a Change of Control, the following shall apply: 
  

	 	(a)	Executive shall be entitled to receive an amount equal to a sum not less than (i) Executive’s annual salary as in effect on the date of termination; plus (ii) the greater of
the amount of Executive’s targeted bonus in the year of the termination or the average of the actual annual bonuses paid to Executive in the three consecutive years prior to the year of termination; times (iii) the number of years and partial
years remaining in the Term disregarding any early termination thereof, but in no event less than 150% of the sum of (i) and (ii) above (the “Pre-Change of Control Severance Benefit”), which amount shall be paid to Executive in equal
installments over eighteen (18) months in accordance with the Company’s regular salary payment schedule from time to time. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above, a pro rata annual
bonus for the year of termination based on the Executive’s target bonus amount for such year and a continuation of health and disability insurance coverage as specified in Section 6.5.3(c). 

  

	 	(b)	Executive shall be entitled to accelerated vesting of his outstanding stock options, based on the following schedule: (i) if such termination shall occur during the first year of
the Term, one-third (1/3) of Executive’s outstanding stock options shall be vested and exercisable as of the date of termination, (ii) if such termination shall occur during the second year of the Term, two-thirds (2/3) of Executive’s
outstanding stock options shall be vested and exercisable as of the date of termination and (iii) if such termination shall occur during the third year of the Term or thereafter all of Executive’s outstanding stock options shall be fully vested
and exercisable as of the date of termination. 

	 	(c)	Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or
arrangement(s) under which Executive was were covered immediately before his termination of employment or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives. Such
health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive will be required to make such payments as Executive would be required to make if Executive
were still employed by the Company. The benefits provided under this Section 6.5.3(c) shall continue until the earlier of (a) the balance of the Term but in no event less than one and one-half (1 1/2) years following Executive’s termination of employment with the Company and all of its Subsidiaries; or (b) the date Executive becomes covered under
any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or
Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.3(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such
pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as
amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.3(c), the obligations of the Company and its Subsidiaries under this Section 6.5.3(c) shall be conditioned upon Executive’s timely making such an
election. 

  

	 	(d)	The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5
shall be limited to six months from the date of termination. 

 6.5.4 Termination Without Cause or Termination by Executive for Good Reason on or Within Twenty-Four
(24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason on or within twenty-four (24) months after a Change of Control, the following shall apply: 
  

	 	(a)	Executive shall be entitled to receive a lump sum amount equal to a sum not less than (i) Executive’s annual salary as in effect on the date of termination; plus

  
 (ii) the greater of the amount of
Executive’s targeted bonus in the year of the termination or the average of the actual annual bonuses paid to Executive in the three consecutive years prior to the year of termination; times (iii) the number of years and partial years remaining
in the Term disregarding any early termination thereof, but in no event less than 250% of the sum of (i) and (ii) above (the “Change of Control Severance Benefit”). In addition, Executive shall be entitled to receive any amounts payable
under Section 6.5.1 above, a pro rata annual bonus for the year of termination based on Executive’s targeted bonus for such year and a continuation of health and disability insurance coverage as specified in Section 6.5.4(c). The Change of
Control Severance Benefit shall be payable to Executive in a lump sum as soon as practicable after the termination of Executive’s employment. 
  

	 	(b)	Executive shall be entitled to accelerated vesting of his outstanding stock options, based on the following schedule: (i) if such termination shall occur during the first year of
the Term, one-third (1/3) of Executive’s outstanding stock options shall be vested and exercisable as of the date of termination, (ii) if such termination shall occur during the second year of the Term, two-thirds (2/3) of Executive’s
outstanding stock options shall be vested and exercisable as of the date of termination and (iii) if such termination shall occur during the third year of the Term or thereafter all of Executive’s outstanding stock options shall be fully vested
and exercisable as of the date of termination. 

  

	 	(c)	Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or
arrangement(s) under which Executive was were covered immediately before his termination of employment or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives. Such
health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive will be required to make such payments as Executive would be required to make if Executive
were still employed by the Company. The benefits provided under this Section 6.5.4(c) shall continue until the earlier of (a) the balance of the Term but in no event less than two and one-half (2 1/2) years following Executive’s termination of employment with the Company and all of its Subsidiaries; or (b) the date Executive becomes covered under
any other group health plan or group 

 disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided,
however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.4(c) shall
continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an
election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.4(c), the obligations of the Company and its Subsidiaries
under this Section 6.5.4(c) shall be conditioned upon Executive’s timely making such an election. 
  

	 	(d)	The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5
shall be limited to six months from the date of termination. 

  

	 	(e)	Notwithstanding anything contained herein, if a Change of Control occurs and the Executive’s employment with the Company is terminated by the Company without Cause prior to the
Change of Control, such termination of employment shall be deemed to occur after the Change of Control if such termination (x) was at the request of, or in response to actions taken by, a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) occurs within six (6) month’s before the date of any Change of Control. 

  
 6.5.5 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in
control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A
hereto. 
  
 6.5.6 Suspension. In lieu of terminating
Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under
Section 6.1 for an aggregate of not more than 30 days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right
to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating
Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant
to the provisions of this Agreement during the Default Period. 

 6.6 Exercisability of Options. As provided in the stock option agreements, all vested options will
terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the
event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the
termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under
the terms of the governing stock option agreement or this Agreement. 
  
 ARTICLE 7. 
  
 CONFIDENTIALITY 
  
 7.1 Nondisclosure of Confidential Material. In the performance of his
duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at
any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is
disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public
or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of
his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge,
communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder).
Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items
(including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential
Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under
the control of Executive. 
  
 7.2 Assignment of Intellectual
Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual 

 property rights, that relate to the Company’s business and are the results of Executive’s efforts during the
Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property
of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive
hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work
Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in
consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may
require confirming the Company’s ownership of any of Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or
rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product. 
  
 7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of
the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either
during the Term or at any time thereafter. 
  
 7.4 Covenant Not
to Compete. In the event this Agreement is terminated by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then, except as provided in Sections 6.5.2(d), 6.5.3(d) and
6.5.4(d), for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or
entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement,
“market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated by the Company. 
  
 7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause
under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then, except as provided in Sections 6.5.2(d), 6.5.3(d) and 6.5.4(d), for a period of one year after the effective date of such termination,
Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to
Executive to have been such an employee within six months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring. 

 7.6 No Solicitation. During the Term and for a period of one year thereafter, or for a period of
one year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of
any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six months prior to such occurrence) or encourage any such employee to leave the
employment of the Company or any of its subsidiaries. 
  
 7.7
Non-Solicitation of Customers. During the Term and for a period of one year thereafter, or for a period of one year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such
termination (whether by the Company or Executive), Executive shall not use customer lists or Confidential Material to solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage
any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries. 
  
 7.8 Irreparable Injury. The promised service of Executive under this
Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action
at law. 
  
 7.9 Remedies for Breach. Executive agrees that
money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive
from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates
any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by
Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this
Article 7, but shall be in addition to all other remedies available at law or in equity. 
  
 ARTICLE 8. 
  
 ARBITRATION

  
 8.1 General. Except for a claim for injunctive relief
under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be
settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration 

 Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having
jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party
may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual
without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada. 
  
 8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a
list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or
litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so
drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to
serve for any reason, the parties shall repeat this process until an arbitrator is selected. 
  
 8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when
acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising
under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to
grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim
without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the
American Arbitration Association and these procedures, the provisions of these procedures shall govern. 
  
 8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be
responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the
arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s
compensation), expenses, and attorneys’ fees. 
  
 8.5
Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or
otherwise unenforceable, 

 in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be
resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any
subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law. 
  
 ARTICLE 9. 
  
 MISCELLANEOUS 
  
 9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or
repeal. 
  
 9.2 Entire Agreement. This Agreement and the
stock option agreements of even date herewith constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, and there are no other representations,
understandings or agreements. 
  
 9.3 Counterparts. This
Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. 
  
 9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and
distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability
shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall
continue in full force and effect. 
  
 9.5 Waiver or Delay.
The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the
waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion. 
  
 9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors and assigns, except as otherwise provided herein. 
  
 9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or
transfer by Executive shall be void. 

 9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and
deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement. 
  
 9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of Nevada. 
  
 9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally
served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his
address set forth as follows or any other address that any party may designate by written notice to the other parties: 
  

			
	To Executive:	  	Dan Lee
	 	  	3800 Howard Hughes Parkway
	 	  	Las Vegas, NV 89109
	 	  	Telephone: 702 784-7777
	 	  	Facsimile: 702 784-7701
		
	with copy to:	  	Latham & Watkins LLP
	 	  	633 West Fifth Street
	 	  	Los Angeles, CA 90071-2007
	 	  	Attn: James D. C. Barrall
	 	  	Telephone: 213 485 1234
	 	  	Facsimile: 213 891 8763
		
	To the Company:	  	Pinnacle Entertainment, Inc.
	 	  	3800 Howard Hughes Parkway
	 	  	Las Vegas, NV 89109
	 	  	Attn: John A. Godfrey, Executive Vice President,
	 	  	            General Counsel and Secretary
	 	  	Telephone: 702 784-7777
	 	  	Facsimile: 702 784-7701
		
	with copy to:	  	Irell & Manella LLP
	 	  	1800 Avenue of the Stars, Suite 900
	 	  	Los Angeles, CA 90067-4276
	 	  	Attn: Al Segel
	 	  	Telephone: 310 277 1010
	 	  	Facsimile: 310 284 3052

  
 9.11 Headings and
Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement. 

 9.12 Construction. All terms and definitions contained herein shall be construed in such a manner
that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby. 
  
 9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of
this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the
reasonable fees and expenses of Executive’s counsel in connection with this Agreement. 
  
 9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with
Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order. 
  
 9.15 References to Sections of the Code. All references in this
Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto. 
  
 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed this 6th day of June 2005 and
effective as of the date first written above. 
  

					
	 EXECUTIVE
	  	 THE COMPANY

		
	 DANIEL R. LEE
	  	 PINNACLE ENTERTAINMENT, INC.

		
	 /s/ Daniel R. Lee

	  	 /s/ John A. Godfrey

	 	  	 By:
	  	 John A. Godfrey

	 	  	 Its:
	  	 Executive Vice President, General Counsel
and Secretary

 Appendix A 
  
 Tax Grossup Payments 
  
 (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would
be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or
penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed
with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

  
 (b) Subject to the provisions of Section (c), all
determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the
Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Subject to Section e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and
Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of
Executive. 
  
 (c) Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after Executive is
informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires
to contest such claim, Executive shall: 
  
 (i) give the Company
any information reasonably requested by the Company relating to such claim, 

 (ii) take such action in connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, 
  
 (iii) cooperate with the Company in good faith in order effectively to contest such claim, and 
  
 (iv) permit the Company to participate in any proceedings relating to such
claim; 
  
 provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 
  
 (d) If Executive becomes entitled to receive any refund with respect to the
Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any
portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties, Executive shall pay the amount of such offset over to the Company, together
with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset. 
  
 (e) Notwithstanding any other provision of this appendix, the Company may
withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to
such withholding. 
  
 (f) Definitions. The following terms
shall have the following meanings for purposes of this appendix. 

 (i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with
any interest or penalties imposed with respect to such excise tax. 
  
 ((ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement
or otherwise.

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