Document:

ex10.htm

     

    
       Exhibit 10.1

       

       

      
        	
                Commercial
      Paper Dealer Agreement

                 

              

      

       

      [4(2)
Program]

       

      Between:

       

      BlackRock,
Inc., as Issuer and Barclays Capital Inc., as Dealer.

       

      Concerning
Notes to be issued pursuant to an Issuing and Paying Agency Agreement dated as
of October 14, 2009 between the Issuer and JPMorgan Chase Bank, National
Association, as Issuing and Paying Agent

       

      Dated
as of October 14, 2009

       

      Commercial
Paper Dealer Agreement

       

      [4(2)
Program]

       

      This
agreement (as amended, supplemented or otherwise modified and in effect from
time to time, “Agreement”) sets forth the understandings between the Issuer and
the Dealer, each named on the cover page hereof, in connection with the issuance
and sale by the Issuer of its short-term promissory notes in substantially the
form of Exhibit D hereto (the “Notes”) through the Dealer.

       

      Certain
terms used in this Agreement are defined in Section 6 hereof.

       

      The
Addendum to this Agreement, and any Annexes or Exhibits described in this
Agreement or such Addendum, are hereby incorporated into this Agreement and made
fully a part hereof.

       

       

      
        	
                1.

              	
                Offers,
      Sales and Resales of Notes.

              

      

       

       

      
        	
                 
      

              	
                1.1

              	
                While
      (i) the Issuer has and shall have no obligation to sell the Notes to the
      Dealer or to permit the Dealer to arrange any sale of the Notes for the
      account of the Issuer, and (ii) the Dealer has and shall have no
      obligation to purchase the Notes from the Issuer or to arrange any sale of
      the Notes for the account of the Issuer, the parties hereto agree that in
      any case where the Dealer purchases Notes from the Issuer, or arranges for
      the sale of Notes by the Issuer, such Notes will be purchased or sold by
      the Dealer in reliance on the representations, warranties, covenants and
      agreements of the Issuer contained herein or made pursuant hereto and on
      the terms and conditions and in the manner provided
  herein.

              

      

       

       

      
        	
                 
      

              	
                1.2

              	
                So
      long as this Agreement shall remain in effect, and in addition to the
      limitations contained in Section 1.7 hereof, the Issuer shall not, without
      the consent of the Dealer, offer, solicit or accept offers to purchase, or
      sell, any Notes except (a) in transactions with one or more dealers which
      may from time to time after the date hereof become dealers with respect to
      the Notes by executing with the Issuer one or more agreements which
      contain provisions substantially identical to those contained in Section 1
      of this Agreement, of which the Issuer hereby undertakes to provide the
      Dealer prompt notice or

              

      

       

      
        
          
             

          

           

        

        
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Paper Dealer Agreement 4(2) Program  ■ 1

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)
      in transactions with the other dealers listed on the Addendum hereto,
      which are executing agreements with the Issuer which contain provisions
      substantially identical to Section 1 of this Agreement contemporaneously
      herewith. In no event shall the Issuer offer, solicit or accept offers to
      purchase, or sell, any Notes directly on its own behalf in transactions
      with persons other than broker-dealers as specifically permitted in this
      Section 1.2.

              

      

       

       

      
        	
                 
      

              	
                1.3

              	
                The
      Notes shall be in a minimum denomination of $250,000 or integral multiples
      of $1,000 in excess thereof, will bear such interest rates, if interest
      bearing, or will be sold at such discount from their face amounts, as
      shall be agreed upon by the Dealer and the Issuer, shall have a maturity
      not exceeding 397 days from the date of issuance and may have such terms
      as are specified in Exhibit C hereto or the Private Placement
      Memorandum.  The Notes shall not contain any provision for
      extension, renewal or automatic
“rollover.”

              

      

       

       

      
        	
                 
      

              	
                1.4

              	
                The
      authentication and issuance of, and payment for, the Notes shall be
      effected in accordance with the Issuing and Paying Agency Agreement, and
      the Notes shall be either individual physical certificates or book-entry
      notes evidenced by one or more master notes (each, a “Master Note”)
      registered in the name of The Depository Trust Company (“DTC”) or its
      nominee, in the form or forms annexed hereto as Exhibit
  D.

              

      

       

       

      
        	
                 
      

              	
                1.5

              	
                If
      the Issuer and the Dealer shall agree on the terms of the purchase of any
      Note by the Dealer or the sale of any Note arranged by the Dealer
      (including, but not limited to, agreement with respect to the date of
      issue, purchase price, principal amount, maturity and interest rate or
      interest rate index and margin (in the case of interest-bearing Notes) or
      discount thereof (in the case of Notes issued on a discount basis), and
      appropriate compensation for the Dealer’s services hereunder) pursuant to
      this Agreement, the Issuer shall cause such Note to be issued and
      delivered in accordance with the terms of the Issuing and Paying Agency
      Agreement and payment for such Note shall be made by the purchaser
      thereof, either directly or through the Dealer, to the Issuing and Paying
      Agent, for the account of the Issuer. Except as otherwise agreed, in the
      event that the Dealer is acting as an agent and a purchaser shall either
      fail to accept delivery of or make payment for a Note on the date fixed
      for settlement, the Dealer shall promptly notify the Issuer, and if the
      Dealer has theretofore paid the Issuer for the Note, the Issuer will
      promptly return such funds to the Dealer against its return of the Note to
      the Issuer, in the case of a certificated Note, and upon notice of such
      failure in the case of a book-entry Note. If such failure occurred for any
      reason other than default by the Dealer, the Issuer shall reimburse the
      Dealer on an equitable basis for the Dealer’s loss of the use of such
      funds for the period such funds were credited to the Issuer’s
      account.

              

      

       

       

      
        	
                 
      

              	
                1.6

              	
                The
      Dealer and the Issuer hereby establish and agree to observe the following
      procedures in connection with offers, sales and subsequent resales or
      other transfers of the Notes:

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                Offers
      and sales of the Notes by or through the Dealer shall be made only to: (i)
      investors reasonably believed by the Dealer to be Qualified Institutional
      Buyers, Institutional Accredited Investors or Sophisticated Individual
      Accredited Investors and (ii) non-bank fiduciaries or agents that will be
      purchasing Notes for one or more accounts, each of which is reasonably
      believed by the Dealer to be an Institutional Accredited Investor or
      Sophisticated Individual Accredited
Investor.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                Resales
      and other transfers of the Notes by the holders thereof shall be made only
      in accordance with the restrictions in the legend described in clause (e)
      below.

              

      

       

      
        
          
              

          

           

        

        
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Paper Dealer Agreement 4(2) Program  ■ 2

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (c)

              	
                No
      general solicitation or general advertising shall be used in connection
      with the offering of the Notes. Without limiting the generality of the
      foregoing, without the prior written approval of the Dealer (which shall
      not be unreasonably withheld or delayed), the Issuer shall not issue any
      press release or place or publish any “tombstone” or other advertisement
      relating to the Notes.

              

      

       

       

      
        	
                 
      

              	
                (d)

              	
                No
      sale of Notes to any one purchaser shall be for less than $250,000
      principal or face amount, and no Note shall be issued in a smaller
      principal or face amount. If the purchaser is a non-bank fiduciary acting
      on behalf of others, each person for whom such purchaser is acting must
      purchase at least $250,000 principal or face amount of
    Notes.

              

      

       

       

      
        	
                 
      

              	
                (e)

              	
                Offers
      and sales of the Notes by the Issuer through the Dealer acting as agent
      for the Issuer shall be made in accordance with Rule 506 under the
      Securities Act, and shall be subject to the restrictions described in the
      legend appearing on Exhibit A hereto. A legend substantially to the effect
      of such Exhibit A shall appear as part of the Private Placement Memorandum
      used in connection with offers and sales of Notes hereunder, as well as on
      each individual certificate representing a Note and each Master Note
      representing book-entry Notes offered and sold pursuant to this
      Agreement.

              

      

       

       

      
        	
                 
      

              	
                (f)

              	
                The
      Dealer shall furnish or shall have furnished to each purchaser of Notes
      for which it has acted as the Dealer a copy of the then-current Private
      Placement Memorandum unless such purchaser has previously received a copy
      of the Private Placement Memorandum as then in effect. The Private
      Placement Memorandum shall expressly state that any person to whom Notes
      are offered shall have an opportunity to ask questions of, and receive
      information from, the Issuer and the Dealer and shall provide the names,
      addresses and telephone numbers of the persons from whom information
      regarding the Issuer may be
obtained.

              

      

       

       

      
        	
                 
      

              	
                (g)

              	
                The
      Issuer agrees, for the benefit of the Dealer and each of the holders and
      prospective purchasers from time to time of the Notes that, if at any time
      the Issuer shall not be subject to Section 13 or 15(d) of the Exchange
      Act, the Issuer will furnish, upon request and at its expense, to the
      Dealer and to holders and prospective purchasers of Notes information
      required by Rule 144A(d)(4)(i) in compliance with Rule
      144A(d).

              

      

       

       

      
        	
                 
      

              	
                (h)

              	
                In
      the event that any Note offered or to be offered by the Dealer would be
      ineligible for resale under Rule 144A, the Issuer shall immediately notify
      the Dealer (by telephone, confirmed in writing) of such fact and shall
      promptly prepare and deliver to the Dealer an amendment or supplement to
      the Private Placement Memorandum describing the Notes that are ineligible,
      the reason for such ineligibility and any other relevant information
      relating thereto.

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                The
      Issuer represents that it is not currently issuing commercial paper in the
      United States market in reliance upon the exemption provided by Section
      3(a)(3) of the Securities Act. The Issuer agrees that, if it shall issue
      commercial paper after the date hereof in reliance upon such exemption (a)
      the proceeds from the sale of the Notes will be segregated from the
      proceeds of the sale of any such commercial paper by being placed in a
      separate account; (b) the Issuer will institute appropriate corporate
      procedures to ensure that the offers and sales of notes issued by the
      Issuer pursuant to the Section 3(a)(3) exemption are not integrated with
      offerings and sales of Notes hereunder; and (c) the Issuer will comply
      with each of the requirements of Section 3(a)(3) of the Securities Act in
      selling commercial paper or other short-term debt securities other than
      the Notes in the United States.

              

      

       

      
        
          
              

          

           

        

        
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Paper Dealer Agreement 4(2) Program  ■ 3

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                1.7

              	
                The
      Issuer hereby represents and warrants to the Dealer, in connection with
      offers, sales and resales of Notes by the Issuer, as
    follows:

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                The
      Issuer hereby confirms to the Dealer that (except as permitted by Section
      1.6(i)) within the preceding six months neither the Issuer nor any person
      other than the Dealer or the other dealers referred to in Section 1.2
      hereof acting on behalf of the Issuer has offered or sold any Notes, or
      any substantially similar security of the Issuer (including, without
      limitation, medium-term notes issued by the Issuer), to, or solicited
      offers to buy any such security from, any person other than the Dealer or
      the other dealers referred to in Section 1.2 hereof. The Issuer also
      agrees that (except as permitted by Section 1.6(i)), as long as the Notes
      are being offered for sale by the Dealer and the other dealers referred to
      in Section 1.2 hereof as contemplated hereby and until at least six months
      after the offer of Notes hereunder has been terminated, neither the Issuer
      nor any person other than the Dealer or the other dealers referred to in
      Section 1.2 hereof (except as contemplated by Section 1.2 hereof) will
      offer the Notes or any substantially similar security of the Issuer for
      sale to, or solicit offers to buy any such security from, any person other
      than the Dealer or the other dealers referred to in Section 1.2 hereof, it
      being understood that such agreement is made with a view to bringing the
      offer and sale of the Notes within the exemption provided by Section 4(2)
      of the Securities Act and Rule 506 thereunder and shall survive any
      termination of this Agreement. The Issuer hereby represents and warrants
      that it has not taken or omitted to take, and will not take or omit to
      take, any action that would cause the offering and sale of Notes hereunder
      to be integrated with any other offering of securities, whether such
      offering is made by the Issuer or some other party or
    parties.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                The
      Issuer represents and agrees that the proceeds of the sale of the Notes
      are not currently contemplated to be used for the purpose of buying,
      carrying or trading securities within the meaning of Regulation T and the
      interpretations thereunder by the Board of Governors of the Federal
      Reserve System. In the event that the Issuer determines to use such
      proceeds for the purpose of buying, carrying or trading securities,
      whether in connection with an acquisition of another company or otherwise,
      the Issuer shall give the Dealer at least five business days’ prior
      written notice to that effect. The Issuer shall also give the Dealer
      prompt notice of the actual date that it commences to purchase securities
      with the proceeds of the Notes. Thereafter, in the event that the Dealer
      purchases Notes as principal and does not resell such Notes on the day of
      such purchase, to the extent necessary to comply with Regulation T and the
      interpretations thereunder, the Dealer will sell such Notes either (i)
      only to offerees it reasonably believes to be Qualified Institutional
      Buyers or to Qualified Institutional Buyers it reasonably believes are
      acting for other Qualified Institutional Buyers, in each case in
      accordance with Rule 144A or (ii) in a manner which would not cause a
      violation of Regulation T and the interpretations
    thereunder.

              

      

       

       

      
        	
                2.

              	
                Representations
      and Warranties of Issuer.

              

      

       

                            The
Issuer represents and warrants that:

       

       

      
        	
                 
      

              	
                2.1

              	
                The
      Issuer is a corporation duly organized, validly existing and in good
      standing under the laws of its jurisdiction of incorporation, has the
      power and authority to own its properties and to carry on its business as
      now being and hereafter proposed to be conducted and is duly qualified and
      authorized to do business in each jurisdiction in which the character of
      its properties or the nature of its business requires
  such

              

      

       

      
        
          
              

          

           

        

        
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Paper Dealer Agreement 4(2) Program  ■ 4

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                qualification
      and authorization, except where the failure to be so qualified or in good
      standing could not be reasonably expected to result in a Material Adverse
      Effect.   The Issuer has all the requisite power and
      authority to execute, deliver and perform its obligations under the Notes,
      this Agreement and the Issuing and Paying Agency
  Agreement.

              

      

       

       

      
        	
                 
      

              	
                2.2

              	
                This
      Agreement and the Issuing and Paying Agency Agreement have been duly
      authorized, executed and delivered by the Issuer and constitute legal,
      valid and binding obligations of the Issuer enforceable against the Issuer
      in accordance with their terms, except as such enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar
      state or federal debtor relief laws from time to time in effect which
      affect the enforcement of creditors’ rights in general and the
      availability of equitable remedies (regardless of whether enforcement is
      sought in a proceeding in equity or at
law).

              

      

       

       

      
        	
                 
      

              	
                2.3

              	
                The
      Notes have been duly authorized, and when issued as provided in the
      Issuing and Paying Agency Agreement, will be duly and validly issued and
      will constitute legal, valid and binding obligations of the Issuer
      enforceable against the Issuer in accordance with their terms, except as
      such enforceability may be limited by bankruptcy, insolvency,
      reorganization, moratorium or similar state or federal debtor relief laws
      from time to time in effect which affect the enforcement of creditors’
      rights in general and the availability of equitable remedies (regardless
      of whether enforcement is sought in a proceeding in equity or at
      law).

              

      

       

       

      
        	
                 
      

              	
                2.4

              	
                The
      offer and sale of the Notes by the Issuer in the manner contemplated
      hereby do not require registration of the Notes under the Securities Act,
      pursuant to the exemption from registration contained in Section 4(2)
      thereof, and no indenture in respect of the Notes is required to be
      qualified under the Trust Indenture Act of 1939, as
    amended.

              

      

       

       

      
        	
                 
      

              	
                2.5

              	
                The
      Notes will rank at least pari
      passu
      with all other unsecured and unsubordinated indebtedness of the
      Issuer.

              

      

       

       

      
        	
                 
      

              	
                2.6

              	
                No
      consent or action of, or filing or registration with, any governmental or
      public regulatory body or authority, including the SEC, is required to
      authorize, or is otherwise required in connection with the execution,
      delivery or performance of, this Agreement, the Notes or the Issuing and
      Paying Agency Agreement, except as may be required by the securities or
      Blue Sky laws of the various states in connection with the offer and sale
      of the Notes.

              

      

       

       

      
        	
                 
      

              	
                2.7

              	
                The
      execution, delivery and performance by the Issuer of this Agreement and
      the Issuing and Paying Agency Agreement, and the issuance of the Notes in
      accordance with the Issuing and Paying Agency Agreement, each in
      accordance with its respective terms, and the transactions contemplated
      hereby and thereby do not and will not, by the passage of time, the giving
      of notice or otherwise, (i) require any Governmental Approval relating to
      the Issuer where the failure to obtain such Governmental Approval could
      reasonably be expected to have a Material Adverse Effect, (ii) violate any
      Applicable Law relating to the Issuer except where such violation could
      not reasonably be expected to have a Material Adverse Effect, (iii)
      conflict with, result in a breach of or constitute a default under the
      articles of incorporation or bylaws of the Issuer, (iv) conflict with,
      result in a breach of or constitute a default under any indenture,
      agreement or other instrument to which the Issuer is a party or by which
      any of its properties may be bound or any Governmental Approval relating
      to the Issuer, which could reasonably be expected to have a Material
      Adverse Effect, (v) result in or require the creation or imposition of any
      Lien upon or with respect to any property now owned or hereafter acquired
      by the Issuer

              

      

       

      
        
          
              

          

           

        

        
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                or
      (vi) require any consent or authorization of, filing with, or other act in
      respect of, an arbitrator or Governmental Authority and no consent of any
      other Person is required in connection with the execution, delivery,
      performance, validity or enforceability of this Agreement, the Notes or
      the Issuing and Paying Agency Agreement other than consents,
      authorizations, filings or other acts or consents which have been obtained
      or made and are in full force and effect or for which the failure to
      obtain or make could not reasonably be expected to have a Material Adverse
      Effect.

              

      

       

       

      
        	
                 
      

              	
                2.8

              	
                Except
      for matters disclosed in any filings made by the Issuer with the SEC,
      there are no actions, suits or proceedings pending nor, to the knowledge
      of the Issuer, threatened against or in any other way relating adversely
      to or affecting the Issuer or any of its properties in any court or before
      any arbitrator of any kind or before or by any Governmental Authority that
      has had or could reasonably be expected to have a Material Adverse
      Effect.

              

      

       

       

      
        	
                 
      

              	
                2.9

              	
                The
      Issuer is not an “investment company” within the meaning of the Investment
      Company Act of 1940, as amended.

              

      

       

       

      
        	
                 
      

              	
                2.10

              	
                Neither
      the Private Placement Memorandum nor the Company Information contains any
      untrue statement of a material fact or omits to state a material fact
      required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

              

      

       

       

      
        	
                 
      

              	
                2.11

              	
                Each
      (a) issuance of Notes by the Issuer hereunder and (b) amendment or
      supplement of the Private Placement Memorandum shall be deemed a
      representation and warranty by the Issuer to the Dealer, as of the date
      thereof, that, both before and after giving effect to such issuance and
      after giving effect to such amendment or supplement, (i) the
      representations and warranties given by the Issuer set forth in this
      Section 2 remain true and correct on and as of such date as if made on and
      as of such date, (ii) in the case of an issuance of Notes, the Notes being
      issued on such date have been duly and validly issued and constitute
      legal, valid and binding obligations of the Issuer, enforceable against
      the Issuer in accordance with their terms, except as such enforceability
      may be limited by bankruptcy, insolvency, reorganization, moratorium or
      similar state or federal debtor relief laws from time to time in effect
      which affect the enforcement of creditors’ rights in general and the
      availability of equitable remedies (regardless of whether enforcement is
      sought in a proceeding in equity or at law), (iii) in the case of an
      issuance of Notes, since the date of the most recent Private Placement
      Memorandum, there has been no material adverse change in the financial
      condition or operations of the Issuer which, if not publicly available,
      has not been disclosed to the Dealer in writing and (iv) the Issuer is not
      in default under any of its obligations hereunder, under the Issuing and
      Paying Agency Agreement or the Notes that is reasonably likely to result
      in a Material Adverse Effect.

              

      

       

       

      
        	
                3.

              	
                Covenants
      and Agreements of Issuer.

              

      

       

      The
Issuer covenants and agrees that:

       

      
        	
                 
      

              	
                3.1

              	
                The
      Issuer will give the Dealer prompt notice (but in any event prior to any
      subsequent issuance of Notes hereunder) of any amendment to, modification
      of or waiver with respect to, the Notes or the Issuing and Paying Agency
      Agreement, including a complete copy of any such amendment, modification
      or waiver.

              

      

       

       

      
        	
                 
      

              	
                3.2

              	
                The
      Issuer shall, whenever there shall occur any change, development or
      occurrence in relation to the Issuer that would have a Material Adverse
      Effect (including any receipt by the Issuer, from any nationally
      recognized statistical ratings organization that
  has

              

      

       

      
        
          
              

          

           

        

        
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                provided
      a rating to the Notes, of any notice of a downgrading in such rating that
      is publicly available), promptly, and in any event prior to any subsequent
      issuance of Notes hereunder, notify the Dealer (by telephone, confirmed in
      writing) of such change, development or
  occurrence.

              

      

       

       

      
        	
                 
      

              	
                3.3

              	
                The
      Issuer shall from time to time furnish to the Dealer such non-public
      information as the Dealer may reasonably request, regarding (i) the
      Issuer’s operations and financial condition, (ii) the due authorization
      and execution of the Notes and (iii) the Issuer’s ability to pay the Notes
      as they mature; provided that
      the disclosure of such information shall not be reasonably likely to cause
      the Issuer to be in violation of any Applicable Law or otherwise violate
      the terms of any confidentiality agreement to which the Issuer is
      subject.

              

      

       

       

      
        	
                 
      

              	
                3.4

              	
                The
      Issuer will take all such action as the Dealer may reasonably request to
      ensure that each offer and each sale of the Notes will comply with any
      applicable state Blue Sky laws; provided, however, that the Issuer shall
      not be obligated to file any general consent to service of process or to
      qualify as a foreign corporation in any jurisdiction in which it is not so
      qualified or subject itself to taxation in respect of doing business in
      any jurisdiction in which it is not otherwise so
  subject.

              

      

       

       

      
        	
                 
      

              	
                3.5

              	
                The
      Issuer will not be in default of any of its obligations hereunder, under
      the Notes or under the Issuing and Paying Agency Agreement, at any time
      that any of the Notes are
outstanding.

              

      

       

       

      
        	
                 
      

              	
                3.6

              	
                The
      Issuer shall not issue Notes hereunder until the Dealer shall have
      received (a) one or more opinions of counsel to the Issuer, addressed to
      the Dealer, satisfactory in form and substance to the Dealer, (b) a copy
      of the executed Issuing and Paying Agency Agreement as then in effect, (c)
      a copy of resolutions adopted by the Board of Directors of the Issuer,
      satisfactory in form and substance to the Dealer and certified by the
      Secretary or similar officer of the Issuer, authorizing execution and
      delivery by the Issuer of this Agreement, the Issuing and Paying Agency
      Agreement and the Notes and consummation by the Issuer of the transactions
      contemplated hereby and thereby, (d) prior to the issuance of any
      book-entry Notes represented by a master note registered in the name of
      DTC or its nominee, a copy of the executed Letter of Representations among
      the Issuer, the Issuing and Paying Agent and DTC and of the executed
      master note, (e) prior to the issuance of any Notes in physical form, a
      copy of such form (unless attached to this Agreement or the Issuing and
      Paying Agency Agreement), (f) confirmation of the then current ratings
      assigned to the Notes by each nationally recognized statistical ratings
      organization then rating the Notes and (g) such other certificates,
      opinions, letters and documents as the Dealer shall have reasonably
      requested.

              

      

       

       

      
        	
                 
      

              	
                3.7

              	
                The
      Issuer shall reimburse the Dealer for all of the Dealer’s reasonable
      out-of-pocket expenses related to this Agreement, including reasonable
      expenses incurred in connection with its preparation and negotiation, and
      the transactions contemplated hereby (including, but not limited to, the
      printing and distribution of the Private Placement Memorandum), and, if
      applicable, for the reasonable fees and out-of-pocket expenses of the
      Dealer’s counsel.

              

      

       

       

      
        	
                4.

              	
                Disclosure.

              

      

       

       

      
        	
                 
      

              	
                4.1

              	
                The
      Private Placement Memorandum and its contents (other than the Dealer
      Information) shall be the sole responsibility of the Issuer. The Private
      Placement Memorandum shall contain a statement expressly offering an
      opportunity for each prospective purchaser to ask questions of, and
      receive answers from, the Issuer concerning the offering of
      Notes

              

      

       

      
        
          
              

          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 7

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                and
      to obtain relevant additional information which the Issuer possesses or
      can acquire without unreasonable effort or
  expense.

              

      

       

       

      
        	
                 
      

              	
                4.2

              	
                The
      Issuer agrees to promptly furnish the Dealer the Company Information as it
      becomes available.

              

      

       

       

      
        	
                 
      

              	
                4.3

              	
                (1)  The Issuer
      further agrees to notify the Dealer promptly upon the occurrence of any
      event relating to or affecting the Issuer that would cause the Company
      Information then in existence to include an untrue statement of a material
      fact or to omit to state a material fact necessary in order to make the
      statements contained therein, in light of the circumstances under which
      they are made, not misleading.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                In
      the event that the Issuer gives the Dealer notice pursuant to Section
      4.3(a) and the Dealer notifies the Issuer that it then has Notes it is
      holding in inventory, (i) the Issuer agrees promptly to supplement or
      amend the Private Placement Memorandum so that the Private Placement
      Memorandum, as amended or supplemented, shall not contain an untrue
      statement of a material fact or omit to state a material fact necessary in
      order to make the statements therein, in light of the circumstances under
      which they were made, not misleading, and the Issuer shall make such
      supplement or amendment available to the Dealer prior to any further sale
      or resale of Notes or (ii) the Issuer shall repurchase any such Note held
      in inventory at a price equal to the face amount thereof discounted on a
      ratable basis based on the Issuer's market rate reflecting the remaining
      period to maturity in relation to the original
  term.

              

      

       

       

      
        	
                 
      

              	
                (c)

              	
                In
      the event that (i) the Issuer gives the Dealer notice pursuant to Section
      4.3(a), (ii) the Dealer does not notify the Issuer that it is then holding
      Notes in inventory and (iii) the Issuer chooses not to promptly amend or
      supplement the Private Placement Memorandum in the manner described in
      clause (b) above, then all solicitations and sales of Notes shall be
      suspended until such time as the Issuer has so amended or supplemented the
      Private Placement Memorandum, and made such amendment or supplement
      available to the Dealer.

              

      

       

       

      
        	
                 
      

              	
                (d)

              	
                Without
      limiting the generality of Section 4.3(a), the Issuer shall review, amend
      and supplement the Private Placement Memorandum on a periodic basis, but
      no less than at least once annually, to incorporate current financial
      information of the Issuer to the extent necessary to ensure that the
      information provided in the Private Placement Memorandum is accurate and
      complete.

              

      

       

       

      
        	
                5.

              	
                Indemnification
      and Contribution.

              

      

       

       

      
        	
                 
      

              	
                5.1

              	
                The
      Issuer will indemnify and hold harmless the Dealer, each individual,
      corporation, partnership, trust, association or other entity controlling
      the Dealer, any affiliate of the Dealer or any such controlling entity and
      their respective directors, officers, employees, partners, incorporators,
      shareholders, servants, trustees and agents (hereinafter the
      “Indemnitees”) against any and all liabilities, penalties, suits, causes
      of action, losses, damages, claims, costs and expenses (including, without
      limitation, fees and disbursements of counsel) or judgments of whatever
      kind or nature (each a “Claim”), imposed upon, incurred by or asserted
      against the Indemnitees arising out of or based upon (i) any allegation
      that the Private Placement Memorandum, the Company Information or any
      information provided by the Issuer to the Dealer included (as of any
      relevant time) or includes an untrue statement of a material fact or
      omitted (as of any relevant time) or omits to state any material fact
      necessary to make the statements therein, in light of the circumstances
      under which they were made, not misleading or (ii) arising out of or based
      upon the breach by the Issuer of any agreement, covenant
  or

              

      

       

      
        
          
             

          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 8

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                representation
      made in or pursuant to this Agreement.  This indemnification
      shall not apply to the extent that the Claim arises out of or is based
      upon Dealer Information or is determined to have resulted from an
      Indemnitee's gross negligence or willful
  misconduct.

              

      

       

       

      
        	
                 
      

              	
                5.2

              	
                Provisions
      relating to claims made for indemnification under this Section 5 are set
      forth on Exhibit B to this
Agreement.

              

      

       

       

      
        	
                 
      

              	
                5.3

              	
                In
      order to provide for just and equitable contribution in circumstances in
      which the indemnification provided for in this Section 5 is held to be
      unavailable or insufficient to hold harmless the Indemnitees, although
      applicable in accordance with the terms of this Section 5, the Issuer
      shall contribute to the aggregate costs incurred by the Dealer in
      connection with any Claim in the proportion of the respective economic
      interests of the Issuer and the Dealer; provided, however, that such
      contribution by the Issuer shall be in an amount such that the aggregate
      costs incurred by the Dealer do not exceed the aggregate of the
      commissions and fees earned by the Dealer hereunder with respect to the
      issue or issues of Notes to which such Claim relates. The respective
      economic interests shall be calculated by reference to the aggregate
      proceeds to the Issuer of the Notes issued hereunder and the aggregate
      commissions and fees earned by the Dealer
  hereunder.

              

      

       

       

      
        	
                6.

              	
                Definitions.

              

      

       

       

      
        	
                 
      

              	
                6.1

              	
                “Claim”
      shall have the meaning set forth in Section
5.1.

              

      

       

       

      
        	
                 
      

              	
                6.2

              	
                “Company
      Information” at any given time shall mean the Private Placement Memorandum
      and information incorporated by reference therein together with, to the
      extent applicable, (i) the Issuer’s most recent report on Form 10-K filed
      with the SEC and each report on Form 10-Q or 8-K filed by the Issuer with
      the SEC since the most recent Form 10-K, (ii) the Issuer’s most recent
      annual audited financial statements and each interim financial statement
      or report prepared subsequent thereto, if not included in item (i) above,
      (iii) the Issuer’s and its affiliates’ other publicly available recent
      reports, including, but not limited to, any publicly available filings or
      reports provided to their respective shareholders, (iv) any other
      information or disclosure prepared pursuant to Section 4.3 hereof and (v)
      any information prepared or approved by the Issuer for dissemination to
      investors or potential investors in the
Notes.

              

      

       

       

      
        	
                 
      

              	
                6.3

              	
                “Dealer
      Information” shall mean material concerning the Dealer provided by the
      Dealer in writing expressly for inclusion in the Private Placement
      Memorandum.

              

      

       

       

      
        	
                 
      

              	
                6.4

              	
                “Exchange
      Act” shall mean the U.S. Securities Exchange Act of 1934, as
      amended.

              

      

       

       

      
        	
                 
      

              	
                6.5

              	
                “Governmental
      Approval” shall mean all authorizations, consents, approvals, permits,
      licenses and exemptions of, registrations and filings with, and reports
      to, all Governmental Authorities.

              

      

       

       

      
        	
                 
      

              	
                6.6

              	
                “Governmental
      Authority” shall mean the government of the United States or any other
      nation, or of any political subdivision thereof, whether state or local,
      and any agency, authority, instrumentality, regulatory body, court,
      central bank or other entity exercising executive, legislative, judicial,
      taxing, regulatory or administrative powers or functions of or pertaining
      to government (including any supra-national bodies such as the European
      Union or the European Central
Bank).

              

      

       

       

      
        	
                 
      

              	
                6.7

              	
                “Indemnitee”
      shall have the meaning set forth in Section
5.1.

              

      

       

       

      
        	
                 
      

              	
                6.8

              	
                “Institutional
      Accredited Investor” shall mean an institutional investor that is an
      accredited investor within the meaning of Rule 501 under the Securities
      Act and that has such knowledge and experience in financial and business
      matters that it is capable of

              

      

       

      
        
          
          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 9

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                evaluating
      and bearing the economic risk of an investment in the Notes, including,
      but not limited to, a bank, as defined in Section 3(a)(2) of the
      Securities Act, or a savings and loan association or other institution, as
      defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its
      individual or fiduciary capacity.

              

      

       

       

      
        	
                 
      

              	
                6.9

              	
                “Issuing
      and Paying Agency Agreement” shall mean the issuing and paying agency
      agreement described on the cover page of this Agreement, as such agreement
      may be amended or supplemented from time to
  time.

              

      

       

       

      
        	
                 
      

              	
                6.10

              	
                “Issuing
      and Paying Agent” shall mean the party designated as such on the cover
      page of this Agreement, as issuing and paying agent under the Issuing and
      Paying Agency Agreement, or any successor thereto in accordance with the
      Issuing and Paying Agency
Agreement.

              

      

       

       

      
        	
                 
      

              	
                6.11

              	
                “Material
      Adverse Effect” shall mean a material adverse effect on (a) the business,
      operations or financial condition of the Issuer and its subsidiaries taken
      as a whole or (b) the ability of the Issuer to perform its obligations
      under this Agreement, the Notes and the Issuing and Paying Agency
      Agreement.

              

      

       

       

      
        	
                 
      

              	
                6.12

              	
                “Non-bank
      fiduciary or agent” shall mean a fiduciary or agent other than (a) a bank,
      as defined in Section 3(a)(2) of the Securities Act, or (b) a savings and
      loan association, as defined in Section 3(a)(5)(A) of the Securities
      Act.

              

      

       

       

      
        	
                 
      

              	
                6.13

              	
                “Person”
      shall mean any natural person, corporation, limited liability company,
      trust, joint venture, association, company, partnership, governmental
      authority or other entity.

              

      

       

       

      
        	
                 
      

              	
                6.14

              	
                “Private
      Placement Memorandum” shall mean offering materials prepared in accordance
      with Section 4 (including materials referred to therein or incorporated by
      reference therein, if any) provided to purchasers and prospective
      purchasers of the Notes, and shall include amendments and supplements
      thereto which may be prepared from time to time in accordance with this
      Agreement (other than any amendment or supplement that has been completely
      superseded by a later amendment or
supplement).

              

      

       

       

      
        	
                 
      

              	
                6.15

              	
                “Qualified
      Institutional Buyer” shall have the meaning assigned to that term in Rule
      144A under the Securities Act.

              

      

       

       

      
        	
                 
      

              	
                6.16

              	
                “Rule
      144A” shall mean Rule 144A under the Securities
  Act.

              

      

       

       

      
        	
                 
      

              	
                6.17

              	
                “SEC”
      shall mean the U.S. Securities and Exchange
  Commission.

              

      

       

       

      
        	
                 
      

              	
                6.18

              	
                “Securities
      Act” shall mean the U.S. Securities Act of 1933, as
    amended.

              

      

       

       

      
        	
                 
      

              	
                6.19

              	
                “Sophisticated
      Individual Accredited Investor” shall mean an individual who (a) is an
      accredited investor within the meaning of Regulation D under the
      Securities Act and (b) based on his or her pre-existing relationship with
      the Dealer, is reasonably believed by the Dealer to be a sophisticated
      investor (i) possessing such knowledge and experience (or represented by a
      fiduciary or agent possessing such knowledge and experience) in financial
      and business matters that he or she is capable of evaluating and bearing
      the economic risk of an investment in the Notes and (ii) having not less
      than $5 million in investments (as defined, for purposes of this section,
      in Rule 2a51-1 under the Investment Company Act of 1940, as
      amended).

              

      

       

       

      
        	
                7.

              	
                General

              

      

       

       

      
        	
                 
      

              	
                7.1

              	
                Unless
      otherwise expressly provided herein, all notices under this Agreement to
      parties hereto shall be in writing and shall be effective when received at
      the address of the respective party set forth in the Addendum to this
      Agreement.

              

      

       

      
        
          
             

          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 10

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                7.2

              	
                This
      Agreement shall be governed by and construed in accordance with the laws
      of the State of New York.

              

      

       

       

      
        	
                 
      

              	
                7.3

              	
                The
      Issuer agrees that any suit, action or proceeding brought by the Issuer
      against the Dealer in connection with or arising out of this Agreement or
      the Notes or the offer and sale of the Notes shall be brought solely in
      the United States federal courts located in the Borough of Manhattan or
      the courts of the State of New York located in the Borough of Manhattan.
      EACH OF THE DEALER AND THE ISSUER WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY
      SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY.

              

      

       

       

      
        	
                 
      

              	
                7.4

              	
                This
      Agreement may be terminated, at any time, by the Issuer, upon one business
      day’s prior notice to such effect to the Dealer, or by the Dealer upon one
      business day’s prior notice to such effect to the Issuer. Any such
      termination, however, shall not affect the obligations of the Issuer under
      Sections 3.7, 5 and 7.3 hereof or the respective representations,
      warranties, agreements, covenants, rights or responsibilities of the
      parties made or arising prior to the termination of this
      Agreement.

              

      

       

       

      
        	
                 
      

              	
                7.5

              	
                This
      Agreement is not assignable by either party hereto without the written
      consent of the other party; provided, however, with reasonably prompt
      notice to the Issuer, the Dealer may assign its rights and obligations
      under this Agreement to any affiliate of the
  Dealer.

              

      

       

       

      
        	
                 
      

              	
                7.6

              	
                This
      Agreement may be signed in any number of counterparts, each of which shall
      be an original, with the same effect as if the signatures thereto and
      hereto were upon the same
instrument.

              

      

       

       

      
        	
                 
      

              	
                7.7

              	
                This
      Agreement is for the exclusive benefit of the parties hereto, and their
      respective permitted successors and assigns hereunder, and shall not be
      deemed to give any legal or equitable right, remedy or claim to any other
      person whatsoever.

              

      

       

       

       

      [Signature
Page Follows]

       

      
        
          
              

          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 11

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Dealer Agreement to be
executed as of the date and year first above written.

       

      
        	
                BLACKROCK,
      INC., as Issuer

              	
                BARCLAYS
      CAPITAL INC., as Dealer

              
	 	 
	
                By:

              	 
      /s/ Ann Marie Petach	 
      	
                By:

              	 	 
      

      

      

      
        	
                Name:  Ann
      Marie Petach

              	
                Name:

              	 	 
      

      

      

      
        	
                Title:  Managing
      Director & Chief Financial Officer

              	
                Title:

              	 	 
      

      

      

      
        
          
             

          

           

        

        
          ■  Commercial
Paper Dealer Agreement 4(2) Program  ■ 12

          
            

          

        

        
           

        

      

       

      Addendum

       

      The
following additional clauses shall apply to the Agreement and be deemed a part
thereof.

       

       

      
        	
                1.

              	
                The
      other dealers referred to in clause (b) of Section 1.2 of the Agreement
      are Citigroup
      Global Markets Inc., Credit Suisse Securities (USA) LLC and Banc of
      America Securities LLC.

              

      

       

      
        	
                2.

              	
                The
      addresses of the respective parties for purposes of notices under Section
      7.1 are as follows:

              

      

       

       

      For
the Issuer:

       

      Address:  40
East 52nd
Street, New York, New York  10022

       

      Attention:  Amy
Engel

       

      Telephone
number:  (212) 810-5547

       

      Fax
number:  (212) 810-8765

       

      For
the Dealer:

       

      Address:  745
7th
Avenue, 2nd
Floor, New York, New York  10019

       

      Attention:  Joann
Petrossian

       

      Telephone
number:  (212) 526-0731

       

      Fax
number:  (646) 758-4012

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

       

      Model
Opinion of Counsel to Issuer1

       

      [Date]

       

      [Name
and Address of Dealer]

       

       

      Ladies
and Gentlemen:

       

       

      We
have acted as counsel to                            ,
a                            
corporation (the “Issuer”), in connection with the proposed offering and sale by
the Issuer in the United States of commercial paper in the form of short-term
promissory notes (the “Notes”).

       

       

      In
our capacity as such counsel, we have examined a specimen form of Note, an
executed copy of the Commercial Paper Dealer Agreement dated                            ,
_____ (the “Agreement”) between the Issuer and [Name of Dealer] (the “Dealer”),
and the Issuing and Paying Agency Agreement dated _____________ , _____ (the
“Issuing and Paying Agency Agreement”) between the Issuer and _____, as issuing
and paying agent (the “Issuing and Paying Agent”) as well as originals, or
copies certified or otherwise identified to our satisfaction, of such other
records and documents as we have deemed necessary as a basis for the opinions
expressed below. In such examination, we have assumed the genuineness of all
documents submitted to us as originals, and the conformity to the originals of
all documents submitted to us as copies.

       

       

      Capitalized
terms used herein without definition are used as defined in the
Agreement.

       

      Based
upon the foregoing, it is our opinion that:

       

      
        	
                 
      

              	
                1.

              	
                The
      Issuer is a corporation duly organized, validly existing and in good
      standing under the laws of the state of                            
      and has all the requisite power and authority to execute, deliver and
      perform its obligations under the Notes, the Agreement and the Issuing and
      Paying Agency Agreement.

              

      

       

       

      
        	
                 
      

              	
                2.

              	
                Each
      of the Agreement and the Issuing and Paying Agency Agreement has been duly
      authorized, executed and delivered by the Issuer and constitutes a legal,
      valid and binding obligation of the Issuer enforceable against the Issuer
      in accordance with its terms subject to applicable bankruptcy, insolvency
      and similar laws affecting creditors’ rights generally, and subject, as to
      enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding in equity or at law), and except as
      rights under the Agreement to indemnity and contribution may be limited by
      federal or state laws.

              

      

       

       

      
        	
                 
      

              	
                3.

              	
                The
      Notes have been duly authorized, and when issued as provided in the
      Issuing and Paying Agency Agreement, will be duly and validly issued and
      will constitute legal, valid and binding obligations of the Issuer
      enforceable against the Issuer in accordance with their terms, subject to
      applicable bankruptcy, insolvency and similar laws affecting creditors’
      rights

              

      

       

      

        

      
        
          	
                  1

                	
                  Set
      forth below are the operative provisions on which the Dealer will
      generally expect a legal opinion. Parties should recognize that there may
      be additions to the Dealer’s opinion request, and variations as to the
      opinion language, depending on the details of the transaction and the
      differing opinion practices of law firms; it may also be necessary to
      split the opinion between two or more counsel where no one counsel is in a
      position to opine as to all subjects or in all relevant
      jurisdictions.

                

        

         

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                generally,
      and subject, as to enforceability, to general principles of equity
      (regardless of whether enforcement is sought in a proceeding in equity or
      at law).

              

      

       

       

      
        	
                 
      

              	
                4.

              	
                The
      issuance and sale of Notes under the circumstances contemplated by the
      Agreement and the Issuing and Paying Agency Agreement do not require
      registration of the Notes under the Securities Act of 1933, as amended,
      pursuant to the exemption from registration contained in Section 4(2)
      thereof [and Regulation D thereunder], and do not require compliance with
      any provision of the Trust Indenture Act of 1939, as amended; and the
      Notes will rank at least pari passu with all other unsecured and
      unsubordinated indebtedness of the
Issuer.

              

      

       

       

      
        	
                 
      

              	
                5.

              	
                [Except
      as provided in Section 1.6(j) of the Agreement,].2 No consent or action of, or filing or
      registration with, any governmental or public regulatory body or
      authority, including the Securities and Exchange Commission, is required
      to authorize, or is otherwise required in connection with the execution,
      delivery or performance of, the Agreement, the Notes or the Issuing and
      Paying Agency Agreement, except as may be required by the securities or
      Blue Sky laws of the various states in connection with the offer and sale
      of the Notes.

              

      

       

       

      
        	
                 
      

              	
                6.

              	
                Neither
      the execution and delivery of the Agreement and the Issuing and Paying
      Agency Agreement, nor the issuance of the Notes in accordance with the
      Issuing and Paying Agency Agreement, nor the fulfillment of or compliance
      with the terms and provisions of either thereof by the Issuer, will (i)
      result in the creation or imposition of any mortgage, lien, charge or
      encumbrance of any nature whatsoever upon any of the properties or assets
      of the Issuer, or (ii) violate or result in a breach or default under any
      of the terms of the Issuer’s charter documents or by-laws, any contract or
      instrument to which the Issuer is a party or by which it or its property
      is bound, or any law or regulation, or any order, writ, injunction or
      decree of any court or government instrumentality, to which the Issuer is
      subject or by which it or its property is
bound.

              

      

       

       

      
        	
                 
      

              	
                7.

              	
                There
      is no litigation or governmental proceeding pending, or to the knowledge
      of the Issuer threatened, against or affecting the Issuer or any of its
      subsidiaries which might result in a material adverse change in the
      condition (financial or otherwise), operations or business prospects of
      the Issuer or the ability of the Issuer to perform its obligations under
      the Agreement, the Notes or the Issuing and Paying Agency
      Agreement.

              

      

       

       

      
        	
                 
      

              	
                8.

              	
                The
      Issuer is not an “investment company” within the meaning of the Investment
      Company Act of 1940, as amended.3

              

      

       

       

      
        	
                 
      

              	
                9.

              	
                As
      a condition to the admissibility in evidence of the Agreement, the Issuing
      and Paying Agency Agreement or the Notes in [foreign jurisdiction], it is
      not necessary that the Agreement, the Issuing and Paying Agency Agreement
      or the Notes be filed or recorded with any court or other authority. [All
      documentary evidence in a foreign language to be submitted 

                 

              

      

       

       

      
        

        
          
            	
                    2

                  	
                    To
      be added where the parties wish to fully rely on the safe harbor in Rule
      506. See Guidance Note relating to Section 1.6 generally and paragraph 2
      in the Addendum.

                  

          

            

        

        
          
            	
                    3

                  	
                    The
      phrase “or an entity controlled by an investment company” is not included
      in this paragraph or in the representation in Section 2.9 of the
      Agreement. See Guidance Note to Section 2.9 for a description of the
      limited circumstances where this phrase should be
  included.

                  

          

           

           

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

         

        
          	 	 	to a court in
      [foreign jurisdiction] must be in, or translated into, the [foreign
      jurisdiction] language and certified by a duly qualified official
      translator in [foreign jurisdiction]].4

        

         

      

       

      
        	
                 
      

              	
                10.

              	
                Under
      the laws of [foreign jurisdiction], neither the Issuer nor any of its
      revenues, assets or properties has any right of immunity from service of
      process or from the jurisdiction of competent courts of [foreign
      jurisdiction] or the United States or the State of New York in connection
      with any suit, action or proceeding, attachment prior to judgment,
      attachment in aid of execution of a judgment, or execution of a judgment
      or from any other legal process with respect to its obligations under the
      Agreement, the Issuing and Paying Agency Agreement or the
      Notes.

              

      

       

       

      
        	
                 
      

              	
                11.

              	
                The
      Issuer is permitted to make all payments under the Agreement, the Issuing
      and Paying Agency Agreement and the Notes (to holders of the Notes that
      are non-residents of [foreign jurisdiction]), free and clear of and
      without deduction or withholding for or on account of any taxes or other
      governmental charges imposed by [foreign jurisdiction]. There is no stamp
      or documentary tax or other charge imposed by any governmental agency
      having jurisdiction over the Issuer in connection with the execution,
      delivery, issuance, payment, performance, enforcement or introduction into
      evidence in a court of [foreign jurisdiction] of the Agreement, the
      Issuing and Paying Agency Agreement or any
Note.

              

      

       

       

      
        	
                 
      

              	
                12.

              	
                The
      choice of New York law to govern the Agreement, the Issuing and Paying
      Agency Agreement and the Notes is, under the laws of [foreign
      jurisdiction], a valid, effective and irrevocable choice of
      law.

              

      

       

       

      
        	
                 
      

              	
                13.

              	
                The
      submission by the Issuer, in the Agreement, to the jurisdiction of the
      courts of the United States District Court and the State of New York
      located in the Borough of Manhattan is valid and binding upon the Issuer
      under the laws of [foreign
jurisdiction].

              

      

       

       

      
        	
                 
      

              	
                14.

              	
                Any
      final judgment rendered by any Federal or State court of competent
      jurisdiction located in the State of New York in an action to enforce the
      obligations of the Issuer under the Agreement, the Issuing and Paying
      Agency Agreement or the Notes is capable of being enforced in the courts
      of [foreign jurisdiction].

              

      

       

       

      This
opinion may be delivered to the Issuing and Paying Agent, each holder from time
to time of Notes and any nationally recognized rating agency (in connection with
the rating of the Notes), each of which may rely on this opinion to the same
extent as if such opinion were addressed to it.

       

       

      Very
truly yours,

       

       

      
        

      

      
        
          	
                  4

                	
                  Paragraphs
      9 through 14 will only be necessary where the Issuer is a foreign
      entity.

                

        

         

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      Exhibit
A

       

      Form
of Legend for Private Placement Memorandum and Notes

       

      THE
NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY
BE MADE ONLY IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  BY
ITS ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT (I) IT
HAS BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE ISSUER
AND THE NOTES, (II) IT IS ACQUIRING SUCH NOTES FOR INVESTMENT PURPOSES ONLY AND
IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION THEREOF, (III) IT
HAS NOT PURCHASED THE NOTES AS A RESULT OF ANY GENERAL SOLICITATION OR
ADVERTISING (AS THOSE TERMS ARE USED IN REGULATION D UNDER THE ACT) OR IN ANY
MANNER INVOLVING A PUBLIC OFFERING WITHIN THE MEANING OF SECTION 4(2) OF THE
ACT, (IV) IT IS NOT RELYING ON ANY COMMUNICATION (WRITTEN OR ORAL) OF THE ISSUER
AS INVESTMENT ADVICE OR AS A RECOMMENDATION TO PURCHASE THE NOTES, AND (V) IT IS
EITHER (A)(1) AN INSTITUTIONAL INVESTOR OR SOPHISTICATED INDIVIDUAL INVESTOR
THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a) UNDER THE ACT
(AN “INSTITUTIONAL ACCREDITED INVESTOR” OR “SOPHISTICATED INDIVIDUAL ACCREDITED
INVESTOR”, RESPECTIVELY) AND WHICH (i) POSSESSES SUCH KNOWLEDGE AND EXPERIENCE
IN FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS CAPABLE OF EVALUATING AND
BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE NOTES AND (ii) HAS NOT LESS
THAN $5 MILLION IN INVESTMENTS  AND (2) PURCHASING NOTES FOR (i) ITS
OWN ACCOUNT, (ii) A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE ACT) OR A SAVINGS
AND LOAN ASSOCIATION OR OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF
THE ACT) ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR (iii) A FIDUCIARY OR
AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION) PURCHASING NOTES
FOR ONE OR MORE ACCOUNTS EACH OF WHICH ACCOUNTS IS SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR OR SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR; OR (B) A
QUALIFIED INSTITUTIONAL BUYER (“QIB”) WITHIN THE MEANING OF RULE 144A UNDER THE
ACT THAT IS ACQUIRING NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS,
EACH OF WHICH ACCOUNTS IS A QIB; AND THE PURCHASER ACKNOWLEDGES THAT IT IS AWARE
THAT THE SELLER MAY RELY UPON THE EXEMPTION FROM THE REGISTRATION PROVISIONS OF
SECTION 5 OF THE ACT PROVIDED BY RULE 144A.  BY ITS ACCEPTANCE OF A
NOTE, THE PURCHASER THEREOF SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR
OTHER TRANSFER THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE ACT, (1) TO THE ISSUER OR TO A PLACEMENT AGENT DESIGNATED
BY THE ISSUER AS A PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY, THE “PLACEMENT
AGENTS”), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH NOTE, (2)
THROUGH A PLACEMENT AGENT TO AN INSTITUTIONAL ACCREDITED INVESTOR, SOPHISTICATED
INDIVIDUAL ACCREDITED INVESTOR OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT
MEETS THE REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF
$250,000.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      Exhibit
B

       

      Further
Provisions Relating to Indemnification

       

      
        	
                (a)

              	
                The
      Issuer agrees to reimburse each Indemnitee for all expenses (including
      reasonable fees and disbursements of internal and external counsel) as
      they are incurred by it in connection with investigating or defending any
      loss, claim, damage, liability or action in respect of which
      indemnification may be sought under Section 5 of the Agreement (whether or
      not it is a party to any such
proceedings).

              

      

       

       

      
        	
                (b)

              	
                Promptly
      after receipt by an Indemnitee of notice of the existence of a Claim, such
      Indemnitee will, if a claim in respect thereof is to be made against the
      Issuer, notify the Issuer in writing of the existence thereof; provided
      that (i) the omission so to notify the Issuer will not relieve the Issuer
      from any liability which it may have hereunder unless and except to the
      extent it did not otherwise learn of such Claim and such failure results
      in the forfeiture by the Issuer of substantial rights and defenses, and
      (ii) the omission so to notify the Issuer will not relieve it from
      liability which it may have to an Indemnitee otherwise than on account of
      this indemnity agreement. In case any such Claim is made against any
      Indemnitee and it notifies the Issuer of the existence thereof, the Issuer
      will be entitled to participate therein, and to the extent that it may
      elect by written notice delivered to the Indemnitee, to assume the defense
      thereof, with counsel reasonably satisfactory to such Indemnitee; provided
      that if the defendants in any such Claim include both the Indemnitee and
      the Issuer, and the Indemnitee shall have concluded that there may be
      legal defenses available to it which are different from or additional to
      those available to the Issuer, the Issuer shall not have the right to
      direct the defense of such Claim on behalf of such Indemnitee, and the
      Indemnitee shall have the right to select separate counsel to assert such
      legal defenses on behalf of such Indemnitee. Upon receipt of notice from
      the Issuer to such Indemnitee of the Issuer’s election so to assume the
      defense of such Claim and approval by the Indemnitee of counsel, the
      Issuer will not be liable to such Indemnitee for expenses incurred
      thereafter by the Indemnitee in connection with the defense thereof (other
      than reasonable costs of investigation) unless (i) the Indemnitee shall
      have employed separate counsel in connection with the assertion of legal
      defenses in accordance with the proviso to the next preceding sentence (it
      being understood, however, that the Issuer shall not be liable for the
      expenses of more than one separate counsel (in addition to any local
      counsel in the jurisdiction in which any Claim is brought), approved by
      the Dealer, representing the Indemnitee who is party to such Claim), (ii)
      the Issuer shall not have employed counsel reasonably satisfactory to the
      Indemnitee to represent the Indemnitee within a reasonable time after
      notice of existence of the Claim or (iii) the Issuer has authorized in
      writing the employment of counsel for the Indemnitee. The indemnity,
      reimbursement and contribution obligations of the Issuer hereunder shall
      be in addition to any other liability the Issuer may otherwise have to an
      Indemnitee and shall be binding upon and inure to the benefit of any
      successors, assigns, heirs and personal representatives of the Issuer and
      any Indemnitee. The Issuer agrees that without the Dealer’s prior written
      consent, it will not settle, compromise or consent to the entry of any
      judgment in any Claim in respect of which indemnification may be sought
      under the indemnification provision of the Agreement (whether or not the
      Dealer or any other Indemnitee is an actual or potential party to such
      Claim), unless such settlement, compromise or consent (i) includes an
      unconditional release of each Indemnitee from all liability arising out of
      such Claim and (ii) does not include a statement as to or an admission of
      fault, culpability or failure to act, by or on behalf of any
      Indemnitee.

              

      

       

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      Exhibit
C

       

      Statement
of Terms for Interest – Bearing Commercial Paper Notes of [Name of
Issuer]

       

      THE
PROVISIONS SET FORTH BELOW ARE QUALIFIED TO THE EXTENT APPLICABLE BY THE
TRANSACTION SPECIFIC [PRICING] [PRIVATE PLACEMENT MEMORANDUM] SUPPLEMENT (THE
“SUPPLEMENT”) (IF ANY) SENT TO EACH PURCHASER AT THE TIME OF THE
TRANSACTION.

       

       

      
        	
                 
      

              	
                1.

              	
                 General. (a)
      The obligations of the Issuer to which these terms apply (each a “Note”)
      are represented by one or more Master Notes (each, a “Master Note”) issued
      in the name of (or of a nominee for) The Depository Trust Company (“DTC”),
      which Master Note includes the terms and provisions for the Issuer’s
      Interest-Bearing Commercial Paper Notes that are set forth in this
      Statement of Terms, since this Statement of Terms constitutes an integral
      part of the Underlying Records as defined and referred to in the Master
      Note.

              

      

       

       

      (b)
“Business Day” means any day other than a Saturday or Sunday that is neither a
legal holiday nor a day on which banking institutions are authorized or required
by law, executive order or regulation to be closed in New York City and, with
respect to LIBOR Notes (as defined below) is also a London Business Day. “London
Business Day” means, a day, other than a Saturday or Sunday, on which dealings
in deposits in U.S. dollars are transacted in the London interbank
market.

       

       

      
        	
                 
      

              	
                2.

              	
                Interest. (a)
      Each Note will bear interest at a fixed rate (a “Fixed Rate Note”) or at a
      floating rate (a “Floating Rate
Note”).

              

      

       

       

      (b) The
Supplement sent to each holder of such Note will describe the following terms:
(i) whether such Note is a Fixed Rate Note or a Floating Rate Note and whether
such Note is an Original Issue Discount Note (as defined below); (ii) the date
on which such Note will be issued (the “Issue Date”); (iii) the Stated Maturity
Date (as defined below); (iv) if such Note is a Fixed Rate Note, the rate per
annum at which such Note will bear interest, if any, and the Interest Payment
Dates; (v) if such Note is a Floating Rate Note, the Base Rate, the Index
Maturity, the Interest Reset Dates, the Interest Payment Dates and the Spread
and/or Spread Multiplier, if any (all as defined below), and any other terms
relating to the particular method of calculating the interest rate for such
Note; and (vi) any other terms applicable specifically to such Note. “Original
Issue Discount Note” means a Note which has a stated redemption price at the
Stated Maturity Date that exceeds its Issue Price by more than a specified de
minimis amount and which the Supplement indicates will be an “Original Issue
Discount Note”.

       

       

      (c) Each
Fixed Rate Note will bear interest from its Issue Date at the rate per annum
specified in the Supplement until the principal amount thereof is paid or made
available for payment. Interest on each Fixed Rate Note will be payable on the
dates specified in the Supplement (each an “Interest Payment Date” for a Fixed
Rate Note) and on the Maturity Date (as defined below). Interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day
months.

       

       

      If
any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls on a
day that is not a Business Day, the required payment of principal, premium, if
any, and/or interest will be payable on the next succeeding Business Day, and no
additional interest will accrue in respect of the payment made on that next
succeeding Business Day.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

       

      (d)
The interest rate on each Floating Rate Note for each Interest Reset Period (as
defined below) will be determined by reference to an interest rate basis (a
“Base Rate”) plus or minus a number of basis points (one basis point equals
one-hundredth of a percentage point) (the “Spread”), if any, and/or multiplied
by a certain percentage (the “Spread Multiplier”), if any, until the principal
thereof is paid or made available for payment. The Supplement will designate
which of the following Base Rates is applicable to the related Floating Rate
Note: (a) the CD Rate (a “CD Rate Note”), (b) the Commercial Paper Rate (a
“Commercial Paper Rate Note”), (c) the Federal Funds Rate (a “Federal Funds Rate
Note”), (d) LIBOR (a “LIBOR Note”), (e) the Prime Rate (a “Prime Rate Note”),
(f) the Treasury Rate (a “Treasury Rate Note”) or (g) such other Base Rate as
may be specified in such Supplement.

       

       

      The
rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly or semi-annually (the “Interest Reset Period”). The date or
dates on which interest will be reset (each an “Interest Reset Date”) will be,
unless otherwise specified in the Supplement, in the case of Floating Rate Notes
which reset daily, each Business Day, in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, the Tuesday of each week; in the
case of Floating Rate Notes that reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December; and in the case of Floating
Rate Notes that reset semiannually, the third Wednesday of the two months
specified in the Supplement. If any Interest Reset Date for any Floating Rate
Note is not a Business Day, such Interest Reset Date will be postponed to the
next day that is a Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. Interest on each Floating
Rate Note will be payable monthly, quarterly or semiannually (the “Interest
Payment Period”) and on the Maturity Date. Unless otherwise specified in the
Supplement, and except as provided below, the date or dates on which interest
will be payable (each an “Interest Payment Date” for a Floating Rate Note) will
be, in the case of Floating Rate Notes with a monthly Interest Payment Period,
on the third Wednesday of each month; in the case of Floating Rate Notes with a
quarterly Interest Payment Period, on the third Wednesday of March, June,
September and December; and in the case of Floating Rate Notes with a semiannual
Interest Payment Period, on the third Wednesday of the two months specified in
the Supplement. In addition, the Maturity Date will also be an Interest Payment
Date.

       

       

      If
any Interest Payment Date for any Floating Rate Note (other than an Interest
Payment Date occurring on the Maturity Date) would otherwise be a day that is
not a Business Day, such Interest Payment Date shall be postponed to the next
day that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the Maturity Date of a
Floating Rate Note falls on a day that is not a Business Day, the payment of
principal and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
maturity.

       

       

      Interest
payments on each Interest Payment Date for Floating Rate Notes will include
accrued interest from and including the Issue Date or from and including the
last date in respect of which interest has been paid, as the case may be, to,
but excluding, such Interest Payment Date. On the Maturity Date, the interest
payable on a Floating Rate Note will include interest accrued to, but excluding,
the Maturity Date. Accrued interest will be calculated by multiplying the
principal amount of a Floating Rate Note by an accrued interest factor. This
accrued interest factor will be

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      computed
by adding the interest factors calculated for each day in the period for which
accrued interest is being calculated. The interest factor (expressed as a
decimal) for each such day will be computed by dividing the interest rate
applicable to such day by 360, in the cases where the Base Rate is the CD Rate,
Commercial Paper Rate, Federal Funds Rate, LIBOR or Prime Rate, or by the actual
number of days in the year, in the case where the Base Rate is the Treasury
Rate. The interest rate in effect on each day will be (i) if such day is an
Interest Reset Date, the interest rate with respect to the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date, or
(ii) if such day is not an Interest Reset Date, the interest rate with respect
to the Interest Determination Date pertaining to the next preceding Interest
Reset Date, subject in either case to any adjustment by a Spread and/or a Spread
Multiplier.

       

       

      The
“Interest Determination Date” where the Base Rate is the CD Rate or the
Commercial Paper Rate will be the second Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is the Federal
Funds Rate or the Prime Rate will be the Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is LIBOR will be
the second London Business Day next preceding an Interest Reset Date. The
Interest Determination Date where the Base Rate is the Treasury Rate will be the
day of the week in which such Interest Reset Date falls when Treasury Bills are
normally auctioned. Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is held
on the following Tuesday or the preceding Friday. If an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding
week.

       

       

      The
“Index Maturity” is the period to maturity of the instrument or obligation from
which the applicable Base Rate is calculated.

       

       

      The
“Calculation Date,” where applicable, shall be the earlier of (i) the tenth
calendar day following the applicable Interest Determination Date or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity
Date.

       

       

      All
times referred to herein reflect New York City time, unless otherwise
specified.

       

       

      The
Issuer shall specify in writing to the Issuing and Paying Agent which party will
be the calculation agent (the “Calculation Agent”) with respect to the Floating
Rate Notes. The Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate which will become effective on the next
Interest Reset Date with respect to such Floating Rate Note to the Issuing and
Paying Agent as soon as the interest rate with respect to such Floating Rate
Note has been determined and as soon as practicable after any change in such
interest rate.

       

       

      All
percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards. For example,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655). All dollar
amounts used in or resulting from any calculation on Floating Rate Notes will be
rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a
foreign currency, to the nearest unit (with one-half cent or unit being rounded
upwards).

       

       

      CD
Rate Notes

       

      “CD
Rate” means the rate on any Interest Determination Date for negotiable
certificates of deposit having the Index Maturity as published by the Board of
Governors of the Federal Reserve System (the “FRB”) in “Statistical Release
H.15(519), Selected Interest Rates” or any successor publication of the FRB
(“H.15(519)”) under the heading “CDs (Secondary Market)”.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      If
the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation
Date, the CD Rate will be the rate on such Interest Determination Date set forth
in the daily update of H.15(519), available through the world wide website of
the FRB at http://www.federalreserve.gov/releases/h15/Update,
or any successor site or publication or other recognized electronic source used
for the purpose of displaying the applicable rate (“H.15 Daily Update”) under
the caption “CDs (Secondary Market)”.

       

       

      If
such rate is not published in either H.15(519) or H.15 Daily Update by 3:00 p.m.
on the Calculation Date, the Calculation Agent will determine the CD Rate to be
the arithmetic mean of the secondary market offered rates as of 10:00 a.m. on
such Interest Determination Date of three leading nonbank dealers5 in negotiable U.S. dollar certificates of
deposit in New York City selected by the Calculation Agent for negotiable U.S.
dollar certificates of deposit of major United States money center banks of the
highest credit standing in the market for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity in the denomination of
$5,000,000.

       

       

      If
the dealers selected by the Calculation Agent are not quoting as set forth
above, the CD Rate will remain the CD Rate then in effect on such Interest
Determination Date.

       

       

      Commercial
Paper Rate Notes

       

      “Commercial
Paper Rate” means the Money Market Yield (calculated as described below) of the
rate on any Interest Determination Date for commercial paper having the Index
Maturity, as published in H.15(519) under the heading “Commercial
Paper-Nonfinancial”.

       

       

      If
the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation
Date, then the Commercial Paper Rate will be the Money Market Yield of the rate
on such Interest Determination Date for commercial paper of the Index Maturity
as published in H.15 Daily Update under the heading “Commercial
Paper-Nonfinancial”.

       

       

      If
by 3:00 p.m. on such Calculation Date such rate is not published in either
H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the
Commercial Paper Rate to be the Money Market Yield of the arithmetic mean of the
offered rates as of 11:00 a.m. on such Interest

       

       

      Determination
Date of three leading dealers of U.S. dollar commercial paper in New York City
selected by the Calculation Agent for commercial paper of the Index Maturity
placed for an industrial issuer whose bond rating is “AA,” or the equivalent,
from a nationally recognized statistical rating organization.

       

       

      If
the dealers selected by the Calculation Agent are not quoting as mentioned
above, the Commercial Paper Rate with respect to such Interest Determination
Date will remain the Commercial Paper Rate then in effect on such Interest
Determination Date.

       

       

      “Money
Market Yield” will be a yield calculated in accordance with the following
formula:

       

      

       

      
      

      

        

      
        
          	
                  5

                	
                  Such
      nonbank dealers referred to in this Statement of Terms may include
      affiliates of the Dealer.

                

        

      

       

      
        

        
          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

        

      

       

       

      where
“D” refers to the applicable per annum rate for commercial paper quoted on a
bank discount basis and expressed as a decimal and “M” refers to the actual
number of days in the interest period for which interest is being
calculated.

       

       

      Federal
Funds Rate Notes

       

      “Federal
Funds Rate” means the rate on any Interest Determination Date for Federal Funds
as published in Reuters (or any successor service) on page FEDFUNDS1 under the
heading “EFFECT” (or any other page as may replace the specified page on that
service) (“Reuters Page FEDFUNDS1”).

       

       

      If
the above rate does not appear on Reuters Page FEDFUNDS1 or is not so published
by 3:00 p.m. on the Calculation Date, the Federal Funds Rate will be the rate on
such Interest Determination Date as published in H.15 Daily Update under the
heading “Federal Funds/(Effective)”.

       

       

      If
such rate is not published as described above by 3:00 p.m. on the Calculation
Date, the Calculation Agent will determine the Federal Funds Rate to be the
arithmetic mean of the rates for the last transaction in overnight U.S. dollar
federal funds arranged by each of three leading brokers of Federal Funds
transactions in New York City selected by the Calculation Agent prior to 9:00
a.m. on such Interest Determination Date.

       

       

      If
the brokers selected by the Calculation Agent are not quoting as mentioned
above, the Federal Funds Rate will remain the Federal Funds Rate then in effect
on such Interest Determination Date.

       

       

      LIBOR
Notes

       

      The
London Interbank offered rate (“LIBOR”) means, with respect to any Interest
Determination Date, the rate for deposits in U.S. dollars having the Index
Maturity that appears on the Designated LIBOR Page as of 11:00 a.m., London
time, on such Interest Determination Date.

       

       

      If
no rate appears, LIBOR will be determined on the basis of the rates at
approximately 11:00 a.m., London time, on such Interest Determination Date at
which deposits in U.S. dollars are offered to prime banks in the London
interbank market by four major banks in such market selected by the Calculation
Agent for a term equal to the Index Maturity and in principal amount equal to an
amount that in the Calculation Agent’s judgment is representative for a single
transaction in U.S. dollars in such market at such time (a “Representative
Amount”). The Calculation Agent will request the principal London office of each
of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR for such interest period will
be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in New
York City, on such Interest Determination Date by three major banks in New York
City, selected by the Calculation Agent, for loans in U.S. dollars to leading
European banks, for a term equal to the Index Maturity and in a Representative
Amount; provided, however, that if fewer than three banks so selected by the
Calculation Agent are providing such quotations, the then existing LIBOR rate
will remain in effect for such Interest Payment Period.

       

       

      “Designated
LIBOR Page” means Reuters Screen LIBOR01 Page or any replacement page or pages
on which London interbank rates of major banks for the Index Currency are
displayed.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      Prime
Rate Notes

       

      “Prime
Rate” means the rate on any Interest Determination Date as published in
H.15(519) under the heading “Bank Prime Loan”.

       

       

      If
the above rate is not published in H.15(519) prior to 3:00 p.m. on the
Calculation Date, then the Prime Rate will be the rate on such Interest
Determination Date as published in H.15 Daily Update opposite the caption “Bank
Prime Loan”.

       

       

      If
the rate is not published prior to 3:00 p.m. on the Calculation Date in either
H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the
Prime Rate to be the arithmetic mean of the rates of interest publicly announced
by each bank that appears on the Reuters Screen US PRIME1 Page (as defined
below) as such bank’s prime rate or base lending rate as of 11:00 a.m., on that
Interest Determination Date.

       

       

      If
fewer than four such rates referred to above are so published by 3:00 p.m. on
the Calculation Date, the Calculation Agent will determine the Prime Rate to be
the arithmetic mean of the prime rates or base lending rates quoted on the basis
of the actual number of days in the year divided by 360 as of the close of
business on such Interest Determination Date by three major banks in New York
City selected by the Calculation Agent.

       

       

      If
the banks selected are not quoting as mentioned above, the Prime Rate will
remain the Prime Rate in effect on such Interest Determination
Date.

       

       

      “Reuters
Screen US Prime1 Page” means the display designated as page “USPrime1” of the
Reuters Service, or any successor service, or any replacement page or pages on
that service, for the purpose of displaying prime rates or base lending rates of
major U.S. banks.

       

       

      Treasury
Rate Notes

       

      “Treasury
Rate” means:

       

       

      (1)
the rate from the auction held on the Interest Determination Date (the
“Auction”) of direct obligations of the United States (“Treasury Bills”) having
the Index Maturity specified in the applicable pricing supplement above under
the caption “INVESTMENT RATE”, as that rate appears on Reuters Screen
USAUCTION10 or USAUCTION11 Page under the heading “Investment Rate” (or any
other page as may replace the specified page on that service or a successor
service), or

       

       

      (2)
if the rate referred to in clause (1) is not so published by 3:00 p.m. on the
related Calculation Date, the Bond Equivalent Yield (as defined below) of the
rate for the applicable Treasury Bills as published in H.15 Daily Update, under
the caption “U.S. Government Securities/Treasury Bills/Auction High”,
or

       

       

      (3)
if the rate referred to in clause (2) is not so published by 3:00 p.m. on the
related Calculation Date, the Bond Equivalent Yield of the auction rate of the
applicable Treasury Bills as announced by the United States Department of the
Treasury, or

       

       

      (4)
if the rate referred to in clause (3) is not so announced by the United States
Department of the Treasury, or if the Auction is not held, the Bond Equivalent
Yield of the rate on the particular

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      Interest
Determination Date of the applicable Treasury Bills as published in H.15(519)
under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”,
or

       

       

      (5)
if the rate referred to in clause (4) not so published by 3:00 p.m. on the
related Calculation Date, the rate on the particular Interest Determination Date
of the applicable Treasury Bills as published in H.15 Daily Update, under the
caption “U.S. Government Securities/Treasury Bills/Secondary Market”,
or

       

       

      (6)
if the rate referred to in clause (5) is not so published by 3:00 p.m. on the
related Calculation Date, the rate on the particular Interest Determination Date
calculated by the Calculation Agent as the Bond Equivalent Yield of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m.
on that Interest Determination Date, of three primary United States government
securities dealers selected by the Calculation Agent, for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified in the
Supplement, or

       

       

      (7)
if the dealers so selected by the Calculation Agent are not quoting as mentioned
in clause (6), the Treasury Rate in effect on the particular Interest
Determination Date.

       

       

      “Bond
Equivalent Yield” means a yield (expressed as a percentage) calculated in
accordance with the following formula:

       

      

      
      

       

      where
“D” refers to the applicable per annum rate for Treasury Bills quoted on a bank
discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case
may be, and “M” refers to the actual number of days in the applicable Interest
Reset Period.

       

       

      
        	
                 
      

              	
                3.

              	
                Final Maturity.
      The Stated Maturity Date for any Note will be the date so specified in the
      Supplement, which shall be no later than 397 days from the date of
      issuance. On its Stated Maturity Date, or any date prior to the Stated
      Maturity Date on which the particular Note becomes due and payable by the
      declaration of acceleration, each such date being referred to as a
      Maturity Date, the principal amount of each Note, together with accrued
      and unpaid interest thereon, will be immediately due and
      payable.

              

      

       

       

      
        	
                 
      

              	
                4.

              	
                Events of
      Default. The occurrence of any of the following shall constitute an
      “Event of Default” with respect to a Note: (i) default in any payment of
      principal of or interest on such Note (including on a redemption thereof);
      (ii) the Issuer makes any compromise arrangement with its creditors
      generally including the entering into any form of moratorium with its
      creditors generally; (iii) a court having jurisdiction shall enter a
      decree or order for relief in respect of the Issuer in an involuntary case
      under any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, or there shall be appointed a receiver,
      administrator, liquidator, custodian, trustee or sequestrator (or similar
      officer) with respect to the whole or substantially the whole of the
      assets of the Issuer and any such decree, order or appointment is not
      removed, discharged or withdrawn within 60 days thereafter; or (iv) the
      Issuer shall commence a voluntary case under any applicable bankruptcy,
      insolvency or other similar law now or hereafter in effect, or consent to
      the entry of an order for relief in an involuntary case under any such
      law, or consent to the appointment of or taking possession by a receiver,
      administrator, liquidator, assignee, custodian, trustee or sequestrator
      (or similar official), with respect to the whole or substantially the
      whole of the assets of the Issuer or make any general assignment for the
      benefit of creditors. Upon the occurrence of an Event
  of

              

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                Default,
      the principal of each obligation evidenced by such Note (together with
      interest accrued and unpaid thereon) shall become, without any notice or
      demand, immediately due and payable.6

              

      

       

       

      
        	
                 
      

              	
                5.

              	
                Obligation
      Absolute. No provision of the Issuing and Paying Agency Agreement
      under which the Notes are issued shall alter or impair the obligation of
      the Issuer, which is absolute and unconditional, to pay the principal of
      and interest on each Note at the times, place and rate, and in the coin or
      currency, herein prescribed.

              

      

       

       

      
        	
                 
      

              	
                6.

              	
                Supplement. Any
      term contained in the Supplement shall supercede any conflicting term
      contained herein.

              

      

       

      

        

      
        
          	
                  6

                	
                  Unlike
      single payment notes, where a default arises only at the stated maturity,
      interest-bearing notes with multiple payment dates should contain a
      default provision permitting acceleration of the maturity if the Issuer
      defaults on an interest payment.

                

        

         

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      Model
Certificate as to Resolutions7

       

      [Name
of Issuer]

       

      I,
                                         ,
the [Assistant] Secretary of                                                   ,
a                                      
corporation (the “Issuer”), do hereby certify, in connection with the issuance
and sale of short-term promissory notes under the Commercial Paper Dealer
Agreement dated                              ,
____ (the “Agreement”, the terms defined therein being used herein as therein
defined) between the Issuer and                              
(the “Dealer”), that:

       

       

      
        	
                 
      

              	
                1.

              	
                The
      following resolution was duly adopted by the Board of Directors of the
      Issuer [by unanimous written consent dated ____________, ___] [at a meeting
      thereof duly called and held on ______________, _____, at which meeting a
      quorum was present and acting throughout], and such resolution has not
      been amended, modified or revoked and is in full force and effect on the
      date hereof:

              

      

       

      RESOLVED,
that the Chairman of the Board, the President, the Executive Vice President, any
Vice President and the Treasurer of the Issuer be, and each of them hereby is,
individually authorized to: (i) borrow for the use and benefit of the Issuer
from time to time through the issuance of commercial paper notes;8 (ii) execute such commercial paper notes in
the name and on behalf of the Issuer and issue such notes in accordance with the
Issuing and Paying Agency Agreement referred to below; (iii) execute and deliver
(A) a Commercial Paper Dealer Agreement between the Issuer and                              ,
as Dealer, providing, among other things, for the sale of commercial paper notes
on behalf of the Issuer and the indemnification of the Dealer in connection
therewith, (B) an Issuing and Paying Agency Agreement between the Issuer and
_____________ , as issuing and paying agent, and (C) a Letter of Representations
addressed to The Depository Trust Company; (iv) execute and file with the
Securities and Exchange Commission Form D and any and all amendments thereto, as
required by Section 1.6(j) of the Agreement;9 (v) delegate to any other officers or
employees of the Issuer authority to give instructions to the Dealer pursuant to
the Agreement; and (vi) do such acts and execute such other instruments and
documents as may be necessary and proper to effect the transactions contemplated
hereby including (a) amending documents referred to herein and (b) appointing
additional dealers and successors to any of the parties named.

       

      

        

      
        
          	
                  7

                	
                  This
      model certificate will serve as a guide for resolutions adopted by the
      Issuer. Any resolutions actually adopted, regardless of form, should cover
      all the substantive matters covered in this model, and a certificate
      substantially to the effect of this model is required to be delivered to
      the Dealer under Section 3.6(c) of the
  Agreement.

                

        

         

      

      
        
          	
                  8

                	
                  The
      reference to a specific dollar amount was removed in order to provide
      issuers flexibility with respect to the total amount of commercial paper
      issued without having to update the
Resolutions.

                

        

         

      

      
        
          	
                  9

                	
                  Clause
      (iv) may be deleted if Section 1.6(j) is not part of the Agreement. See
      paragraph 2 of the Addendum and the Guidance Note relating to Section 1.6
      generally.

                

        

         

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                2.

              	
                Each
      of the Agreement and the Issuing and Paying Agency Agreement, as executed
      and delivered by the Issuer, is substantially in the form thereof approved
      by the Board of Directors and referred to in the resolution set forth in
      paragraph 1 hereof.

              

      

       

       

      IN
WITNESS WHEREOF, I have signed this certificate the               
day of               ,
              .

       

       

      

      
      

       

      
        	 	 	 	 
	 	 	[Assistant] Secretaryex101.htm

These Securities Have Not Been Registered For Offer or Sale Under The Securities Act Of 1933, As Amended, Or Any State securities laws.  They May Not Be Sold Or Offered For Sale Except Pursuant To An Effective Registration Statement Under Said Act And Any Applicable State Securities Law Or An Applicable
Exemption From Such Registration Requirements.

 

                      THIS AMENDMENT NO. 1 TO THE AMENDED AND RESTATED STOCK PURCHASE
AGREEMENT (this “Agreement”) is dated as of October 16, 2009, by and between Clean Power Technologies, Inc., a Nevada corporation (the “Company”), and The Quercus Trust, a California Trust (the “Purchaser” and together with the Company, the “Parties”).

 

W I T N E S S E T H:

 

Whereas, the Company and the Purchaser entered into that certain Securities Purchase Agreement on July 10, 2008 providing for the purchase and sale of the Company’s 8% Senior Secured Convertible Promissory Note in the principal fare amount of $2,000,000
(“Debenture”) Class A Warrants and Class B Warrants (the “July 2008 Offering”);

Whereas, subsequent to the July 2008 Offering, the Company and the Purchaser entered into (i) a Stock Purchase Agreement on February 10, 2009 (the “February 2009 Offering”): and thereafter, (ii) an Amended and Restated Stock Purchase Agreement
on October 2, 2009 (the “October 2009 Offering”), both providing for the purchase and sale of the Company’s common stock (“Common Stock”) and warrants (the “Warrants”, collectively with the Common Stock, the “Securities”);

Whereas, the Parties had agreed at the time of the October 2009 Offering that the sale and purchase of the Securities shall take place in three tranches as follows: (i) an initial purchase
and sale of 2,500,000 shares of the Company’s Common Stock at a purchase price of $0.20 per share, and warrants to purchase an aggregate of 3,125,000 shares of the Company’s common stock at exercise prices of (x) $0.27 per share for the initial 1,875,000 warrants; and (y) $0.38 per share for the remaining 1,250,000 warrants, to take place upon the execution of this Agreement (“Initial Closing”); (ii) the purchase and sale of an additional 1,111,111 shares of the Company’s Common
Stock, upon the same terms and conditions as provided in the February 2009 Offering, to take place on or about October 12, 2009 upon confirmation of the attainment of the Second Closing Milestone, as set forth in the February 2009 Offering (“Milestone Closing”); and thereafter, (iii) the purchase and sale of an additional 2,469,136 shares of the Company’s Common Stock at a purchase price of $0.405 per share, plus the issuance of warrants
to purchase an aggregate of 3,086,420 shares of the Company’s common stock at exercise prices of (x) $0.54 per share for the initial 1,857,852 warrants; and (y) $0.77 per share for the remaining 1,234,568 warrants, to take place immediately upon the appointment of a mutually acceptable 5th member to the Company’s Board of Directors (“Final Closing”);

 

WHEREAS, the parties have consummated the Initial Closing and seek to consummate the Milestone Closing and the Final Closing on the same date pursuant to the terms and conditions of this Agreement; and

 

Whereas, pursuant to the terms hereof, the Purchaser will have registration rights with respect to the Common Stock issued herein and such Common Stock issuable upon the exercise of the warrants
pursuant to the terms of that certain Registration Rights Agreement to be entered into between the Company and the Purchaser substantially in the form of Exhibit A hereto (“Registration Rights Agreement” and, together with this Agreement and the Warrants (the “Transaction Documents”).

  

1

  

Now, Therefore, in consideration of the foregoing premises and the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

Article I.

 

Purchase and Sale of Shares and Warrants

 

Section 1.1 Issuance of Common Stock.  Upon the following terms and conditions, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, an aggregate of 3,580,247 shares of the Company’s common stock (the “Shares”) as follows: (i) Milestone Closing: 1,111,111 shares of the Company’s Common Stock at a purchase price of $0.45 per share; and (ii) Final Closing: 2,469,136 shares of the Company’s Common Stock at a purchase price of $0.405 per share.

 

Section 1.2 Purchase Price.  The purchase price for the Shares to be acquired by the
Purchaser shall be $1,500,000 (the “Purchase Price”).

 

Section 1.3 The Closing.  The purchase and sale of the Shares shall take place on or about the date hereof or such other date as the Purchaser
and the Company may agree upon (the “Closing Date”); provided that the Closing Date shall be no later than October 31, 2009. Within five (5) business days of the Closing Date, the Company shall deliver to the Purchaser one or more certificates representing the Shares registered in the name of the Purchaser or its nominee.  On or prior to the Closing Date, the
Purchaser shall deliver the Purchase Price by certified check or by wire transfer of immediately available funds:

 

Gersten Savage LLP

600 Lexington Avenue

New York, NY 10022

Signature Bank

565 Fifth Avenue

New York, NY 10017

ABA # 026013576

Account # 1500886257

In addition, each party shall deliver all documents, instruments and writings required to be delivered by such party pursuant to this Agreement at or prior to the Closing.  The Securities will be fully owned and paid for by the Purchaser as of the Closing Date.  The account with Gersten Savage LLP shall be referred
to herein as the “Escrow Account”.

 

Section 1.4   Warrants.  In addition to the Shares, at the Closing, the Company will execute and deliver to the Purchaser warrants
to purchase shares of the Company’s Common stock, substantially in the forms attached hereto as Exhibit B (the “Warrants”).  The Warrants shall entitle the holder thereof to purchase:  (i) 833,333 shares of Common Stock at an exercise price of $0.60 per share (the “$0.60 Warrants”); (ii) 555,555 shares of Common Stock at an exercise price of $0.85 per share (the “$0.85 Warrants”); (iii)
1,857,852 shares of Common Stock at an exercise price of $0.54 per share (the “$0.54 Warrants”); and (iv) 1,234,568 shares of Common Stock at an exercise price of $0.77 per share (the “$0.77 Warrants” and together with the $0.60 Warrants, the $0.85 Warrants and the $0.54 Warrants, the “Warrants”).  On the Closing Date, the Company shall issue the Warrants to the Purchaser. The Warrants shall have a one (1) year term from the date of issuance.  The shares
of Common Stock that are issuable pursuant to the Warrants are hereafter referred to as the “Warrant Shares.”

 

  

2

  

 

Article II.

 

Representations and Warranties

 

Section 2.1 Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to the Purchaser as of the date
hereof and the Closing Date:

 

(a) Organization and Qualification; Material Adverse Effect.  The Company is a corporation duly incorporated and existing in good standing under the
laws of the State of Nevada and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The Company does not have any subsidiaries other than the subsidiaries listed on Schedule 2.1(a) attached hereto (“Subsidiaries”).  Except where specifically indicated to the contrary, all references in this Agreement
to subsidiaries shall be deemed to refer to all direct and indirect subsidiaries of the Company.  Each Subsidiary has been duly incorporated and is in good standing under the laws of its jurisdiction of incorporation.  The Company and each Subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary other than those in which the failure
so to qualify would not have a Material Adverse Effect.  “Material Adverse Effect” means any adverse effect on the business, operations, properties, prospects or financial condition of the Company and its subsidiaries, and which is (either alone or together with all other adverse effects) material to the Company and its Subsidiaries, if any, taken as a whole, and any material adverse effect on the transactions contemplated
under the Transaction Documents.

 

(b) Authorization; Enforcement.  (i)  The Company has all requisite corporate power and authority to enter into and perform its obligations
under the Transaction Documents and to issue the Shares and Warrants in accordance with the terms hereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including the issuance of the Shares and Warrants, have been duly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors (or any committee or subcommittee thereof) or stockholders
is required, (iii) the Transaction Documents have been duly executed and delivered by the Company, (iv) the Transaction Documents constitute valid and binding obligations of the Company enforceable against the Company, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application, and (B) to
the extent the indemnification provisions contained in this Agreement and the Registration Rights Agreement may be limited by applicable federal or state securities laws and (v) the Shares, the Warrants and the Warrant Shares issuable upon the exercise of the Warrants, have been duly authorized and, upon issuance thereof and payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, free and clear of any and all liens, claims and encumbrances.

 

(c) Capitalization.  As of October 12, 2009, the authorized capital stock of the Company consists of 350,000,000 shares of Common Stock, of which
as of August 5, 2009, 72,220,695 shares are issued and outstanding, 200,000,000 shares of preferred stock consisting of 100,000,000 shares of Class A Preferred Stock and 100,000,000 shares of Class B Preferred Stock, of which as of the date hereof, no shares of preferred stock are issued and outstanding and 2,500,000 shares are issuable and reserved for issuance pursuant to the Company’s stock option plans and certain outstanding contracts, or securities exercisable or exchangeable for, or convertible into,
shares of Common Stock.  All of such outstanding shares have been, or upon issuance will be, validly issued, fully paid and nonassessable.  As of the date hereof, except as disclosed in Schedule 2.1(c), (i) no shares of the Company’s capital 

  

3

  

stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no outstanding debt securities, and (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company.

 

(d) Issuance and Ownership of Securities.  Upon issuance in accordance with this Agreement, the Shares, the Warrants and the Warrant Shares will be
validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.   The Company owns all outstanding shares of the Subsidiaries, free and clear of any liens and other encumbrances

 

(e) No Conflicts.  Except as disclosed in Schedule 2.1(e), the execution, delivery
and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby and issuance of the Shares and Warrant, and Warrant Shares underlying the Warrant (i) result in a violation of its Certificate of Incorporation, any certificate of designations, preferences and rights of any outstanding series of preferred stock of the Company or its By-laws; (ii) conflict with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) to the Company’s knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and the rules and regulations of the OTC Bulletin Board (“Principal
Market”) or other principal securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries, or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of clause (ii), such conflicts that would not have a Material Adverse Effect.

 

(f) SEC Documents.  Since the filing of its Annual Report on Form 10-K for the fiscal year ended August 31, 2008, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC
Documents”).  To the Company’s knowledge, as of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. Since the date of the respective filings, the Company has not incurred any liabilities except in the ordinary course of business or as reflected in the SEC Documents.

 

(g) Absence of Litigation.  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company, the Shares or any officers or directors of the Company or any of its Subsidiaries in their capacities as such, except as set forth in SEC Documents which were filed at least 10 days before the date hereof.

 

(h) No Integrated Offering.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, aside for the July 2008 Offering, the February 2009 Offering and the October 2009 Offering, under circumstances that would cause this offering of the Securities to the Purchaser to be integrated with prior offerings by the Company for purposes of the Securities Act of 1933, as amended (“1933 Act” or “Securities Act”) or any applicable
stockholder approval provisions, including, without limitation, under the rules and regulations of the Principal Market or other Approved Market, nor will the Company take any action or steps that would cause the offering of the Securities to be integrated with other offerings.

 

  

4

  

 

(i)  Employee Relations.  Neither the Company nor any of its Subsidiaries is not involved in any labor dispute nor, to the knowledge of the Company,
is any such dispute threatened, the effect of which would be reasonably likely to result in a Material Adverse Effect.

 

(j) Intellectual Property Rights.  The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted.  Neither the Company nor any of its Subsidiaries have any knowledge of any infringement by the Company or any of its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or any of its Subsidiaries regarding trademarks, trade name rights, patents, patent rights, inventions, copyrights, licenses, service names, service marks, service mark registrations, trade secrets
or other infringement.  The Company has no knowledge of any pending or threatened infringement of its intellectual property rights.

 

(k)  Compliance with Law.  The business of the Company has been and is presently being conducted so as to comply with all applicable material
federal, state and local governmental laws, rules, regulations and ordinances.

 

(l) Environmental Laws.  The Company and its Subsidiaries (i) are, to the Company’s knowledge, in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) is in com­pliance with all terms and conditions of any such
permit, license or approval where such noncompliance or failure to receive permits, licenses or approvals referred to in clauses (i), (ii) or (iii) above could have, individually or in the aggregate, a Material Adverse Effect.

 

(m) Disclosure. No representation or warranty by the Company in this Agreement, nor in any certificate, schedule, document, exhibit or other instrument delivered
or to be delivered pursuant to this Agreement or otherwise in connection with the transactions contemplated by the Transaction Documents, contains or will contain any untrue statement of material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading or necessary to in order fully and fairly to provide the information required to be provided in any such certificate, schedule, document, exhibit or other instrument.  To the knowledge
of the Company at the time of the execution of this Agreement, there is no information concerning the Company or any of its Subsidiaries or its respective businesses which has not heretofore been disclosed to the Purchaser (or disclosed in the Company's filings made with the SEC under the 1934 Act) that would have a Material Adverse Effect.

 

  

5

  

(n) Title.  The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all
personal property owned by it which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects or such as do not materially and adversely affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries.  Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

 

(o) Insurance.  The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company is engaged.

 

(p)  Permits.  The Company and its Subsidiaries own, hold, possess, or lawfully use in its business all material approvals, authorizations, certifications,
franchises, licenses, permits, and similar authorities (“Permits”) that are necessary for the conduct of their business as currently conducted or the ownership and use of their assets or properties, in compliance with all Laws.  All of such material Permits are listed on Schedule 2.1(p), and true, complete and correct copies of each Permit listed on Schedule 2.1(p)
have been provided to the Purchaser.  Neither the Company or any of its Subsidiaries is in default under, or has received any notice of any claim of default in respect of, any such Permits.  To the Company’s knowledge, after due inquiry, all such Permits are renewable by their respective terms in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine filing fees.

 

(q) Foreign Corrupt Practices Act.  To the Company’s knowledge, neither the Company, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of acting for, or on behalf of, the Company, directly or indirectly used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; directly or indirectly made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or any similar treaties of the United States; or directly or indirectly made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government or party official or employee.

 

(r) Tax Status.  The Company and its Subsidiaries have made or filed all United States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and all such returns, reports and declarations are true, correct and accurate in all material respects.  The Company has paid all taxes and other governmental assessments and charges, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, for which adequate reserves have been established, in accordance with generally accepted accounting principles (“GAAP”).

 

(s) Issuance of Shares and/or Warrant Shares.  The Warrant Shares are duly authorized and reserved for issuance and, upon exercise of the Warrants
in accordance with the terms thereof, the Warrant Shares will be validly issued, fully paid and non-assessable, free and clear of any and all liens, claims and encumbrances, and entitled to be traded on the Principal Market or the New York Stock Exchange, or the American Stock Exchange or the Alternative Investment Market (AIM) of the London Stock Exchange (collectively with the Principal Market, the “Approved
Markets”), and the holders of such Warrant Shares shall be entitled to all rights and preferences accorded to a holder of Common Stock.  As of the date of this Agreement, the outstanding shares of Common Stock are currently listed on the Principal Market.

  

6

  

(t) Financial Statements.  Except as set forth in Schedule 2.1(t), the financial
statements of the Company included in the Forms 10-K and the Forms 10-Q of the Company duly filed with the Securities and Exchange Commission have been prepared from the books and records of the Company, in accordance with GAAP, and fairly present in all material respects the financial condition of the Company, as at their respective dates, and the results of its operations and cash flows for the periods covered thereby.

 

(u) Internal Accounting and Disclosure Controls.  The Company maintains a system of internal accounting controls and procedures that are sufficient
to provide reasonable assurance (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is being prepared. The Company’s
certifying officers have evaluated the effectiveness of the Company’s controls and procedures in accordance with the 1934 Act for the Company’s most recently ended fiscal quarter or fiscal year-end (such date, the “ Evaluation Date ”). The Company presented in its most recently filed Form 10-K or Form 10-Q the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal controls over financial reporting (as defined in 34 Act Rules 13a-15(f) and 15(d)-15(f)).

 

(v)  Off-Balance Sheet Arrangements.  There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to have a material adverse effect.

 

(w) No Stabilization.  The Company has not taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or
result in any stabilization or manipulation of the price of the shares of Common Stock.

 

(x) Investment Company Status.  The Company is not and, after giving effect to the offering and the application of the proceeds as described in the
Transaction Documents, will not be, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended, and the rules and regulations thereunder.

 

(y) Subsidiary Rights.  The Company has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends
and distributions on, all capital securities of its subsidiaries as owned by the Company or such subsidiary.

 

(z) Sarbanes-Oxley Act.  There has been no failure of the Company or any of its directors or officers, in their capacities as such, to comply with
any applicable provisions of the Sarbanes Oxley Act of 2002 and the rules and regulations thereunder (the “Sarbanes Oxley Act”).

  

7

  

(aa) Application of Takeover Protections. The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents.

 

(bb) General Solicitation.  The Company has not undertaken any advertisement, article, notice or other communication regarding the sale of the Securities
and has not published such sale in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(cc) Brokers or Finders. Except for vFinance Investments, Inc. (the "Placement Agent"), the
Company has not dealt with any broker or finder in connection with the transactions contemplated by this Agreement, and, except for certain fees and expenses payable to the Placement Agent, the Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders' fees or agents commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

 

(dd) Non-Public Information. The Company covenants and agrees that neither it nor any other person acting on its behalf will provide the Purchaser or his agents
or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

 

(ee) No Additional Agreements. The Company does not have any agreement or understanding with any Purchaser with respect to the transactions contemplated by
this Agreement, other than as specified in this Agreement, the Registration Rights Agreement and the Warrants.

 

(ff) Public Utility Holding Company Act and Investment Company Act Status. The Company is not a “holding company” or a “public utility company”
as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 2.2 Representations and Warranties of the Purchaser.  The Purchaser hereby makes the following representations and warranties to the
Company as of the date hereof and the Closing Date:

 

(a) Accredited Investor Status; Sophisticated Purchaser.  The Purchaser is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D under the 1933 Act.  The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Shares, the Warrant and the Warrant Shares.  The Purchaser is not registered as a broker or dealer under Section 15(a) of the 1934 Act, affiliated with any broker or dealer registered under Section 15(a) of the 1934 Act, or a member of the Financial Industry Regulatory Authority.

 

(b) Information.  The Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations
of the Company which have been requested and materials relating to the offer and sale of the Shares, the Warrant and the Warrant Shares which have been requested by the Purchaser.  The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company. 

 

  

8

  

In determining whether to enter into this Agreement and purchase the Securities, the Purchaser has relied solely on the written information supplied by Company employees in response to the written due diligence information request provided by Purchaser to the Company, and the Purchaser has not received nor relied upon any oral representation
or warranty relating to the Company, this Agreement, the Securities, or any of the transactions or relationships contemplated thereby.  The Purchaser understands that its purchase of the Securities, and if applicable, the Warrant Shares involves a high degree of risk.  The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares, the Warrants and if applicable, the Warrant
Shares.

 

(c) No Governmental Review.  The Purchaser understands that no United States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Shares, the Warrant, and Warrant Shares or the fairness or suitability of the investment in the Shares, the Warrant and Warrant Shares nor have such authorities passed upon or endorsed the merits thereof.

 

(d) Legends. The Company shall issue the certificates for the Shares, and if applicable, the Warrant Shares, to the Purchaser without any legend except as described
in Article VI below.  The Purchaser covenants that, in connection with any transfer of the Warrant Shares by the Purchaser pursuant to the registration statement contemplated by the Registration Rights Agreement, it will comply with the applicable prospectus delivery requirements of the 1933 Act, provided that copies of a current prospectus relating to such effective registration statement are or have been supplied to the Purchaser.

 

(e) Authorization; Enforcement.  Each of this Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and
delivered on behalf of the Purchaser and is a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with their terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.  The Purchaser has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement and the Registration Rights Agreement and each other agreement entered into by the parties hereto in connection with the transactions contemplated by this Agreement.

 

(f) No Conflicts.  The execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Purchaser and the consummation
by the Purchaser of the transactions contemplated hereby and thereby will not (i) result in a violation of the certificate of incorporation, by-laws or other documents of organization of the Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Purchaser is bound, or (iii) result in a violation
of any law, rule, regulation or decree applicable to the Purchaser.

 

(g) Investment Representation.  The Purchaser is purchasing the Securities for its own account for investment and not with a view to distribution
or sale  in violation of the 1933 Act or any state securities laws or rules and regulations promulgated thereunder.  The Purchaser has been advised and understands that neither the Shares, the Warrant, nor Warrant Shares issuable upon exercise thereof have been registered under the 1933 Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the provisions of the 1933 Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required by law.  The Purchaser has been advised and understands that the Company, in issuing the Shares and the Warrant, is relying upon, among other things, the representations and warranties of the Purchaser contained in this Section 2.2 in concluding that such issuance is a “private offering” and is exempt from the registration provisions of the 1933 Act.

 

  

9

  

            (h) Rule
144.  The Purchaser understands that there is no public trading market for the Shares or Warrant, that none is expected to develop, and that the Shares and Warrant must be held indefinitely unless and until such Shares and the Warrant, or if applicable, the Warrant Shares received upon exercise thereof are registered under the 1933 Act or an exemption from registration is available.  The Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the 1933
Act.

 

(i) Brokers.  Except with respect to any fees owed to vFinance, the Purchaser has taken no action which would give rise to any claim by any person
for brokerage commissions, finder's fees or similar payments by the Company or the Purchaser relating to this Agreement or the transactions contemplated hereby.

 

(j) Reliance by the Company.  The Purchaser understands that the Shares and the Warrant are being offered and sold in reliance on a transactional
exemption from the registration requirements of Federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares and the Warrant, and the Warrant Shares issuable upon exercise thereof.

 

Article III.

 

Covenants

 

Section 3.1 Registration and Listing; Effective Registration.  Until such time as six months following the date on which all of the Warrants
have either have been exercised or have expired, the Company will cause the Shares to continue at all times to be registered under Sections 12(b) or (g) of the 1934 Act or listed on AIM, will comply in all material respects with its reporting and filing obligations under the 1934 Act or under the bylaws or rules of AIM, and will not take any action or file any document (whether or not permitted by the 1934 Act or the rules thereunder) to terminate or suspend such reporting and filing obligations.  Until
such time as the Warrants are no longer outstanding, the Company shall use its best efforts to continue the listing or trading of the Shares and the Warrant Shares, if applicable, on the Principal Market or one of the other Approved Markets and shall comply in all material respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Approved Market on which the Common Stock is listed.  The Company shall use its best efforts to cause the Warrant Shares to be listed
on the Principal Market or one of the other Approved Markets no later than the date of issuance of the Warrant, and shall use its best efforts to continue such listing(s) on one of the Approved Markets, for so long as the Warrants are outstanding.

 

Section 3.2 Constitution of Board of Directors.  Upon the Final Closing, the Company shall immediately seek the resignation of two of its current
board members, Ms. Diane Glatfelter and Mr. Peter Gennuso, and shall reconstitute its board of directors to comprise of four (4) members. The vacancy created shall be filled by a second designee of the Purchaser.  The Company shall use reasonable efforts to assist the members of the board appointed by the Purchaser pursuant hereto and under the February 2009 Offering in maintaining their respective board positions through the Company’s
2010 Annual General Meeting.

 

  

10

  

Section 3.3 Board Observers.  Immediately upon the Final Closing, the Company shall appoint Mr. Jim Mason and Mr. Peter Gennuso as board observers,
each of whom shall serve in such capacity and for such period of time as determined by the Company’s board of directors, at its sole discretion.

 

Section 3.4 Replacement of Shares.  The Shares held by the Purchaser (or then holder) may be exchanged by the Purchaser (or such holder) at
any time and from time to time for Shares with different denominations representing an equal aggregate principal amount of Shares, as requested by the Purchaser (or such holder) upon surrendering the same.  No service charge will be made for such registration or transfer or exchange.

 

Section 3.5 Securities Compliance. The Company shall notify the SEC and the Principal Market, in accordance with their requirements, of the transactions
contemplated by this Agreement, the Shares, the Warrants, and the Registration Rights Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Shares and Warrant hereunder and the Warrant Shares issuable upon exercise thereof.

 

Section 3.6 Reservation of Shares; Stock Issuable Upon Exercise.  Subject to Section 2.1(c) of this Agreement, the Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrant, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of the Warrants issued to the Purchaser and the payment for any damages that may become due to the Purchaser due to the Company’s failure to register the Securities.

 

Section 3.7 Form D; Blue Sky Laws.  The Company agrees to file a Form D with respect to Shares and the Warrants in accordance with Regulation
D and to provide a copy thereof to the Purchaser promptly after such filing.  The Company shall, on or before the Closing Date, take such action as the Company shall have reasonably determined is necessary to qualify the Shares, the Warrants and Warrant Shares for sale to the Purchaser under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Purchaser
on or prior to the Closing Date; provided, however, that the Company shall not be required in connection therewith to register or qualify as a foreign corporation in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits or taxation, in each case, in any jurisdiction where it is not now so subject.

 

Section 3.8 Prohibition on Short Sales.  From and including the date of this Agreement and for so long as the Purchaser holds any outstanding
Shares, the Purchaser agrees that it will neither sell the Company’s stock short nor direct, instruct or otherwise influence any of its affiliates, principals or advisors to sell the Company’s stock short.  Further, the Purchaser agrees not to pledge, hypothecate, loan or enter into other hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Company’s Common Stock; provided, however, that the Purchaser shall have the
right to pledge the Company’s Shares pursuant to a bona fide margin account or lending arrangement entered into in compliance with law, including applicable securities laws, in such a manner that will not result, or be equivalent to, a short sale of the Company’s Common Stock.

 

Section 3.9 Material Changes.  On or before the Closing Date, the Company shall forthwith notify the Purchaser of any material change affecting
any of its representations, warranties, undertakings and indemnity at any time prior to payment being made to the Company on the Closing Date.

 

  

11

  

Section 3.10 Prohibition on Certain Actions.   The Company shall not file any additional registration statements unless and until the
registration statement contemplated by the Registration Rights Agreement has become effective.

 

Section 3.11 Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder for general corporate purposed
including working capital and other growth initiatives consistent with the current business of the Company.

 

Section 3.12 Funding Commitment.  For any debt, equity or equity linked private financing in the amount of Five Million Dollars ($5,000,000)
or more consummated by the Company within six (6) months from February 1, 2010, or in the event that the Company enters into a binding term sheet within nine (9) months from February 1, 2010 relating to any debt, equity or equity linked private financing to be granted to the Company in the amount of Five Million Dollars ($5,000,000) (a “Qualified Financing”), the Purchaser shall make an additional investment in the Company in the amount of One Million Dollars ($1,000,000) on same terms and conditions
hitherto offered to the Company.  This funding commitment shall apply only in the event that the Qualified Financing is negotiated at arm’s-length with one or more unaffiliated third parties (except to the extent otherwise agreed upon by the Purchaser in writing).

 

Section 3.13 Press Release.  As soon as practicable upon the execution of this Agreement, the Company shall issue a press release disclosing
the transaction contemplated herein.  The Company shall also file a Form 8-K with the Securities and Exchange Commission (the “SEC”) within the time prescribed under current SEC rules and regulations.

 

Article IV.

 

Conditions to Closings

 

Section 4.1 Conditions Precedent to the Obligation of the Company to Sell.  The obligation hereunder of the Company to issue and/or sell the
Securities to the Purchaser at the applicable Closing is subject to the satisfaction, at or before the applicable Closing, of each of the applicable conditions set forth below.  These conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion.

 

(a) Accuracy of the Purchaser’ Representations and Warranties.  The representations and warranties of the Purchaser will be true and correct
in all material respects as of the date when made and as of the Closing Date, as though made at that time.

 

(b) Performance by the Purchaser.  The Purchaser shall have performed all agreements and satisfied all conditions required to be performed or satisfied
by the Purchaser at or prior to the Closing, including full payment of the Purchase Price to the Company as provided herein.

 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

 

Section 4.2 Conditions Precedent to the Obligation of the Purchaser to Purchase.  The obligation hereunder of the Purchaser to acquire and
pay for the Securities at the applicable Closing is subject to the satisfaction, at or before the applicable Closing, of each of the applicable conditions set forth below.  These conditions are for the Purchaser’ benefit and may be waived by the Purchaser at any time.

 

  

12

  

(a) Accuracy of the Company's Representations and Warranties.  The representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties as of an earlier date, which shall be true and correct in all material respects as of such date).

 

(b) No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by the Transaction Documents.  The Principal Market shall not have objected or indicated that it may object to the consummation of any of the transactions contemplated by this Agreement.

 

(c) Legal Opinions.  At the Closing, the Purchaser shall have received an opinion of U.S. counsel to the Company substantially in the form attached
hereto as Exhibit C.

 

(d) Registration Rights Agreement.  The Company and the Purchaser shall have executed and delivered the Registration Rights Agreement in the form
and substance of Exhibit A attached hereto.

 

(e) Officer's Certificates.  The Company shall have delivered to the Purchaser a certificate in form and substance satisfactory to the Purchaser and
the Purchaser’ counsel, executed by an officer of the Company, certifying as to satisfaction of closing conditions, incumbency of signing officers, and the true, correct and complete nature of the Certificate of Incorporation, By-Laws, good standing and authorizing resolutions of the Company.

 

(f) Warrants.  The Company shall have executed and delivered the Warrants to the Purchaser in substantially the form attached hereto as Exhibit
B.

 

(g) No Material Adverse Change.  There shall not have occurred any event prior to the Closing which, singly or taken together with any other event,
could reasonably be expected to have a Material Adverse Effect.

 

(h) Presentation of Use of Proceeds.  The Company shall have presented a summary of the use of financing proceeds satisfactory to the Purchaser.

 

(i) Transfer Agent Instructions.  The Company shall issue irrevocable instructions to its transfer agent requesting the transfer agent to issue one
or more share certificates to the Purchaser representing the Shares as soon as practicable after receiving notice of the exercise of the Warrants.

 

Article V.

 

Legend and Stock

 

Upon payment therefor as provided in this Agreement, the Company will issue the Shares in the name the Purchaser or its designees and in such denominations to be specified by such Purchaser prior to (or from time to time subsequent to) Closing.  The Securities and any certificate representing the Warrant Shares issued upon exercise
thereof, prior to such Warrant Shares being registered under the 1933 Act for resale or available for resale under Rule 144 under the 1933 Act, shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

  

13

  

These Securities Have Not Been Registered For Offer or Sale Under The Securities Act Of 1933, As Amended, Or Any State securities laws.  They May Not Be Sold Or Offered For Sale Except Pursuant To An Effective Registration Statement Under Said Act And Any Applicable State Securities Law Or An Applicable
Exemption From Such Registration Requirements.

 

The Company agrees to reissue the Shares and Warrant Shares issuable upon exercise of the foregoing, without the legend set forth above, at such time as (i) the holder thereof is permitted to dispose of such Shares and Warrant Shares issuable upon exercise of the foregoing pursuant to Rule 144 under the 1933 Act, or (ii) such securities
are sold to a purchaser or Purchaser who (in the opinion of counsel to the seller or such purchaser(s), in form and substance reasonably satisfactory to the Company and its counsel) are able to dispose of such shares publicly without registration under the 1933 Act, or (iii) such securities have been registered under the 1933 Act.  If a Purchaser shall make a sale or transfer of Shares or Warrant Shares either (x) pursuant to Rule 144 or (y) pursuant to a registration statement under the 1933 Act and
in each case shall have delivered to the Company or the Company’s transfer agent the certificate representing Shares or Warrant Shares containing a restrictive legend which are the subject of such sale or transfer (the date of such sale or transfer and Share or Warrant Share, as the case may be, delivery being the “ Share Delivery Date ”) and (1) the Company shall fail to deliver or cause to be delivered (any such delivery shall
include crediting the Purchaser’s balance account with DTC) to such Purchaser a certificate representing such Shares or Warrant Shares that is free from all restrictive or other legends by the third Trading Day following the Share Delivery Date and (2) following such third Trading Day after the Share Delivery Date and prior to the time such Shares or Warrant Shares are received free from restrictive legends, the Purchaser, or any third party on behalf of such Purchaser, purchases (in an open market transaction
or otherwise) shares of Shares to deliver in satisfaction of a sale by the Purchaser of such Shares or Warrant Shares (a " Buy-In "), then the Company shall pay in cash to the Purchaser (for costs incurred either directly by such Purchaser or on behalf of a third party) the amount by which the total purchase price paid for Shares as a result of the Buy-In (including brokerage commissions, if any) exceed the proceeds received by such Purchaser as
a result of the sale to which such Buy-In relates. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser in respect of the Buy-In. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

 

Prior to the Registration Statement (as defined in the Registration Rights Agreement) being declared effective, any Warrant Shares issued pursuant to the exercise of the Warrant shall bear a legend in the same form as the legend indicated above; provided that such legend shall be removed from such shares and the Company shall issue new
certificates without such legend if (i) the holder has sold or disposed of such shares pursuant to Rule 144 under the 1933 Act, or the holder is permitted to dispose of such shares pursuant to Rule 144 under the 1933 Act, (ii) such shares are registered for resale under the 1933 Act, or (iii) such shares are sold to a purchaser or Purchaser who (in the opinion of counsel to the seller or such purchaser(s), in form and substance reasonably satisfactory to the Company and its counsel) are able to dispose of such
shares publicly without registration under the 1933 Act.  Upon such Registration Statement becoming effective, the Company agrees to promptly issue new certificates representing such shares without such legend.  Any Warrant Shares issued after the Registration Statement has become effective shall be free and clear of any legends, transfer restrictions and stop orders.  Notwithstanding the removal of such legend, the Purchaser agree to sell the Warrant Shares represented by the new
certificates in accordance with the applicable prospectus delivery requirements (if copies of a current prospectus are provided to such Purchaser by the Company) or in accordance with an exemption from the registration requirements of the 1933 Act.

 

Nothing herein shall limit the right of any holder to pledge these securities pursuant to a bona fide margin account or lending arrangement entered into in compliance with law, including applicable securities laws.

 

  

14

  

 

Article VI.

 

Termination

 

Section 6.1 Termination by Mutual Consent.  This Agreement may be terminated at any time prior to the Closing by the mutual written consent of the Company and the Purchaser.

 

Section 6.2 Other Termination.  This Agreement may be terminated by action of the Board of Directors of the Company or by the Purchaser at any time if the Closing shall not have been consummated on the Closing
Date; provided, however, that the party (or parties) prepared to close shall retain its (or their) right to sue for any breach by the other party (or parties).

 

Article VII.

 

Indemnification

 

Section 7. In consideration of the Purchaser’ execution and delivery of the this Agreement and the Registration Rights Agreement and acquiring the Shares hereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the
Purchaser and all of its partners, officers, directors, employees, members and direct or indirect investors and any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Purchaser Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of whether any such Purchaser Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Purchaser Indemnified Liabilities”), incurred by any Purchaser Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate or document contemplated hereby or thereby.  Notwithstanding the foregoing, Purchaser Indemnified Liabilities shall not include any liability of any Purchaser Indemnitee arising out of such Purchaser Indemnitee’s gross negligence or
willful misconduct.  To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Purchaser Indemnified Liabilities which is permissible under applicable law.  Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Article VII shall be the same as those set forth in Section 6 (other than Section
6(b)) of the Registration Rights Agreement, including, without limitation, those procedures with respect to the settlement of claims and Company’s right to assume the defense of claims.

 

Article VIII.

 

Governing Law; Miscellaneous

 

Section 8.1 Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts to
be wholly performed within such state and without regard to conflicts of laws provisions.

 

  

15

  

Any legal action or proceeding arising out of or relating to this Agreement and/or the Transaction Documents may be instituted in the courts of the State of California sitting in Los Angeles County, and the parties hereto irrevocably submit to the jurisdiction of each such court in any action or proceeding.  Subscriber hereby
irrevocably waives and agrees not to assert, by way of motion, as a defense, or otherwise, in every suit, action or other proceeding arising out of or based on this Agreement and/or the Transaction Documents and brought in any such court, any claim that Subscriber is not subject personally to the jurisdiction of the above named courts, that Subscriber’s property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper.

 

Section 8.2 Counterparts.  This Agreement may be executed by facsimile and in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts together shall constitute one agreement.  Execution and delivery of this Agreement by facsimile transmission (including delivery of documents in Adobe PDF format) shall constitute execution and delivery of this Agreement for all purposes, with the same force and effect as execution and delivery of an original manually signed copy hereof.

 

Section 8.3 Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement.

 

Section 8.4 Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

Section 8.5 Costs and Expenses.  All reasonable out-of-pocket costs and expenses incurred by the Company with respect to this Agreement and
the transactions contemplated by this Agreement shall be paid by the Purchaser at the Closing.  The Purchaser shall also be responsible for the payment of vFinance’s and the Company’s reasonable post Closing expenses incurred in connection with the transactions contemplated by this Agreement.  Such post Closing expenses shall be paid promptly after the Company issues a request in writing but in no event later than five (5) business days following such request. Nevertheless, in
the event that any dispute between the parties should result in litigation or arbitration, the prevailing party in such dispute shall be entitled to recover from the non-prevailing party in such dispute all reasonable fees, costs and expenses of enforcing any right of the prevailing party, including without limitation, reasonable attorney’s fees and expenses, all of which shall be deemed to have accrued upon the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.

 

Section 8.6 Entire Agreement; Amendments; Waivers.

 

(a) This Agreement supersedes all other prior oral or written agreements between the Purchaser, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, including
without limitation the February 2009 Offering and the October 2009 Offering, and this Agreement and the instruments referenced herein (including the other Transaction Documents) contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the Purchaser, and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

  

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(b) The Purchaser may at any time elect, by notice to the Company, to waive (whether permanently or temporarily, and subject to such conditions, if any, as the Purchaser may specify in such
notice) any of Purchaser’ rights under any of the Transaction Documents to acquire the Shares from the Company, in which event such waiver shall be binding against the Purchaser in accordance with its terms; provided, however, that the voluntary waiver contemplated by this sentence may not reduce the Purchaser’ obligations to the Company under the Transaction Documents.

 

Section 8.7 Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement
must be in writing, must be delivered by (i) courier, mail or hand delivery or (ii) facsimile, and will be deemed to have been delivered upon receipt. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Clean Power Technologies, Inc.

436-35th Avenue, N.W.

Calgary, Alberta

Canada T2K OC1

Attention: Abdul Mitha

Facsimile: (403) 277-3117

 

With a copy to:

 

Gersten Savage, LLP

600 Lexington Avenue, 9th Floor

New York, New York 10022

Telephone:  (212) 752-9700

Facsimile:   (212)  813-9768

Attention: Peter J. Gennuso, Esq.

 

If to the Purchaser:

 

                The Quercus Trust

1835 Newport Blvd.

A109-PMB 467

Costa Mesa, CA  92627

Telephone:

Facsimile:

Attention: David Gelbaum

 

With a copy to:

 

The Law Offices of Joseph P. Bartlett, P.C.

1900 Avenue of the Stars, 19th Floor

Los Angeles, CA 90067

Telephone: (310) 201-7553

Facsimile: (310) 388-1055

Attention: Joseph Bartlett, Esq.

 

  

17

  

Each party shall provide five (5) days prior written notice to the other party of any change in address, telephone number or facsimile number.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

Section 8.8 Successors and Assigns.  Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns, including any Permitted Assignee (as defined below).  The Purchaser may assign some or all of its rights hereunder to any assignee of the Shares or Warrant Shares (in each case, a “Permitted Assignee”); provided,
however, that any such assignment shall not release the Purchaser from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption.

 

Section 8.9 No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

Section 8.10 Survival.  The representations, warranties, rights to indemnification and agreements of the Company and the Purchaser contained
in the Agreement shall survive the delivery of the Shares.

 

Section 8.11 Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

Section 8.12 No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

Section 8.13 Days.  Unless the context refers to “business days” or “Trading Days”, all references herein to “days”
shall mean calendar days.

 

Section 8.14 Placement Agent.  Other than the engagement of vFinance by the Company, the Purchaser and the Company each acknowledges and warrants
that it has not engaged any placement agent in connection with the sale of the Securities, and the Company and Purchaser shall indemnify and hold the other harmless against any liability, loss, or expense (including without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising from any breach of said warranty.

 

  

18

  

  

	 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to the Amended and Restated Stock Purchase Agreement to be duly executed as of the date and year first above written.

 

	
COMPANY:
	
PURCHASER(S):

 

	
CLEAN POWER TECHNOLOGIES, INC.

 

/s/ Abdul Mitha
	  	
THE QUERCUS TRUST

 

/s/ David Gelbaum

	
Name:  Abdul Mitha

Title: Chief Executive Officer

 
	  	
Name:  David Gelbaum

Title:  Trustee

 

  

19

  

EXHIBIT A

 

 

[Form of Registration Rights Agreement]

 

  

20

  

EXHIBIT B

 

 

Form of Warrants

 

  

21

  

EXHIBIT C

 

 

Form of Legal Opinion

 

  

22

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