Document:

EX-10.17

 

Exhibit 10.17

PYRAMID LAKE PAIUTE TRIBE FISH SPRINGS RANCH SETTLEMENT AGREEMENT

     THIS SETTLEMENT AGREEMENT, dated as of May 30, 2007 is entered into among the Pyramid Lake
Paiute Tribe of Indians, the United States of America, the Bureau of Land Management and the
Department of the Interior, and Fish Springs Ranch, LLC.

1.0 RECITALS

1.1. Fish Springs owns Water Rights in the amount of 14,108 acre-feet per year. The State
Engineer, by a Ruling and a Supplemental Ruling, has authorized Fish Springs to Transfer up to
13,000 acre-feet per year of Water Rights for use outside of the Honey Lake Valley Basin.

1.2. Pursuant to the State Engineer’s authorization, Fish Springs has proposed to Pump and Transfer
up to 8,000 acre-feet per year of the Water Rights to the North Valleys Planning Area by means of
the Project described in the FEIS and the ROD issued by the BLM. The Tribe has objected to the
FEIS, the ROD, and the Project, and asserts that the Project will harm the resources of the
Reservation, will cause Injuries to Tribal Water Rights, and will impair the Tribe’s existing and
claimed Tribal Water Rights in the Honey Lake Valley Basin, the Smoke Creek Desert Basin, Pyramid
Lake, and the Pyramid Lake Valley Basin.

1.3. On July 20, 2006, the Tribe filed before the Interior Board of Land Appeals, Office of the
Secretary of the Interior (IBLA) an appeal and request for stay of the ROD. On September 7, 2006,
the IBLA denied the requested stay of the Tribe. The Tribe’s appeal before the IBLA is Number IBLA
2006-223, NVN-76800.

 

 

1.4. On October 13, 2006, the Tribe filed a complaint in the United States District Court of Nevada
Case Number 2:06-CV-01293-LDG-LRL, alleging, among other matters, that the FEIS and ROD did not
comply with NEPA and that the BLM violated the federal trust obligation owed to the Tribe. The
District Court has enjoined any further construction activity, except as expressly set forth in its
May 8, 2007, order, pending a final determination in that case. An evidentiary hearing date has
been set before the Court for June 4, 2007.

1.5. On April 11, 2007, the Tribe filed Notice of Appeal of the District Court’s Preliminary
Injunction. On April 13, 2007, Fish Springs Ranch filed a notice of cross-appeal. That appeal and
cross-appeal are pending before the Ninth Circuit Court of Appeals, Case Numbers 07-15633 and
07-15671.

1.6. The Parties have agreed to settle and resolve permanently (a) the Tribe’s objections to the
Project, the FEIS, the ROD, the Ground Water Rights, and the Additional Fish Springs Water Rights,
and (b) the Tribe’s claims that the Project, the Water Rights, the Ground Water Rights, and the
Additional Fish Springs Water Rights will harm the resources of the Reservation, will cause
Injuries to Tribal Water Rights, and will impair the Tribe’s existing and claimed Tribal Water
Rights in the Honey Lake Valley Basin, Smoke Creek Desert Basin, Pyramid Lake, and the Pyramid Lake
Valley Basin.

1.7. By means of this Agreement, the Tribe and Fish Springs intend to completely and fully settle
and conclude the current disputes between them with this settlement that has two independent
components: First, in consideration of the payments and property called for in Paragraph 4.1 of
this Agreement, the Tribe and Fish Springs intend to settle and

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forever compromise all administrative appeals and end all litigation, whether currently pending or
arising in the future, involving the Tribe’s objections to the Project, the Ground Water Rights,
the Additional Fish Springs Water Rights, the FEIS and the ROD, or relating to any potential
impacts to the Tribe or its resources arising out of the Project, the FEIS, the ROD, the
Groundwater Rights, and the Additional Fish Springs Water Rights; and Second, in consideration of
the payments called for in Paragraph 4.2 of this Agreement, to completely and fully settle any and
all claims of the Tribe and of the United States on behalf of the Tribe and its members, for
impacts or injuries to existing and claimed Tribal Water Rights and Injuries to Tribal Water Rights
in the Honey Lake Valley Basin, the Smoke Creek Desert Basin, Pyramid Lake, and the Pyramid Lake
Valley Basin or relating to any potential impacts to the Reservation and to existing and claimed
Tribal Water Rights and Injuries to Tribal Water Rights resulting from the Project, the Water
Rights, the Ground Water Rights, and the Additional Fish Springs Water Rights.

1.8. In addition, the Parties intend this Agreement to fulfill the United States’ trust obligation
to the Tribe to protect existing and claimed Tribal Water Rights, to prevent Injuries to Tribal
Water Rights, and to protect the Reservation and its resources, including the United States’ trust
obligations regarding implementation of the Project and the Pumping and Transfer of the Ground
Water Rights and the Additional Fish Springs Water Rights.

1.9. It is the policy of the United States, in fulfillment of its trust responsibility to Indian
tribes, to promote Indian self-determination and economic self-sufficiency, and to

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settle, wherever possible, the water rights claims of Indian tribes without lengthy and costly
litigation.

1.10. In order to fully implement this Agreement, the Parties recognize that additional
legislative, judicial, administrative, or other actions are required. Accordingly, the Tribe and
Fish Springs recognize that the BLM and the United States will execute this agreement after the
Tribe and Fish Springs will execute the Agreement. The Tribe and Fish Springs intend to act in
conformance with the obligations under this Agreement until such time as the BLM and The United
States execute the Agreement.

     NOW, THEREFORE, the Parties agree as follows:

2.0 DEFINITIONS

     For purposes of this Agreement, the following terms shall have the meanings set forth below:

2.1. “Act of Congress” shall mean the legislation enacted by Congress and approved by the President
of the United States ratifying and approving this Agreement in substantially the form attached as
Exhibit “A.”

2.2. “Additional Fish Springs Water Rights” shall mean the Pumping and Transfer of Ground Water
Rights in excess of 8,000 acre feet per year, up to 13,000 acre feet per year, pursuant to the
Ruling, the Supplemental Ruling, and Paragraph 4.11 of this Agreement.

2.3. “Agreement” shall mean this Pyramid Lake Paiute Tribe Fish Springs Ranch Settlement Agreement
and all Exhibits hereto.

2.4. “Approval of the Secretary” or “Secretarial Approval” shall mean the approval of the Secretary
of the Interior acting in the capacity of the Trustee for the Tribe and its members as such
approval is required and directed under the Act of Congress.

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2.5. “Aquatrac Land” shall mean the 6,214.32 acres of land, more or less, including all water
rights and other appurtenances described in Exhibit “B.”

2.6. “BLM” shall mean the Bureau of Land Management and the United States Department of the
Interior, who granted the ROD, and are named as defendants in the Federal District Court Action
Ninth Circuit Appeals and in the IBLA Appeal, and are acting solely in the capacity as defendants
in the IBLA Appeal, the Federal District Court Action, the Ninth Circuit Appeals, and not in any
capacity as trustee for the Tribe and its members.

2.7. Effective dates related to this Agreement shall be as follows:

	 	2.7.1.	 	“Effective Date” shall mean the date as of which both Fish Springs and the Tribe
have executed this Settlement Agreement; the parties to the Federal Court Action have
filed the stipulation to dissolve the preliminary injunction and the injunction
pending appeal, and to stay proceedings in the Federal District Action; filed the
dismissal of the IBLA appeal; and filed the dismissal of the Ninth Circuit Appeals.
	 
	 	2.7.2.	 	“First Payment Date” shall mean January 8, 2008.
	 
	 	2.7.3.	 	“Final Payment Date” shall mean January 8, 2009 or passage of an Act of Congress and
Approval of the Secretary, whichever occurs later.

2.8. “Effluent” shall mean the product discharged from the point of final treatment from within a
sewage collection and treatment system as referred to in Title 48, Chapter 533, of the Nevada
Revised Statutes.

2.9. “End Users” shall mean Washoe County, the City of Reno and the North Valleys Planning Area in
the State of Nevada, all persons in or residing in, and all entities doing

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business in, Washoe County, the City of Reno and the North Valleys Planning Area now and in the
future, using water Pumped and Transferred through the Project pursuant to this Agreement for
whatever purpose, as well as their successors and assigns.

2.10. “Federal District Court Action” shall mean the action described in Recital 1.4.

2.11. “FEIS” shall mean the Final Environmental Impact Statement, North Valleys Rights-of-Way
Projects, prepared by the United States Department of the Interior, Bureau of Land Management,
notice of which was published in the November 10, 2005, Federal Register.

2.12. “Fish Springs” shall mean Fish Springs Ranch, LLC, a Nevada limited liability company, its
parent, Pico Holdings, Inc., a Delaware corporation, Pico Holdings, Inc.’s wholly or
partially-owned subsidiaries, including but not limited to Nevada Land and Resource Company, LLC, a
Nevada limited liability company, and Vidler Water Company, Inc., a Nevada corporation, and all of
their successors and assigns.

2.13. “Fish Springs Ranch” shall mean the land described in Exhibit “C.”

2.14. “Grant, Bargain and Sale Deed” shall mean the deed conveying the Aquatrac Land attached as
Exhibit “D.”

2.15. “Ground Water Rights” shall mean the Pumping and Transfer of up to 8,000 acre-feet of the
Ground Water Rights per year pursuant to the Ruling and the Supplemental Ruling, through the
Project and pursuant to the Right-of-Way granted in the ROD.

2.16. “Honey Lake Valley Basin” shall mean the Honey Lake Valley Hydrographic Basin as described as
Nevada Hydrographic Water Basin 97.

2.17. “IBLA Appeal” shall mean the IBLA action described in Recital 1.3.

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2.18. “Injuries to Tribal Water Rights” shall mean any interference with, diminution of, or
deprivation of Tribal Water Rights including, but not limited to, a lowering of the underground
water table of the Reservation, a diminution of the levels of Pyramid Lake or the flows in or into
the Truckee River, impacts to water quality on or off the Reservation caused by Pumping at Fish
Springs Ranch, Pumping and Transfer of the Ground Water Rights and the Additional Fish Springs
Water Rights, a diminution of groundwater flows onto the Reservation, subsidence of land on the
Reservation, all impacts to water or land on the Reservation or on the land aboriginally occupied
by the Tribe and its members and their predecessors, including all such interferences with,
diminutions of, or deprivations of Tribal Water Rights from the Project, the Water Rights, the
Ground Water Rights, and the Additional Fish Springs Water Rights which are identified in the FEIS
or which are not identified in the FEIS but which occur as a result of the Project, the Water
Rights, the Ground Water Rights, and the Additional Fish Springs Water Rights.

2.19. “North Valleys Planning Area” shall mean an area of approximately 245 square miles of land
located in Washoe County as described in the Washoe County Master Plan.

2.20. “Party” shall mean any signatory to this Agreement; “Parties” shall mean all of the
signatories to this Agreement.

2.21. “Project” shall mean the Pumping and Transfer of 8,000 acre-feet of the Ground Water Rights
per year as described in the FEIS and ROD and the Additional Fish Springs Water Rights as
ultimately carried out hereafter. The term does not include the project proposed by Intermountain
Water Supply, Ltd. and described in the FEIS.

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2.22. “Pump, Pumped, or Pumping” shall mean the withdrawal of water from beneath the surface of the
earth through a well.

2.23. “Pyramid Lake” shall mean the body of water that serves as the terminus for the Truckee River
in Nevada and that reach of the Truckee River within the boundaries of the Reservation.

2.24. “Pyramid Lake Valley Basin” shall mean the Pyramid Lake Valley Hydrographic Basin as
described as Nevada Hydrographic Water Basin 81.

2.25. “Pyramid Lake Paiute Tribe” or “the Tribe” shall mean the members of, and the government
composed of the members of, the Pyramid Lake Paiute Tribe, organized under section 16 of the act of
June 18, 1934, as codified at 25 U.S.C. 476.

2.26. “Reservation” shall mean the reservation of the Pyramid Lake Paiute Tribe, created by
Executive Order ___ dated March 23, 1874.

2.27. “Reserved Rights Doctrine” shall mean the doctrine as announced by the United States Supreme
Court in Winters v. United States, 207 U.S. 564 (1908) and subsequent decisions of the courts of
the United States.

2.28. “ROD” shall mean the Record of Decision that is the separate, concise public record of the
BLM District Manager’s decision regarding the FEIS and the Project issued May 31, 2006 pursuant to
the requirements of 40 C.F.R. § 1505.2. ROD shall include the Right of Way granted to Fish Springs
pursuant to the terms of the ROD.

2.29. “Ruling” shall mean Ruling No. 3787 signed by the State Engineer on March 1, 1991, and
attached hereto as Exhibit “E.”

2.30. “Secretary” shall mean the Secretary of the United States Department of the Interior.

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2.31. “Smoke Creek Desert Basin” shall mean the Smoke Creek Desert Hydrographic Basin described as
Nevada Hydrographic Water Basin 21.

2.32. “State Engineer” shall mean the office within the State of Nevada created pursuant to N.R.S.
§ 532.010 et seq.

2.33. “Supplemental Ruling” shall mean the Supplemental Ruling on Remand No. 3787A signed by the
State Engineer on October 9, 1992, and attached hereto as Exhibit “F.”

2.34. “Transfer” or “Transferred” shall mean the conveyance, transport, or importation of water
Pumped at Fish Springs Ranch to any location outside of the Honey Lake Valley Basin.

2.35. “Tribal Water Rights” shall mean all rights of the Reservation and of the Tribe and its
members to the use for any purpose of surface water, groundwater, or Effluent on or off the
Reservation, whether based on state law, federal law, or other law, whether claimed, unclaimed,
asserted, or unasserted, whether existing in the past, present, or future within the Honey Lake
Valley Basin, the Smoke Creek Desert Basin, Pyramid Lake, and the Pyramid Lake Valley Basin, and
all past, present, and future rights of the Tribe and its members to the use for any purpose of
surface water, groundwater, or Effluent based upon the aboriginal occupation of the Tribe and its
members and their predecessors of any area of land.

2.36. “Truckee River Operating Agreement” or “TROA” shall mean the October 2003 draft of the
Truckee River Operating Agreement negotiated for the purpose of carrying out the terms of the
Truckee-Carson-Pyramid Lake Water Rights Settlement Act, Public Law No. 101-618, and any final,
signed version of the Truckee River Operating

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Agreement which becomes effective under the terms of the Truckee-Carson-Pyramid Lake Water Rights
Settlement Act.

2.37. “Truckee River Water Quality Settlement Agreement” shall mean the agreement dated October 10,
1996, between the Tribe, the City of Reno, the City of Sparks, the County of Washoe, the United
States Department of the Interior, the United States Department of Justice, the United States
Environmental Protection Agency, and the Nevada Division of Environmental Protection.

2.38. “United States” shall mean the United States of America, acting through the Secretary, as
trustee for the Tribe and its members.

2.39. “Water Rights” shall mean the 14,108 acre-feet of water available to Fish Springs pursuant to
certificates of water rights issued to Fish Springs or its predecessors in interest by the State
Engineer, copies of which are attached as Exhibit “G.”

2.40. “Wiring Instructions” shall mean the wiring instruction provided for deposit to the Trust
Account of Robert C. Maddox & Associates.

3.0 EXHIBITS

     The following exhibits are attached hereto, incorporated herein and made a part of this
Agreement.

	 	 	 	 	 	 	 
	Exhibit A
	 	Exhibit C
	 	Exhibit E
	 	Exhibit G
	Exhibit B
	 	Exhibit D
	 	Exhibit F
	 	Exhibit H

4.0 AGREEMENTS OF FISH SPRINGS

4.1. Fish Springs agrees to make the payments set forth in this Paragraph 4.1 in order to fully and
forever discharge and settle the Tribe’s objections and claims arising out of or related to the
ROD, the FEIS, the Project, the Ground Water Rights, the Additional

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Fish Springs Water Rights, the IBLA Appeal, and the Federal District Court Action. The Parties
intend that the obligations of the Tribe, Fish Springs, and the BLM to settle these claims are not
contingent on the Act of Congress or the Approval of the Secretary and intend that the Parties are
bound by these obligations immediately upon the execution of this Agreement by the Tribe, Fish
Springs, and the BLM.

4.1.1. On the date that Fish Springs and the Tribe execute this Settlement Agreement, Fish
Springs shall deliver to Don Springmeyer, Esq., counsel for the Tribe, for disbursal to the
Tribe the sum of Five Hundred Thousand Dollars ($500,000.00) and the Grant, Bargain and
Sale Deed for the Aquatrac Land which shall be not be disbursed to the Tribe or recorded
until satisfaction of the conditions relating to the Effective Date as defined above in
Paragraph 2.7.1. Such funds and property are compensation for the Tribe’s agreement to
request in the Federal District Action to dissolve the preliminary injunction and the
injunction pending appeal, to stay the proceedings in the Federal District Court Action, to
dismiss the IBLA Appeal, to dismiss the appeal filed in the Ninth Circuit Court of Appeals,
and to cooperate in accordance with Paragraph 8.14.

4.1.2. On the First Payment Date, January 8, 2008, Fish Springs shall pay the Tribe Three
Million One Hundred Thousand Dollars ($3,100,000.00). The payment required by this
Paragraph 4.1.2 and the payments required by Paragraph 4.10 is compensation for fully
settling and resolving all objections, litigation, claims, demands, injuries, and harms
alleged by the Tribe over the Project, the Ground Water Rights, the Additional Fish Springs
Water Rights, the FEIS, and the ROD.

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4.2. Fish Springs agrees to make the payment required by this Paragraph 4.2 in order to fully and
forever settle the Tribe’s claims and the United States’ claims on behalf of the Tribe and its
members for impacts or injuries to past, existing, claimed, or future Tribal Water Rights, or
Injuries to Tribal Water Rights. The Parties intend that the obligations to settle these claims
are contingent upon an Act of Congress and Approval of the Secretary.

4.2.1. On the Final Payment Date, January 8, 2009 or an Act of Congress and Approval of the
Secretary, whichever occurs later, Fish Springs shall pay the Tribe Three Million Six
Hundred Thousand Dollars ($3,600,000.00) for the Tribe’s claims of impairment to the
Tribe’s existing and claimed Tribal Water Rights and Injuries to Tribal Water Rights in the
Honey Lake Valley Basin, Smoke Creek Desert Basin, Pyramid Lake, and the Pyramid Lake
Valley Basin. The Parties intend that the payment required under this Paragraph 4.2.1
requires an Act of Congress and Approval of the Secretary and that the Final Payment Date
shall be delayed until the passage of an Act of Congress and Approval of the Secretary is
obtained. Fish Springs agrees to pay interest on the amount due under this Paragraph 4.2.1
at the LIBOR rate per annum from January 8, 2009 until the Act of Congress and Approval of
the Secretary have occurred if these prerequisites have not occurred by January 8, 2009.

4.3. Fish Springs shall wire the funds to be paid to the Tribe pursuant to this Agreement in
accordance with the Wiring Instructions provided to Fish Springs in present collected funds on or
before the dates the money is due and payable pursuant to this Agreement.

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4.4. In the event Fish Springs fails to make the payments required on the Effective Date or the
First Payment Date, the Tribe may, at its option, (a) seek specific performance of this Agreement
or (b) after thirty days’ written notice to Fish Springs, cancel this Agreement and retain all
consideration paid by Fish Springs. In the event Fish Springs fails to make the payment required
on the Final Payment Date, other than for failure to obtain an Act of Congress or Approval of the
Secretery, the Tribe may, at its option, (a) seek specific performance of this Agreement or (b)
after thirty days’ written notice to Fish Springs from the Tribe may retain all consideration paid
by Fish Springs. Fish Springs may cure any failure to make the payment required on the Effective
Date, the First Payment Date, or the Final Payment Date by making the required payment within the
thirty-day notice period specified in this paragraph, and for reasons other than failure to obtain
an Act of Congress or Approval of the Secretary, with interest at the LIBOR rate plus 2% from the
required dates to the date payment is made. Fish Springs may cure any failure to make the
conveyance required on the Effective Date by making the required conveyance at any time within the
thirty-day notice period specified in this Paragraph 4.4.

4.5. After the Effective Date of this Agreement, Fish Springs shall deliver to the Tribe and the
United States the reports prepared by Fish Springs or its designee for the Nevada State Engineer’s
office showing the total amount of water Pumped and Transferred from Fish Springs Ranch to the
North Valleys Planning Area through the Project during the preceding year.

4.6. Fish Springs shall implement the Water Resources Monitoring and Management Plan as approved by
the State Engineer.

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4.7. In consideration for the payment of funds and the conveyance of property as provided in
Paragraphs 4.1 of this Agreement, Fish Springs shall have the right:

	 	4.7.1.	 	To Pump and Transfer through the Project to the End Users for the use of the End
Users for any purpose and at any location allowed by the State Engineer the Ground
Water Rights and the Additional Fish Springs Water Rights, subject to the requirements
of Paragraph 4.10, without objection by the Tribe;
	 
	 	4.7.2.	 	To manage Fish Springs Ranch and the Ground Water Rights and the Additional Fish
Springs Water Rights by replacing or deepening existing wells, constructing new wells,
constructing monitoring wells, and any and all other actions Fish Springs determines,
in the exercise of its sole judgment, are necessary and appropriate to the management
of Fish Springs Ranch and the Ground Water Rights, and the Additional Fish Springs
Water Rights consistent with the provisions of this Agreement.

4.8. In consideration for the payment of funds as provided in Paragraphs 4.2 of this Agreement,
Fish Springs shall have the right:

	 	4.8.1.	 	To manage Fish Springs Ranch and the Water Rights by replacing or deepening existing
wells, constructing new wells, constructing monitoring wells, and any and all other
actions Fish Springs determines, in the exercise of its sole judgment, are necessary
and appropriate to the management of Fish Springs Ranch and the Water Rights,
consistent with the provisions of this Agreement;

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	 	4.8.2.	 	To assert the benefits and rights obtained under the waivers of the Tribe as set
forth in this Agreement and Exhibit “H.”

4.9. Upon the execution of this Agreement, the Parties shall file stipulations to: (a) dismiss with
prejudice the Tribe’s Appeal and Fish Springs’ Cross-Appeal filed in the Ninth Circuit Court of
Appeals; (b) dissolve the preliminary injunction and injunction pending appeal entered in the
Federal District Court Action; (c) stay the Federal District Court Action pursuant to the terms of
this Agreement pending approval of an Act of Congress and Approval of the Secretary; and (d)
dismiss with prejudice the Tribe’s IBLA Appeal.

4.10. Fish Springs agrees that at such time as Fish Springs is permitted and authorized to Pump and
Transport Additional Fish Springs Water Rights that Fish Springs shall pay to the Tribe a sum equal
to Twelve (12%) Percent of the gross sales price for each acre- foot of Additional Fish Springs
Water Rights. The Twelve (12%) Percent fee paid to the Tribe shall not be applicable to any
infrastructure component fee levied by Washoe County or Fish Springs attributable to the Additional
Fish Springs Water Rights. The Twelve (12%) Percent fee shall be due and payable from the proceeds
of any escrow relating to Additional Fish Springs Water Rights at the time of the close of the
escrow relating to such sales transaction. The Tribe shall not oppose all permitting activities
related to the Additional Fish Springs Water Rights.

5.0 AGREEMENTS OF THE UNITED STATES AND THE TRIBE

5.1. On the Effective Date and in consideration of the payment and conveyance described in
Paragraph 4.1.1 the Tribe shall have filed the stipulation to dismiss with prejudice the IBLA
Appeal, the stipulation to dismiss the Appeal and Cross-Appeal filed in the Ninth Circuit Court of
Appeals, the stipulation to dissolve the preliminary

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injunction and injunction pending appeal, and the stipulation and joint motion to stay proceedings
in the Federal District Court Action as set forth above. In consideration of the payment and
conveyance described in Paragraph 4.1.1 and 4.1.2 the Tribe shall execute a stipulation to dismiss
the Federal District Court Action. The Parties agree that the stipulation to dismiss the Federal
District Court Action shall not be filed until the Act of Congress and the Approval of the
Secretary have occurred or until it is reasonably certain that Act of Congress and the Approval of
the Secretary shall not be forthcoming.

5.2. In consideration of the payments and conveyance described in Paragraph 4.1.1 and 4.1.2, the
Tribe agrees that the Project, the FEIS, and the ROD fulfill all obligations of the BLM under the
National Environmental Policy Act, the Endangered Species Act, the National Historic Preservation
Act, and all other applicable state and federal environmental laws. The Tribe further agrees that
the BLM has discharged its trust responsibilities in the preparation of both the FEIS and the ROD.

5.3. Provided that Fish Springs has complied with and continues to comply with the provisions of
this Agreement, including its obligations under Paragraph 4.10, the Tribe, shall not object to the
Project, Pumping and Transfer of the Ground Water Rights and the Additional Fish Springs Ranch
Water Rights consistent with Paragraph 4.7 hereof.

5.4. In consideration for the payments under paragraph 4.2, The Tribe and its members, and the
United States acting through the Secretary on behalf of the Tribe and its members, accept the
benefits of this Agreement to the Tribe as full and complete satisfaction of the Tribe’s claims for
Tribal Water Rights or Injuries to Tribal Water Rights under federal, state, and other laws,
including claims for Tribal Water Rights or Injuries to Tribal Water Rights from or in connection
with the Project, the Water Rights,

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the Ground Water Rights, and the Additional Fish Springs Water Rights, consistent with Paragraph
4.8, from time immemorial to the Final Payment Date and thereafter forever, as set forth in Exhibit
“H.” Nothing in this Agreement shall be deemed to recognize or establish any right of a member of
the Tribe to water, or to land, or to compensation under this Agreement.

6.0 WAIVER AND RELEASE OF CLAIMS BY THE UNITED STATES AND THE TRIBE

6.1. The Tribe waives all rights it may have under federal, state, or other laws to challenge the
validity of the FEIS, the ROD, the Project, the Groundwater Rights, and the Additional Fish Springs
Water Rights in any manner whatsoever subject only to the terms of this Agreement.

6.2. Upon the Act of Congress and the Approval of the Secretary, the Tribe and its members and the
United States acting through the Secretary on behalf of the Tribe, and its members waive all rights
they may have under state, federal, or other law, to challenge the validity or characteristics of
the Project, the Water Rights, the Ground Water Rights, the Additional Fish Springs Water Rights,
or the exercise of the Water Rights, the Ground Water Rights, and the Additional Fish Springs Water
Rights, including the right to assert a senior priority against or to place a call on the Project,
the Water Rights, the Ground Water Rights, or Additional Fish Springs Water Rights, and Tribal
Water Rights shall be subordinate to the Project, the Water Rights, the Ground Water Rights, and
the Additional Fish Springs Water Rights from time immemorial to the Final Payment Date, and
thereafter forever, as set forth in Exhibit “H” hereto.

6.3. Upon the Act of Congress and the Approval of the Secretary, the Tribe, and the United States
acting through the Secretary on behalf of the Tribe, waive, release, and

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discharge all claims of the Tribe for Tribal Water Rights or Injuries to Tribal Water Rights under
federal, state, or other laws, including Tribal Water Rights or Injuries to Tribal Water Rights
from or in connection with the Project, the Water Rights, the Ground Water Rights, and Additional
Fish Springs Water Rights, from time immemorial to the Final Payment Date, and thereafter forever,
and any and all future claims of Tribal Water Rights or Injuries to Tribal Water Rights under
federal, state, or other laws, including Tribal Water Rights or Injuries to Tribal Water Rights
from or in connection with the Project, the Water Rights, the Ground Water Rights, and the
Additional Fish Springs Water Rights, from and after the Final Payment Date, and thereafter
forever, as set forth in Exhibit “H” hereto.

6.4. Upon the Act of Congress and the Approval of the Secretary, the Tribe, and the United States
acting through the Secretary on behalf of the Tribe, waive, release, and discharge all claims
against Fish Springs, its officers, directors, employees, and agents relating to the negotiation
and implementation of this Agreement, as set forth in Exhibit “H” hereto.

6.5. Upon the Act of Congress and the Approval of the Secretary, the Tribe and its members, and the
United States acting through the Secretary on behalf of the Tribe and its members, acknowledge that
the Tribe has been competently, fully, and fairly represented by attorneys and technical experts in
negotiating and entering into this Agreement, and the Tribe waives and releases all claims against
the United States, the Secretary, and their employees and agents relating to the negotiation and
implementation of this Agreement, including the Tribe’s use and expenditure of the moneys paid by
Fish

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Springs under this Agreement, and the Tribe’s acquisition and use of the Aquatrac Land, as set
forth in Exhibit “H” hereto.

7.0 RETENTION OF CLAIMS BY THE PARTIES

7.1. The Parties retain the right to seek the interpretation of and to enforce this Agreement in
the United States District Court for the District of Nevada, but not in the courts of the Tribe.
Except for the right to cancel this Agreement for the non-payment of money or the failure to convey
the Aquatrac Land, the Parties’ remedies under this Agreement shall be limited to specific
enforcement of this Agreement or injunctive relief under this Agreement. No Party shall bring any
action to enforce this Agreement in the courts of the Tribe.

7.2. Fish Springs retains the right to:

	 	7.2.1.	 	Subject to performance pursuant to Paragraph 4.10 hereof, seek to Pump and Transfer
all or any part of the Additional Fish Springs Water Rights in excess of 8,000
acre-feet per year to the End Users subsequent to the Final Payment Date; and
	 
	 	7.2.2.	 	Object to any effort or attempt by the Tribe and its members, or by the United
States acting on behalf of the Tribe and its members, to oppose the terms of this
Agreement or to obtain a reserved right to groundwater or any additional Tribal Water
Rights not already confirmed to the Tribe in Nevada v. United States, 463 U.S. 110
(1983) and related proceedings, including the decree of the United States District
Court for the District of Nevada in United States v. Orr Water Ditch Company, et al.,
in Equity, Docket No. A3, dated September 8, 1944, and all amendments thereto.

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7.3. The Tribe and the United States, acting through the Secretary, on behalf of the Tribe,and its
members retain the right to:

7.3.1 Seek to obtain on behalf of the Tribe a reserved right to groundwater in the Honey
Lake Valley Basin, the Smoke Creek Desert Basin, and the Pyramid Lake Valley Basin;

7.3.2. Enforce the Tribe’s rights against any party to the Truckee River Operating
Agreement;

7.3.3. Enforce the Tribe’s rights against any party to the Truckee River Water Quality
Settlement Agreement;

7.3.4. Enforce whatever rights exist to seek compliance with any permit issued to any
wastewater treatment or reclamation facility treating wastewater generated by the End
Users.

7.4. Notwithstanding the retention of these rights by the Parties:

	 	7.4.1.	 	Subject to the payment provision of Paragraph 4.2, and the Act of Congress and
Approval of the Secretary, the Parties agree that any Tribal Water Rights that may be
established by the Tribe or the United States on behalf of the Tribe in (a) seeking a
general adjudication of all rights to use water in the Pyramid Lake Valley Basin, the
Smoke Creek Desert Basin, or the Honey Lake Valley Basin, or (b) attempting to obtain
a reserved right to groundwater in the Pyramid Lake Valley Basin, the Smoke Creek
Desert or Honey Lake Valley Basin shall be subject to the waivers, releases, and
discharges of the Tribe and the United States acting on behalf of the Tribe and its
members regarding the Project, the Water

20

 

	 	 	 	Rights, the Ground Water Rights, and the Additional Fish Springs Water Rights, and
shall be subordinate to the Project, the Water Rights, the Ground Water Rights, and
the Additional Fish Springs Water Rights.

7.4.2. Subject to the payment and conveyance provisions of Paragraph 4.1, the Parties
hereby ratify, confirm, declare to be valid, and agree not to object to, dispute, or
challenge the Project, the FEIS, the ROD, the Ground Water Rights, or the Additional Fish
Springs Water Rights in any action or claim brought by or on behalf of the Tribe after the
Effective Date of this Agreement.

8.0 OTHER AGREEMENTS OF THE PARTIES

8.1. Third Party Beneficiaries. The Parties intend the End Users to be third party
beneficiaries of this Agreement. It is understood that the discharge of Effluent generated from
the water Pumped and Transferred to the North Valleys Planning Areas from the Project and use of
the Ground Water Rights shall comply will all applicable discharge permits required by federal,
state, and local authorities. Fish Springs will use its best efforts to advocate the treatment and
reuse of wastewater within the North Valleys Planning Area for Project water imported to that area.

8.2. Precedent and Rights Affected. This Agreement is not intended to establish any
precedent with respect to the application of the Reserved Rights Doctrine to groundwater or the
quantification of Tribal Water Rights; and is not intended to affect the rights of any other tribe,
band, or community of Native Americans.

8.3. Construction. The Parties agree that they have each been represented by counsel in
connection with the drafting and execution of this Agreement, and that counsel have approved this
Agreement as to content and form. Accordingly, this Agreement is to be

21

 

construed according to its fair content and meaning, and no Party shall be entitled to construction
of this Agreement in its favor by virtue of its status as a Tribe, as a beneficiary of a trust
relationship with the United States, or otherwise.

8.4. Governing Law. The laws of the State of Nevada shall govern the construction and
interpretation of this Agreement.

8.5. Sovereign Immunity. In the event any Party to this Agreement files a lawsuit in the
United States District Court for the District of Nevada, but not in the courts of the Tribe, for
the interpretation or enforcement of this Agreement, naming the United States of America or the
Tribe as a party, the United States and the Tribe agree to be joined in any such litigation and
waive any claim by the United States or the Tribe to sovereign immunity from such suit. No suit to
interpret or enforce this Agreement may be brought in the courts of the Tribe.

8.6. Allotments and Allottees. No Reservation lands have ever been allotted to any member
of the Tribe; however, to the extent any such allotments exist or are claimed to exist, the
benefits accruing to the Tribe and its members under this Agreement shall be in full satisfaction
of the claims of such allottees.

8.7. Entire Agreement. This Agreement constitutes the entire understanding among the
Parties. Evidence of conduct or statements made in the course of negotiating this Agreement,
including but not limited to previous drafts of this Agreement, is inadmissible in any legal
proceedings for the interpretation or enforcement of this Agreement.

8.8. Modification. No modification of this Agreement shall be effective unless it is in
writing and signed by all Parties; provided, however, the Parties agree to execute a

22

 

modification or restatement of this Agreement to the extent necessary to make it conform to the Act
of Congress as required under the Act of Congress.

8.9. Obligation of Good Faith. As of the Effective Date, each Party shall have the
obligation to work in good faith to satisfy the conditions set forth herein. The parties will
support, advocate, and defend this Agreement and the acts and actions necessary to fulfill the
terms of this Agreement.

8.10. Authority to Sign. By signing this Agreement, each person represents that he or she
has the authority to execute this Agreement.

8.11. Binding Agreement. This Agreement shall inure to the benefit of, and be binding
upon, the successors and assigns of the Parties.

8.12. Counterparts. This Agreement may be executed in duplicate originals, each of which
shall constitute an original Agreement.

8.13. Tribal Jurisdiction. No part of this Agreement shall be construed, in whole or in
part, as providing consent by Fish Springs or the End Users to the legislative, executive, or
judicial jurisdiction or authority of the Tribe in connection with activities, rights, or duties
contemplated by this Agreement and conducted by Fish Springs or the End Users outside the exterior
boundaries of the Reservation. This Agreement shall not be construed as a commercial dealing,
contract, lease or other arrangement that creates a consensual relationship between Fish Springs or
the End Users and the Tribe so as to provide a basis for the Tribe’s legislative, executive, or
judicial jurisdiction or authority over Fish Springs or the End Users under Montana v. United
States, 450 U.S. 544 (1981), for activities conducted outside the exterior boundaries of the
Reservation. The activities, rights, or duties conducted or undertaken by Fish Springs or the End
Users pursuant to

23

 

this Agreement outside the exterior boundaries of the Reservation shall not be construed as conduct
that threatens or affects the political integrity, economic security, or health and welfare of the
Tribe so as to provide a basis for the exercise of the Tribe’s legislative, executive, or judicial
jurisdiction or authority over Fish Springs or the End Users under Montana v. United States, 450
U.S. 544 (1981). Benefits and rights accruing to Fish Springs or the End Users are provided as
consideration for benefits and rights accruing to the Tribe hereunder, and shall not be construed
as privileges, benefits, tribal services, or other advantages of civilized society provided by the
Tribe that would justify the imposition of the Tribe’s legislative, executive, or judicial
authority over Fish Springs or the End Users in regard to the activities, rights, and duties
conducted outside the exterior boundaries of the Reservation.

8.14 Future Permitting. The Tribe agree to not oppose the necessary local, state, and
federal permitting required to authorize the Pumping and Transfer of the Additional Fish Springs
Water Rights of up to 5,000 acre-feet.

8.15 Fully Informed. In executing this Agreement and the waivers and releases herein, each
Party acknowledges that it has consulted with or had the opportunity to consult with counsel or an
attorney or hydrological or technical experts of their own choosing, had the advice of counsel or
an attorney duly admitted to practice law in the state of Nevada, and that they execute the
Agreement after independent investigation and without fraud, duress, or undue influence.

8.16 Further Assurances. The Parties hereto acknowledge and understand that there may be
additional acts, actions, and agreements necessary to fully implement the intent and agreement of
the Parties hereto. The Parties shall act in accordance with this

24

 

Agreement pending any further actions contemplated by this Agreement. The Parties agree to execute
such further agreements and undertake such further acts and actions as may be required to fully
implement this Agreement. Such further actions may involve but are not limited to the advocacy by
Fish Springs for the treatment of wastewater in the North Valleys and the preparation, support, and
cooperation in the approvals by any federal agencies, the Secretary of the Interior, or the United
States Congress for the future enforceability of all or any portion of this Agreement. The Parties
agree to use their best efforts and to act in good faith and to deal fairly with each other in all
such future actions and agreements.

8.17 Court Action. This Agreement shall be attached to a Stipulation and Order to Dissolve
the Preliminary Injunction, the Injunction Pending Appeal and Stay Proceedings, to be filed in the
Federal District Court Action, seeking the Court’s approval of the dismissal of said action with
prejudice, with each party to bear its own attorneys’ fees and costs, in accordance with the terms
of this Agreement.

8.18 Severability. As stated in Recital 1.6, this Agreement has two independent
components. Although the Parties desire and shall work toward obtaining the Act of Congress and
Approval of the Secretary, the Parties recognize that these actions are beyond the control of the
Parties. Therefore, the Parties intend that in the event the Act of Congress and Approval of
Secretary are not obtained, then the Tribe, Fish Springs, and the BLM (a) intend to be bound by the
terms of this Agreement that are not contingent upon the Act of Congress and the Approval of the
Secretary and (b) further intend that those terms that are contingent upon the Act of Congress and
Approval of the Secretary shall be severed from this Agreement and shall have no force and effect.

25

 

8.19 Notices. Any notice to be given under this Agreement shall have been properly given
when received by the officer or manager designated herein, or when deposited in the United States
mail in a Nevada or Washington, D.C. post office, certified or registered, postage prepaid,
addressed as follows:

As to the Tribe:

As to Fish Springs:

or addressed to such other address as the party to receive such notice shall have designated by
written notice given as required by this paragraph.

8.20 Recitals. The Parties agree that the Recitals set forth in Section 1.0 are to be
incorporated as additional terms under this Agreement.

26

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement dated as of the day and year
first above written.

9.0 SIGNATURE BLOCK

	 	 	 	 	 	 	 
	 	 	THE UNITED STATES OF AMERICA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Secretary of the Interior	 	 
	 
	 	 	 	 	 	 
	 	 	THE BUREAU OF LAND	 	 
	 
	 	 	 	 	 	 
	 	 	MANAGEMENT	 	 
	 
	 	 	 	 	 	 
	 	 	AND DEPARTMENT OF THE INTERIOR	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	FISH SPRINGS RANCH, LLC	 	 
	 
	 	 	 	 	 	 
	 	 	By Vidler Water Company, Inc.	 	 
	 	 	Its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

President
	 	 
	 
	 	 	 	 	 	 
	 	 	PYRAMID LAKE PAIUTE TRIBE OF INDIANS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Chairman
	 	 

27ex10_1.htm

     

    Exhibit
      10.1

    
 

    ENERGY
      PARTNERS, LTD.

     

    2006
      LONG TERM STOCK INCENTIVE PLAN

     

    CASH-SETTLED
      RESTRICTED SHARE UNIT AGREEMENT

     

    
      	
               

              NAME

            	
              NUMBER
                OF RESTRICTED SHARE
 UNITS

            	
               

              GRANT
                DATE

            
	 	 	 

    

    

    This
      Agreement confirms the grant to you of
          Restricted Share Units
      with respect to Common Stock of Energy Partners, Ltd. (the “Company”) under the
      Company’s 2006 Long Term Stock Incentive Plan (the “Plan”), a copy of which has
      been delivered to you and is made a part hereof, upon the following terms and
      conditions and the terms and conditions of the Plan.  The terms used
      in this Agreement shall have the same meaning as in the Plan, unless the context
      requires otherwise, and except that “Restricted Share Units” shall refer only to
      the restricted share units granted pursuant to this Agreement.

     

    
      	
              1.  

            	
              Restricted
                Share Units - Each Restricted Share Unit shall represent the right to
                receive in cash the Fair Market Value of one share of Common Stock
                of the
                Company at the end of the Restricted Period (as hereinafter defined)
                if
                and only if you vest in such Restricted Share Unit pursuant to
                Section 4 below.  The Restricted Period with respect to
                each Restricted Share Unit is the period beginning on the grant date
                of
                the Restricted Share Units and ending on the date on which the applicable
                Restricted Share Unit becomes payable pursuant to Section 6 below or
                is forfeited pursuant to Section 5
                below.

            

    

     

    
      	
              2.  

            	
              No
                Rights as Shareholder - You shall have none of the rights of a
                shareholder of the Company with respect to any shares of Common Stock
                of
                the Company by reason of this award of Restricted Share
                Units.

            

    

     

    
      	
              3.  

            	
              Non-transferable
                - You may not sell, transfer, assign, pledge, or otherwise encumber
                or
                dispose of any Restricted Share
                Units.

            

    

     

    
      	
              4.  

            	
              Vesting
                - Your Restricted Share Units shall vest as
                follows:  (i) as to one-third of the Restricted Share Units
                on            ,
                (ii) as to an additional one-third of the Restricted Share Units on
                               ,
                and (iii) as to the remaining one-third of the Restricted Share Units
                on
                              
                ; provided, however, that all of the Restricted Share Units
                shall become 100% vested upon a Change of Control (as defined in
                Exhibit A
                to this Agreement).

            

    

     

    
      	
              5.  

            	
              Termination
                of Employment -In the event of your termination of employment for any
                reason during the Restricted Period, all Restricted Share Units which
                have
                not vested pursuant to Section 4 above shall be forfeited and the
                Company may take any action necessary to effect such forfeiture without
                any further notice to you.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	
              6.  

            	
              Payment
                - If any Restricted Share Units vest pursuant to Section 4 above, you
                shall receive in cash an amount equal to the product of (i) the Fair
                Market Value of a share of Company Common Stock on the applicable
                vesting
                date and (ii) the number of Restricted Share Units vesting on that
                vesting
                date.  Such payment shall be made within 60 days after the
                applicable vesting date.

            

    

     

    
      	
              7.  

            	
              No
                Dividend Equivalents - You shall not receive any dividend equivalents
                in respect of the Restricted Share Units to reflect any dividends
                payable
                on shares of Company Common Stock during the Restricted
                Period.

            

    

     

    
      	
              8.  

            	
              Unsecured
                Creditor Status - This grant of Restricted Share Units constitutes a
                mere promise by the Company to pay you the benefits described in
                this
                grant (to the extent vested).  You shall have the status of a
                general unsecured creditor of the Company with respect to the benefits
                payable under this grant.

            

    

     

    
      	
              9.  

            	
              Withholding
                - The Company will withhold taxes on any income realized in connection
                with the Restricted Share Units.

            

    

     

    
      	
              10.  

            	
              Miscellaneous
                - This Agreement (a) shall be binding upon and inure to the benefit
                of any
                successor of the Company; (b) shall be governed by the laws of the
                State
                of Delaware, and any applicable laws of the United States; (c) may
                not be
                amended except in writing; and (d) this grant shall in no way affect
                your
                participation or benefits under any other plan or benefit program
                maintained or provided by the Company.  In the event of a
                conflict between this Agreement and the Plan, the Plan shall
                govern.

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    
 

    
      
        	
                ENERGY
                  PARTNERS, LTD.

              
	
                 

                 

                 

                By: 
                  ______________________________

                       
                  Name:

                       
                  Title:

              

      

    

    
      

    

    Accepted:

     

    

     

    _____________________________

     

    

     

    Witness:

     

    

     

    ______________________________

     

    Date:  __________________________

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    “Change
      of Control” means and shall be deemed to have occurred if:

     

    (a)  any
      person (within the meaning of the Securities Exchange Act of 1934, as amended
      from time to time), other than the Company or a Related Party, is or becomes
      the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act
      of 1934, as amended from time to time), directly or indirectly, of Voting
      Securities representing 25 percent or more of the total voting power of all
      the then-outstanding Voting Securities; or

     

    (b)  the
      individuals who, as of May 4, 2006, constitute the Board of Directors of
      the Company, together with those who first become directors subsequent to such
      date and whose recommendation, election or nomination for election to the Board
      of Directors of the Company was approved by a vote of at least a majority of
      the
      directors then still in office who either were directors as of May 4, 2006
      or whose recommendation, election or nomination for election was previously
      so
      approved (the “Continuing Directors”), cease for any reason to constitute a
      majority of the members of the Board of Directors of the Company;
      or

     

    (c)  a
      merger, consolidation, recapitalization or reorganization of the Company or
      a
      Subsidiary, reverse split of any class of Voting Securities, or an acquisition
      of securities or assets by the Company or a Subsidiary is consummated, other
      than (I) any such transaction in which the holders of outstanding Voting
      Securities immediately prior to the transaction receive (or, in the case of
      a
      transaction involving a Subsidiary and not the Company, retain), with respect
      to
      such Voting Securities, voting securities of the surviving or transferee entity
      representing more than 50 percent of the total voting power outstanding
      immediately after such transaction, with the voting power of each such
      continuing holder relative to other such continuing holders not substantially
      altered in the transaction, or (II) any such transaction which would result
      in a
      Related Party beneficially owning more than 50 percent of the voting securities
      of the surviving entity outstanding immediately after such transaction;
      or

     

    (d)
      the
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale or disposition by the Company of all or
      substantially all of the Company’s assets other than any such transaction which
      would result in a Related Party owning or acquiring more than 50 percent of
      the
      assets owned by the Company immediately prior to the transaction.

     

    For
      purposes of this definition of “Change of Control”:

     

    (i)  “Related
      Party” means (a) a majority-owned subsidiary of the Company; (b) an employee or
      group of employees of the Company or any majority-owned subsidiary of the
      Company; (c) a trustee or other fiduciary holding securities under an employee
      benefit plan of the Company or any majority-owned subsidiary of the Company;
      or
      (d) a corporation owned directly or indirectly by the stockholders of the
      Company in substantially the same proportion as their ownership of Voting
      Securities.

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    

     

    (ii)  “Voting
      Securities” means any securities of the Company which carry the right to vote
      generally in the election of directors.

     

    

    
      
         

      

      
        A-2

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