Document:

EXHIBIT
      10.3

    

    PARTICIPATION
      AGREEMENT

    RE:
      ZODIAC II PROSPECT, JEFFERSON DAVIS & CALCASIEU PARISHES,
      LOUISIANA

    

    This
      Participation Agreement (“Agreement”) is made and entered into effective as of
      the 7th day of June, 2006 (“Effective Date”), by and between Bayou City
      Exploration, Inc. a Nevada Corporation (hereinafter “Company”) and True North
      Energy Corp. (hereinafter “Participant”). Company and Participant are sometimes
      hereinafter referred to, individually, as a “Party” and, collectively, as the
“Parties”.

    

    WHEREAS,
      Company
      has identified a prospect for oil and gas (“Prospect”), known to the Parties as
      the Zodiac 11 Prospect, and purchased, or is in the process of purchasing,
      oil
      and gas leases the (“Leases”) on such Prospect, and; 

    

    WHEREAS,
      Participant has expressed a desire to participate with Company in the drilling
      of a test well in search of oil or gas on the Leases or portions thereof and
      in
      the further development of the Leases, if warranted, and;

    

    WHEREAS,
      the
      Parties desire to join together and enter into a final and binding agreement
      to
      fully express the terms and conditions which are to govern between the Parties
      as to the development of the Prospect, and;

    

    NOW,
      THEREFORE,
      for and
      in consideration of the mutual covenants and promises herein contained, the
      Parties hereby agree as follows: 

    

    
      	13.	
              JOINT
                OPERATING AGREEMENT

            

    

    

    Contemporaneously
      with the execution hereof, the Parties shall execute the Joint Operating
      Agreement (“JOA”) and Memorandum of Joint Operating Agreement, naming Bayou City
      Exploration, Inc. (“Operator”). The executed JOA is attached hereto and
      incorporated herein as Exhibit “A”. The JOA shall control the operations
      conducted on the Prospect. Should there be a conflict between the terms and
      conditions of this Agreement and the JOA, the terms and conditions of this
      Agreement shall prevail.

    

    
      	14.	
              LEASEHOLD

            

    

    

    Company
      represents, but does not warrant that it owns, or is in the process of
      acquiring, certain oil, gas and mineral leases within the Prospect area as
      depicted on the Plat labeled Area of Mutual Interest (“AMI”) attached hereto and
      incorporated herein as Exhibit “B” to this Agreement.

    

    
      	15.	
              PARTICIPANTS
                INTEREST

            

    

    

    Participant
      hereby elects to earn a twenty five percent (25.0%) working interest in the
      Leases pursuant to the terms of this Agreement and the JOA by participating
      in
      the drilling of the Test Well. 

     

    
      
         

      

      
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      	16.	
              PROSPECT
                COSTS

            

    

    

    Company
      has an Agreement with Fairfield Industries (“Fairfield”) in which Fairfield will
      pay for Geophysical and related reprocessing costs and Company will pay for
      land
      acquisition costs Fairfield and Company initially each own fifty percent (50%)
      working interest in the Prospect. Company and Participant agree that for the
      purposes of this agreement Geophysical costs will be considered equal to
      Company’s land and prospect costs. Participants share of current land and
      prospect cost to be charged by Company with respect to the Prospect, including
      lease bonus, land brokerage, legal, engineering, surveying, unitization,
      geological and geophysical costs which is $267,056.00 (“Prospect Costs”).
      Participant will pay its share of such current and future Prospect Costs.
      Participant agrees to pay the sum of $267,056.00 upon the execution of this
      Agreement. The parties acknowledge that there may be additional expenditures
      incurred by Company including but not limited to additional lease bonuses land
      brokerage, drilling title examination, and curative. Appropriate and timely
      billings and payments shall be made accordingly by the Parties. The entire
      Prospect Costs are fully refundable in the event this Agreement is rescinded
      by
      Company for any reason or Company fails to cause the Initial Test Well to be
      drilled for any reason. Because of multiple agreements made with other parties
      and Fairfield which the data is subject to, Participant will not acquire any
      leasehold interest in the area on lands covered by the data as shown on the
      plat
      attached hereto as Exhibit “C” unless Company gives written permission prior to
      the acquisition of such leases.

    

    
      	17.	
              INITIAL
                TEST WELL

            

    

    

    On
      or
      before December 31, 2006 (“Commencement Date”), subject to rig availability,
      Company proposed to commence or cause to be commenced, operations for the
      drilling of a test well (“Test Well”) in search of oil and/or gas at a legal
      location of Company’s choice on the Prospect. The Test Well will be drilled with
      due diligence and in a good and workmanlike manner to a depth sufficient to
      test
      the Siph D Formation or to a depth of 6600’ (TVD) and 8050’ (MD) beneath the
      surface of the earth, whichever is the lesser depth (the "Objective
      Depth").

    

    
      	18.	
              SUBSTITUTE
                TEST WELL

            

    

    

    In
      the
      event impenetrable conditions which render further drilling impracticable are
      met prior to reaching the Objective Depth in the Test Well, then, subject to
      the
      provisions of Section 5 above, for a period of ninety (90) days after making
      the
      election, either Party shall have the right to drill a substitute Test Well
      to
      the Objective Depth on the Leases or on lands pooled therewith. The substitute
      Test Well shall be drilled under the same terms as the Test Well and the
      substitute Test Well shall be deemed to be the Test Well for all purposes under
      this Agreement.

     

    
      
         

      

      
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          	7.	
                  EXPENSES
                    FOR DRILLING THE TEST
                    WELL

                

        

      

    

    

    Participant
      shall bear and pay, in the percentages set forth below, its share of the costs
      and expenses described below. Such payment shall be due and payable to Company
      on or before fifteen (15) days after receipt of an invoice or invoices for
      such
      costs or any portion thereof. 

    

    
      	 	
              A.
                

            	
              Thirty
                three and one third percent (33.33%) of the costs and expenses incurred
                in
                drilling the Test Well (and any substitute well therefore) to casing
                point, or to a lesser depth if impenetrable conditions are encountered
                in
                the well, and in plugging and abandoning the well if no completion
                attempt
                is made. The term “casing point” shall mean that point in time when the
                Test Well has been drilled to the Objective Depth, logged, evaluated
                and
                Company has notified Participant that a completion attempt will be
                made.
                  

            

    

    

    
      	 	
              B.

            	
              Twenty
                five percent (25.0%) of the costs and expenses incurred in completing
                the
                Test Well (and any substitute well therefore) and in equipping the
                same
                for production

            

    

    

    
      	8.	
              SUBSEQUENT
                WELLS

            

    

    

    As
      to any
      subsequent wells drilled within the Prospect area, the Participant has the
      option, but not the obligation, to participate in the drilling of such
      subsequent wells by paying twenty five percent (25.0%) of the costs and expenses
      of drilling such well including the cost of completing such subsequent well
      and
      equipping the same for production. Should a party not elect to participate
      in
      such subsequent well such non-participating Party will be subject to the
      provisions of Article VI section B of the JOA.

    

    
      	9.	
              INTEREST
                EARNED BY DRILLING TO OBJECTIVE
                DEPTH

            

    

    

    At
      such
      time as the Test Well has reached the Objective Depth and Participant has
      elected whether or not to participate in the completion of the well at the
      Objective Depth Participant shall have earned an undivided twenty five percent
      (25.0%) of Company's leasehold interest in and to the Leases, subject to the
      provisions of the Leases, this Agreement and the JOA. 

    

    Company
      shall assign to Participant any interest earned, effective as of the date of
      this Agreement, and such assignment shall be made within thirty (30) days after
      the date on which the completion rig has been released or the date on which
      the
      Objective Depth has been reached which ever is later. The assignment shall
      be
      subject to, among other things, the terms and provisions of this Agreement,
      the
      terms and provisions of the JOA, and all royalties, overriding royalties,
      payments out of production, and similar leasehold burdens affecting the Leases
      and existing as of the Effective Date of this Agreement. The Parties acknowledge
      the royalty burdens of Three percent (3.0%) owed to Seitel and Emce,Inc., as
      a
      result of agreements made with these parties. The drilling of additional wells
      on the Leases and the operation of the Test Well and any additional wells on
      the
      Leases or lands pooled therewith shall be governed by the terms of this
      Agreement and the provisions of the JOA when not in conflict with this
      Agreement.

     

    
      
         

      

      
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      	10.	
              WELL
                INFORMATION -
                CONFIDENTIALITY

            

    

    

    The
      Parties agree that all information, data and other materials, including but
      not
      limited to wire line logs, mud logs, geological interpretations, seismic data
      (subject to all of the terms and conditions of any third party licensor or
      agreement) and other production data (“Data”) which might be obtained or
      accumulated is to be non-public, confidential and proprietary in nature, except,
      that such Data can be shown to affiliated companies, reputable engineering
      firms, gas transmission companies, reputable financial institutions, reputable
      and financially responsible third parties with whom a Party to this Agreement
      is
      engaged in negotiations for the sale of some portion of the interest in this
      Prospect, or any governmental entities requiring such Data. The Parties agree
      that the Data may not otherwise be disclosed, sold, traded, or published with
      out the prior written consent of Company. The Parties, their agents, consultants
      and independent contractors, at their sole cost, risk and expense, shall have
      access at all times to the derrick floor of all wells drilled under this
      Agreement and to all information in connection with the drilling and testing
      of
      all such wells. Operator agrees to send the Parties daily drilling reports
      reporting drilling information consistent with accepted industry standards
      including but not limited to work done, depth drilled, the results of tests
      made
      and oil and gas shows encountered. Operator shall furnish the Parties all well
      data acquired in connection with the drilling and producing of such wells
      including but not limited to copies of the surveyors location plat, all wire
      line and mud logs, reports showing the results of all tests and any forms and
      reports filed with any State or Federal Agency.

    

    
      	11.	
              NOTICES.

            

    

    

    All
      notices and information to be given hereunder shall be in writing and shall
      be
      sent by United States certified mail, telegram, telex, facsimile, email,
      overnight delivery service
      or
      telecopy, postage or charges prepaid and addressed to the Party to whom such
      notice is given as follows:

     

    
      	 	If to Company:	
              Bayou City Exploration, Inc.

              
                10777
                  Westheimer, Suite 170

                Houston,
                  Texas 77042

                Attention:
                  Mr. Morris Hewitt

                Telephone: 832-358-3900

                Facsimile: 832-358-3903

                Email:       
                  mhewitt@bcexploration.com

              

            

    

     

    
      
         

      

      
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      	 	If to Participant:	
              True North Energy Corp.

              
                1200
                  Smith Street

                16th
                  Floor

                Houston,
                  Texas 77002

                Attention:
                   Max
                  Pozzoni

                Telephone: 832-476-8699

                Email:
                  max@tnecorp.com

              

            

    

     

    

    
      	12.	
              ASSIGNMENT
                AND BINDING EFFECT.

            

    

    

    This
      Agreement shall inure to the benefit of and be binding upon the Parties and
      their successors and permitted assigns. Neither Party may assign its rights
      and
      obligations under this Agreement without the prior written consent of the other,
      which consent will not be unreasonably withheld, delayed or conditioned. In
      the
      event of an assignment, the assignee shall agree to be bound by the terms and
      provisions of this Agreement, including any JOA provided for hereunder. In
      the
      event of such assignment the assigning Party shall be relieved from all
      obligations thereafter accruing, but not theretofore accrued, with respect
      to
      the interest assigned. 

    

    
      	13.	
              ENTIRETY
                OF AGREEMENT.

            

    

    

    This
      Agreement and the Exhibits attached hereto constitute the entire agreement
      between the Parties with respect to the subject matter hereof, and there are
      no
      representations or other agreements between the Parties except as expressly
      set
      forth herein and included within the Exhibits attached hereto. Any amendment
      to
      this Agreement shall not be effective unless in writing and executed by the
      Parties to this Agreement.

    

    
      	14.	
              GOVERNING
                LAW.

            

    

    

    This
      Agreement and the rights and obligations of the parties hereunder shall be
      governed by and interpreted, construed and enforced in accordance with the
      laws
      of the State of Texas (excluding any conflict of law rules which would refer
      to
      the laws of another jurisdiction). This Agreement shall be performable in
      Houston, Harris County, Texas and venue for any litigation to enforce a
      provision hereof or construe this Agreement shall be in Houston, Harris County,
      Texas. 

    

    
      	15.	
              RELATIONSHIP
                OF PARTIES.

            

    

    

    This
      Agreement is not intended to create a relationship of partnership or an
      association for profit between or among the Parties. It is expressly agreed
      that
      the obligations and liabilities of the Parties are several and not joint.
      Nothing contained in this Agreement shall be construed to create or impose
      a
      partnership duty, obligation or liability on any of the Parties or an
      association for profit between or among the Parties. Notwithstanding the
      foregoing provisions, if, for federal income tax purposes, this Agreement and
      the operations hereunder are regarded as a partnership, each of the Parties
      elects, under the authority of Section 761(a) of the Internal Revenue Code
      of
      1986, as amended, and applicable issued regulations, to be excluded from the
      application of all provisions of Subchapter K of Chapter 1 of the Internal
      Revenue Code of 1986, as amended. Should there be any requirement that a Party
      give further evidence of this election, such Party shall execute such documents
      and furnish such other evidence as may be required by the Internal Revenue
      Service or as may be necessary to evidence this election.

     

    
      
         

      

      
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      	16.	
              TERM
                OF AGREEMENT.

            

    

    

    This
      Agreement shall remain in force and effect for a period commencing on the
      Effective Date hereof and, subject to the provisions hereof which
      provide for an earlier termination,
      ending
      on the date on which the JOA terminates in accordance with the provisions of
      Article XIII. of the JOA. 

    

    
      	17.	
              SEVERABILITY

            

    

    

    If
      any
      term, provision or condition of this Agreement is held invalid, unenforceable
      or
      contrary to applicable laws, it shall be reformed to the extent necessary to
      conform, consistent with the intention of the Parties, to such laws, and if
      such
      provision cannot be so reformed, it shall be deemed deleted and the validity
      of
      the other terms, provisions and conditions shall not be affected.

    

    
      	18.	
              MISCELLANEOUS

            

    

     

    A.
      The
      titles and the section headings contained in this Agreement are inserted for
      convenient reference only and shall not be construed as limiting or extending
      the meaning of any provision of this Agreement.

    

    B.
      This
      Agreement and any documents to be executed pursuant hereto may be executed
      in
      multiple counterparts, each of which shall constitute an original and all of
      which, when construed together, shall constitute but one and the same
      instrument.

     

    C.
      The
      Parties hereby agree to do, execute or procure to be done and executed, any
      and
      all further necessary acts, deeds, documents and things within their power
      to
      give effect to this Agreement and its intent.

    

    D.
      No
      waiver of any term, provision or condition of or rights under this Agreement
      shall be effective unless in writing and signed by an authorized representative
      of the waiving Party. The failure of either Party to insist upon the strict
      performance of any term, provision or condition of this Agreement shall not
      be
      construed as a waiver or relinquishment in the future of the same or any other
      term, provision or condition.

    

    E.
      If any
      action at law or in equity is necessary to enforce or interpret any of the
      rights or obligations under this Agreement, the prevailing Party shall be
      entitled to reasonable attorney’s fees, costs, and necessary disbursements from
      the non-prevailing Party in addition to any other relief to which the prevailing
      Party may be entitled.

    

    
      
         

      

      
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    If
      the
      foregoing sets forth your understanding of our agreement, please so indicate
      by
      signing in the space provided below and returning one (1) original of this
      Agreement to the undersigned.

    

    BAYOU
      CITY EXPLORATION, INC.

    
      	 	 	 
	 	 	 
	By:
              	/s/
              Morris Hewitt	 
	 	Name: Morris
              Hewitt	 
	 	Title: President	 
	 	 	 
	 	 	 
	TRUE NORTH ENERGY
              CORP.
              	 
	 	 
	 	 	 
	By:
              	/s/
              Massimiliano Pozzoni	 
	 	Name:  Massimiliano
              Pozzoni	 
	 	Title: Chief
              Financial Officer	 

    

    

     

     

    
      
         

      

      
        7
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    Exhibit
      10.1

    

    USA
      TECHNOLOGIES, INC.

    2006-A
      STOCK COMPENSATION PLAN

     

    1. Purpose.
      The
      purpose of the USA Technologies, Inc. 2006-A Stock Compensation Plan is to
      provide an incentive to Employees, Consultants and Directors of the Company
      who
      are in a position to contribute materially to the long-term success of the
      Company, to increase their interest in the Company’s welfare, and to aid in
      gaining the services of Employees, Consultants and Directors of outstanding
      ability who will contribute to the Company’s success.

     

    2. Definitions. 

    2.1 "Award"
      means an
      award of Stock under the Plan.

    2.2 "Board" means
      the
      Board of Directors of USA Technologies, Inc.

    2.3 "Code" means
      the
      Internal Revenue Code of 1986, as amended. Reference to a specific section
      of
      the Code shall include any successor to such section.

    2.4 "Committee"
      means
      the committee designated by the Board to administer the Plan under Section
      4.

    2.5 "Common
      Stock" means
      USA
      common stock, no par value per share, or such other class or kind of shares
      of
      capital stock or other securities as may result from the application of Section
      8 hereof.

    2.6 "Company"
      means
      USA
      and any successor thereof.

    2.7
       "Consultant"
      means a
      consultant retained to provide bona fide services to, and who is not an employee
      of USA.

    2.8 "Director"
      means
      each director of USA who is not an employee of USA.

    2.9 "Employee"
      means an
      officer or employee of the Company including a director who is such an
      employee.

    2.10 "Fair
      Market Value"
      means,
      on any given date, the mean between the high and low prices of actual sales
      of
      Common Stock on the principal national securities exchange on which the Common
      Stock is listed on such date, or, if the Common Stock was not so listed, the
      average closing bid price of the stock for each of the five trading days prior
      to such date.

    2.11 "Holder"
      means an
      Employee, Director or Consultant to whom an Award is made.

    2.12 "USA"
      means
      USA
      Technologies, Inc., a Pennsylvania corporation and any successor
      thereto.

    2.13
      "1933
      Act"
      means
      the Securities Act of 1933, as amended.

    2.14 "Plan"
      means
      the
      USA 2006-A Stock Compensation Plan herein set forth, as amended from time to
      time.

    2.15 "Stock"
      means
      Common Stock awarded by the Committee under Section 6 of the Plan.

    2.16 "SEC"
      means
      the
      United States Securities and Exchange Commission.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Eligibility.
      Any
      Employee, Eligible Director and Eligible Consultant is eligible to receive
      an
      Award.

     

    4. Administration
      of Plan.

    4.1 The
      Plan
      shall be administered and interpreted by the Committee, which shall have full
      authority to act in selecting Employees, Directors and Consultants to whom
      Awards will be made, in determining the type and amount of Awards to be granted
      to each such Holder, the terms and conditions of Awards and the terms of
      agreements which will be entered into with Holders in connection with Awards.
      The Committee shall be appointed by the Board and shall have at least one member
      and shall act unanimously in all matters.

    4.2 The
      Committee’s powers shall include, but not be limited to, the power to determine
      whether, to what extent and under what extent and under what circumstances
      an
      Award is made.

    4.3 The
      Committee shall have the power to adopt regulations for carrying out the Plan
      and to make such changes in such regulations as it shall from time to time
      deem
      advisable. The Committee shall have the power unilaterally and without approval
      of a Holder to amend any existing Award in order to carry out the purposes
      of
      the Plan so long as such amendment does not deprive the Holder of any benefit
      granted by the Award and so long as the amended Award comports with the terms
      of
      the Plan. Amendments adverse to the interests of the Holder must be approved
      by
      the Holder. Any interpretation by the Committee of the terms and provisions
      of
      the Plan and the administration thereof, and all action taken by the Committee,
      shall be final and binding on Plan participants.

     

    5. Shares
      of Stock Subject to the Plan.

    5.1 Subject
      to adjustment as provided in Section 7, the total number of shares of Common
      Stock available for Awards under the Plan shall be 25,000 shares.

    5.2 Any
      shares issued hereunder may consist, in whole or in part, of authorized and
      unissued shares or treasury shares. If any shares subject to any Award granted
      hereunder are forfeited or such Award otherwise terminates without the issuance
      of such shares, the shares subject to such Award, to the extent of any such
      forfeiture or termination, shall again be available for Awards under the Plan.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    6. Stock.

    An
      Award
      of Stock is a grant by the Company of a specified number of shares of Common
      Stock to the Holder, which shares are subject to forfeiture upon the happening
      of specified events. Such an Award shall be subject to the following terms
      and
      conditions:

    6.1 Stock
      may
      be evidenced by Stock agreements. Such agreements shall conform to the
      requirements of the Plan and may contain such other provisions as the Committee
      shall deem advisable.

    6.2 Upon
      determination of the number of shares of Stock to be granted to the Holder,
      the
      Committee shall direct that a certificate or certificates representing the
      number of shares of Common Stock be issued to the Holder with the Holder
      designated as the registered owner.

    6.3 The
      Committee may condition the grant of an Award of Stock upon the Holder’s
      achievement of one or more performance goal(s) specified in the Stock agreement.
      If the Holder fails to achieve the specified performance goal(s), the Committee
      shall not grant the Stock to the Holder, or the Holder shall forfeit the Award
      of Stock and the Common Stock shall be forfeited to the Company.

    6.4 The
      Stock
      agreement if any, shall specify the performance, employment or other conditions
      (including termination of employment on account of death, disability, retirement
      or other cause) under which the Stock may be forfeited to the
      Company.

     

    7. Adjustments
      Upon Changes in Capitalization.
      In the
      event of a reorganization, recapitalization, stock split, spin-off, split-off,
      split-up, stock dividend, issuance of stock rights, combination of shares,
      merger, consolidation or any other change in the corporate structure of USA
      affecting Common Stock, or any distribution to stockholders other than a cash
      dividend, the Board shall make appropriate adjustment in the number and kind
      of
      shares authorized by the Plan as it determines appropriate. No fractional shares
      of stock shall be issued pursuant to such an adjustment, but an amount
      equivalent to the portion of Fair Market Value attributable to any such
      fractional shares shall, where appropriate, be paid in cash to the
      Holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8. Termination
      and Amendment.
      The
      Plan shall remain in full force and effect until terminated by the Board. The
      Board shall have the power to amend, suspend or terminate the Plan at any
      time.

     

    9. Form
      S-8. 
      Promptly
      upon the approval of this Plan by the Board of Directors of USA, the Company
      shall, at its cost and expense, register all of the Stock under the 1933 Act
      pursuant to Form S-8. Notwithstanding anything else set forth herein, an Award
      shall not be made to any Director, Consultant or Employee unless such person
      in
      eligible to receive Stock which has been registered under a Form S-8. In this
      regard, any Stock issuable to a Consultant or Director shall be issued to an
      individual who provided bona fide services to USA and such services are not
      in
      connection with the offer or sale of securities in a capital-raising
      transaction, and do not directly or indirectly promote or maintain a market
      for
      USA’s securities. In connection with the issuance of any Stock pursuant to the
      Plan, USA shall at its expense, use its best efforts to have any such Stock
      exempted from the registration requirements under applicable state securities
      laws.

     

    10. General
      Provisions. 

    10.1 The
      Plan
      shall become effective upon its approval by the Board.

    10.2 Nothing
      contained in the Plan, or an Award granted pursuant to the Plan, shall confer
      upon an Employee any right with respect to continuance of employment by the
      Company or upon any Director or Consultant any right with respect to continuance
      of Board service or the consulting arrangement (as the case may be), nor
      interfere in any way with the right of the Company to terminate such
      relationships at any time.

    10.3 For
      purposes of this Plan, transfer of employment between USA and any Subsidiary
      shall not be deemed termination of employment.

    10.4
      Holders shall be responsible to make appropriate provision for all taxes
      required to be withheld in connection with any Award. Such responsibility shall
      extend to all applicable federal, state, local or foreign withholding taxes.
      Agreements evidencing Awards shall contain appropriate provisions to effect
      withholding. The Plan is not qualified under Section 401(a) of the Internal
      Revenue Code.

    10.5 
      To the
      extent that federal laws (such as the 1934 Act, the Code or the Employee
      Retirement Income Security Act of 1974) do not otherwise control, the Plan
      and
      all determinations made and actions taken pursuant hereto shall be governed
      by
      the law of the Commonwealth of Pennsylvania and construed
      accordingly.

    10.6
      Additional information may be obtained about the Plan and the Plan
      administrators by writing the Company at 100 Deerfield Lane, Suite 140, Malvern,
      PA 19355, Attn: Stephen P. Herbert, or by calling 610-989-0340. 

    

    Dated:
      June 13, 2006

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